The EU’s imposition of duties on imports of certain high-tech products has been condemned by the World Trade Organisation (WTO). A report issued by the WTO, on 16 August, found fault with duties on flat panel computer screens, printers that can also scan/fax/copy, and set-top boxes that transmit TV and video recordings. The level of the duty is 6% for printers and 14% for computer screens and set-top boxes. The WTO ruled that these duties were inconsistent with the its Information Technology Agreement (ITA), signed in 1996 by 71 countries to eliminate trade tariffs on such high-tech products. The ruling is a victory for the United States, Japan, and Chinese Taipei (Taiwan), which in 2008 filed complaints with the WTO.

Responding to the ruling, an EU official told Europolitics that no decision has been taken yet on whether an appeal would be filed. The official stressed that the WTO finding only applied to a limited set of products and did not draw general conclusions on what tariffs may be imposed on new high-tech products. He referred to a paragraph in the WTO report that said such decisions «would have to be determined on a case-by-case basis, taking into account all the objective characteristics of a particular product». Noting that the WTO had adopted a broad reading of commitments contained in the ITA, the official warned this could have the effect of deterring countries from agreeing new commitments.

US Trade Representative (USTR) Ron Kirk said «this ruling affirms the principle that changes in technology are not an excuse to apply new duties to products covered by the ITA». The USTR accused the EU of «taxing innovation». Trade in the products at issue totalled US$44 billion in 2009, the USTR said, of which US$7 billion were exported to the EU. Both the EU and the US are significant producers of these products, as are emerging economies like India and China where they are often assembled. The EU has issued temporary suspensions of duties on some computer monitors but the WTO found that such suspensions did not provide sufficient predictability for traders, said one USTR official.

NEW AGREEMENT NEEDED?

The dispute has a broader context, which is that the EU would like to update the ITA accord to take into account the major technological advances that have occurred since 1996. The EU believes that a revamped ITA is the appropriate vehicle for bringing about further trade liberalisation in this area and is preferable to trade partners challenging one another in the WTO. In a press briefing given after the WTO ruling, one US trade official said that Washington had not taken a decision on whether or not a revised ITA was desirable. The US and Japan’s position until now has been to argue that renegotiating the ITA is not necessary as new products of the type covered by the agreement are entitled to be traded tariff-free under the existing agreement.