U.S., Japan challenge European tech tariffs at WTO

By Doug Palmer


The United States and Japan said they were taking action at the World Trade Organization aimed at overturning European Union tariffs on computer screens, multifunctional printers and TV set-top boxes capable of accessing the Internet.

U.S. technology heavyweights such as Hewlett Packard Co (HPQ.N) argue that EU tariffs on the products violate the spirit and the letter of the WTO's Information Technology Agreement (ITA), which eliminated duties on a wide range of high-tech goods beginning in July 1997 to spur trade.

"The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products," U.S. Trade Representative Susan Schwab said on Wednesday.

"We urge the EU to eliminate permanently the new duties and to cease manipulating tariffs to discourage technological innovation," Schwab said at a news conference to announce the United States had requested formal dispute settlement talks with the European Union on the issue.

Japan, where printer makers such as Canon Inc (7751.T) and Ricoh Co Ltd (7752.T) may be affected, has joined the United States in pursuing the case.

"Our country's industry has incurred unfair damages by being forced to pay tariffs it has not have to do due to an arbitrary customs classification," Japan's Ministry of Economy, Trade and Industry said in a statement.

U.S. industry officials said the EU imported $11 billion worth of the three products each year.

The goods are manufactured mostly in countries such as China and Malaysia but are based on U.S. design and engineering and sold under U.S. brand names.

Profits from exports of the three goods also return to the United States, Schwab said.

Washington has tried for 20 months to persuade the EU to drop the tariffs and is prepared to ask the WTO to form a panel to hear its complaint if Brussels does not take action on the issue in the next 60 days, she said.

'OUTSIDE THE SCOPE'

The European Commission said it "strongly rejected" U.S. complaints that the tariffs violate WTO rules and accused Washington of refusing to heed its calls to negotiate changes in the products covered by the ITA deal.

"The ITA has a review clause which can be invoked by members at any time. The EU has said it is willing to negotiate with all other ITA members. The U.S. is not willing to do this. Why not?" the Commission said in a statement.

The pact gives duty-free treatment to LCD monitors used for computers but not for consumer electronics such as TVs or DVD players, the Commission said.

Set-top boxes primarily used for recording or pausing live television "are properly classified as video recorders and thus outside the scope of the ITA," the EU executive body said.

Also, most multifunctional printers use a type of scanning technology not covered by the zero-duty deal originally struck by 29 countries in December 1996, the Commission said.

The agreement has since grown to 71 members that account for about 97 percent of global information technology trade.

Schwab told reporters the EU position would render the Information Technology Agreement meaningless over time because it would cover fewer and fewer products.

"If ITA participants only provided duty-free treatment to products with the technology that existed at the time the ITA was concluded, very few ITA products would be eligible for duty-free treatment today," she said.

"That is not what ITA participants intended when this landmark sectoral agreement was reached more than 10 years ago," Schwab said, adding the United States did not want to "pay twice" for trade concessions it believes the EU is already obligated to honor.

Senate Finance Committee Chairman Max Baucus and other senior Democrats in the U.S. Congress who have been pressing Schwab's office to step up enforcement of trade agreements welcomed the new case, although two of them said it was long overdue.

"We and other members of Congress have repeatedly urged action on this specific issue," House Ways and Means Committee Chairman Charles Rangel and Rep. Sander Levin said in a joint statement that also promised committee action in coming months to strengthen U.S. trade enforcement tools.

(Additional reporting by William Schomberg in Brussels, Taiga Uranaka in Tokyo; Editing by John O'Callaghan)

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