Europe demands IT import duty rethink

The European Commission wants the number of IT-related goods that are exempt from import duties around the world to be increased

It has asked the World Trade Organisation to review and expand an agreement on waiving charges for computing equipment.

The Information Technology Agreement (ITA) of 1996 is out of date and losing relevance, the European Commission has said, and needs to be widened in scope and more strictly applied if it is to have the desired effect.

The ITA has been a source of friction between the Commission and the US in recent weeks, with the US, Japan and Taiwan claiming that the EU was placing tariffs on goods that are covered by the agreement.

The ITA was agreed in 1996 as a measure to bolster trade in IT and telecoms equipment by eliminating customs duties on goods traded between signatories. At its inception, 14 countries were signatories. Now it has 43 signatories, accounting for 97% of the world's trade in IT goods.

Now, though, it needs to be heavily revised to ensure that it covers goods that have been invented since 1996.

"The ITA remains a milestone duty-free agreement," said EU Trade Commissioner Peter Mandelson. "But it risks being left behind after twelve years of technological development. We need an ITA for the 21st century that will continue to benefit our consumers and businesses."

In a discussion document on how the ITA could be improved, the Commission said that a significant problem is the fact that some countries have barriers to trade that are not customs duties so are not covered by the ITA. The document called non-tariff barriers "a significant obstacle for trade in IT products".

Another problem is the number of products covered by the ITA, the Commission said. It said that the methods agreed to include new products have not worked.

The result is that many products are excluded from the benefits of ITA. This is also true of the increasing number of products which have more than one function, making them difficult to classify, the Commission document said.

"In sum: the ITA has been very successful, but experience so far has shown that none of the mechanisms contained in the Agreement has really helped it to keep pace with technological progress in products or to dismantle existing [non-tariff barriers]," it said.

The Commission has asked the WTO to eliminate those barriers, to review the products covered by the ITA and to include some major producers of IT equipment who are in countries outside of the ITA's coverage.

"The Commission is seeking a prompt launch and conclusion of negotiations to update the ITA within a matter of months, not years," said a Commission statement. "Such a move would provide an additional boost in trade in these products and be the best way to address the increasing challenges of technological development and convergence."

The US, Japan and Taiwan have objected to the European Commission's charging of import duty on cable and satellite boxes that can access the internet, flat panel computer monitors and computers peripherals such as printers, copiers, faxes and scanners.

The Commission has argued that the products have changed so much in the years since 1996 that they are no longer covered by it, a claim disputed by the US, Japan and Taiwan.

The Commission's statement about reform of the ITA did comment on that dispute. "The Commission has maintained that a change in ITA criteria can only be made on the basis of consensus amongst all ITA participants, as provided by the agreement itself, and not as a result of litigation by some members," it said.