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After months of threats, the United States filed a complaint May 28 with the World Trade Organization to force the European Union to stop taxing certain electronic products that the United States claims are exempt from the tariffs. Japan also filed a similar complaint against the EU.
According to U.S. Trade Representative Susan Schwab, the EU is imposing illegal tariffs on cable and satellite boxes that can access the Internet, flat-panel computer monitors, and certain computer printers that can also scan, fax and/or copy. Schwab said the products are exempt from tariffs under a 1996 WTO ITA (Information Technology Agreement).
The EU now classifies those products as consumer goods and therefore subject to the tariffs since they include newer technologies and added features. Global exports of these products were estimated at $70 billion in 2007.
“It is critical that the European Union live up to its ITA obligations instead of imposing new taxes and duties on innovative technologies,” Schwab said in a statement. “The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products.”
The complaint is the first step in the complex WTO resolution process. The parties now have 60 days to resolve the dispute. If those negotiations fail, the United States is entitled to request a WTO panel to determine if the EU is acting consistently with its WTO obligations.
Taxing Innovation
“In effect, the EU is taxing innovation-a move that could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers,” the Office of the United States Trade Representative said in a statement.
The United States and the EU have been discussing the issue for almost two years, including four rounds of informal discussions held by the WTO in Geneva.
“This case is about the EU’s systematic failure to live up to its international obligations,” Rhett Dawson, president of the U.S. trade group Information Technology Industry Council, said in a statement. “The EU’s willful disregard of its commitments harms America’s innovative high-tech firms and their workers, who face an uneven playing field in Europe because of the arbitrary tariffs.”
According to the SIA (Semiconductor Industry Association), the U.S. semiconductor industry is the second-largest exporter in the United States with 70 percent of its manufacturing base in the United States.
“Free and fair trade is vitally important to the health of the U.S. semiconductor industry,” SIA President George Scalise said in a statement. “We rely not only on open trade for semiconductor products but also for the electronic products that use semiconductors.”