EU wants to renegotiate IT trade agreement
The European Commission on Monday submitted a proposal to update and expand the Information Technology Agreement (ITA) as part of a dispute with the USA and Japan over import duties for IT products. By signing the agreement in 1996, the 43 signatory countries agreed to allow certain IT products to be traded duty-free. The EU is currently in dispute with other ITA states including the USA and Japan over application of the agreement. The USA has accused the Europeans of breaching the agreement by imposing tariffs on LCD screens, TV set top boxes and other products. In May the US Trade Representative (USTR) submitted a complaint to the WTO, which has set up an arbitration committee to look into the dispute.
The EU has previously stated that it would like to renegotiate the agreement and has now set out some initial proposals for doing so. The paper (PDF) sets out the goals for any possible renegotiation. According to the paper, Brussels would like to see the list of products covered by the agreement expanded. In addition, future developments should be taken into account automatically and further trade barriers should be dismantled. EU Trade Commissioner Peter Mandelson said "The ITA remains a milestone duty-free agreement." But he thinks there is a danger that the agreement has been left behind by twelve years of technical development, "We need an ITA for the 21st century." The Commission wants to start negotiations and bring them to a conclusion as rapidly as possible.
The dispute centres around the classification of new generations of devices which didn't exist in 1996. The US is unhappy about the EU imposing tariffs on imports of TV set top boxes, some LCD monitors and multifunctional copiers. US Trade Representative Susan Schwab estimates the value of imports into the EU in the affected categories at $70 billion. The EU defends its stance with the argument that newer LCD monitors are also able to process signals from TV receivers and DVD players and are therefore TV devices and therefore are not covered by the ITA agreement.
There was little movement from either side in the recent negotiation phase of the arbitration procedure, raising the likelihood of a decision having to be made by the WTO committee. The proposal from Brussels could be a first step in overcoming the current deadlock. Some persuasion may still required on the other side of the Atlantic. A USTR spokesperson told the Financial Times, "We are, of course, open to ideas for resolving the WTO dispute." In his opinion, if Europe is interested in duty-free trade in IT products, it's unclear why duty continues to be applied to the disputed products when imported into the EU. "Providing duty-free treatment to products already covered does not require a new negotiation."