WTO rules that EU Tariffs on certain high-tech goods are not allowed under GATT 1994

08 September 2010

The WTO Dispute Settlement Body recently ruled that EU Tariffs on certain High-Tech goods were in violation of the EC’s obligations under the Information Technology Agreement (ITA). The United States, Japan and Chinese Taipei claimed that the EC had signed up to allow certain information technology products duty-free access into the EU and that the imposition of import Tariff’s was subsequently prohibited by the ITA.

The Arguments

The US, Japan and Taipei all argued that a number of EC customs classification legal instruments and Regulations were inconsistent with the EC’s obligations under the GATT 1994 agreement. They argued that the ITA should account for technological changes and cover goods and technological advancements that were made in the years subsequent to the agreement. The complaint centred round three products in particular:

• Flat-panel screens
• Set-top boxes
• Multi-Function Printers

They argued that the products all fell within the scope of the ITA even though technologically they were more advanced than the ITA envisaged.

The EU tried to argue that the products concerned were outside of the scope of the ITA and thus “consumer goods” rather than “technology products”. One of the arguments made for example, was that flat-panel computer screens could also be used to watch videos and were thus more akin to television sets than IT products. After considering both arguments, the WTO finally reached the decision that the EU was in breach of its obligations under the ITA agreement by levying import tariffs against the products in question.

What will this actually mean?

In the short-term this ruling is unlikely to change a great deal. The EU has a 60-day window to make an appeal against the ruling. By all accounts, Brussels is extremely unhappy that this matter went to the litigation stage rather than being resolved through negotiation so it remains to be seen whether the EU will launch an appeal as a ‘delaying tactic’ or will even go so far as to attempt to renegotiate the original ITA agreement on the grounds that the original agreement has become dated and unable to function adequately. Should it attempt to do this, the EU is likely to face considerable opposition so until the EU issues its official response to the ruling, traders and practitioners alike will have to be patient.

 

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