EU calls for rewrite of IT trade agreement

As tensions mount over the global trade in IT products, the European Commission has called for a broad discussion among all producer countries about what goods should and should not be slapped with customs duties, as well as talks on other barriers to trade, commonly called non-tariff barriers.

IT products now account for more than US$1.5 trillion in exports worldwide, around a fifth of total world exports of manufactured products, according to the Commission.

This is a sharp rise from US$600 billion in 1996, when the world's biggest IT producing countries signed the Information Technology Agreement (ITA), a pact aimed at reducing duties on devices used by corporations.

As trade in IT products has flourished, many of the technologies covered by the ITA have become common household goods, such as flat-screen monitors, photocopiers that also print documents and digital set-top boxes.

The European Commission has raised duties on many such items, arguing that they are no longer purely for businesses, and therefore shouldn't benefit from reduced duties.

In May the U.S. and Japan appealed to the global trade arbitrator, the Geneva-based World Trade Organization, over the E.U.'s duties on flat screens, set-top boxes and multifunction printer, all of which have evolved into common consumer goods over the past decade.

By formally asking for a review of the 12-year-old ITA, the E.U. hopes to preempt a costly trilateral trade dispute.

"We would be open to discussing duties on the sorts of products the U.S. and Japan are complaining about, but we want to do so in a multilateral forum, not just bilaterally," said Peter Power, spokesman on trade matters at the European Commission.

Japan and the U.S. have opposed multilateral discussions, preferring to take their complaints directly to the E.U., and now to the WTO.

"Now there are twin procedures going on at the WTO: litigation and multilateral discussions. The dynamics of the talks should be different. I think it will be very hard for the U.S. to reject the call for a review of the ITA now," Power said.

U.S. and Japanese trade departments weren't immediately reachable for comment.

EICTA, the European Information and Communications Technology Association, has warned about potential tensions in the trade of IT items for some years.

In addition to disputes about customs duties, it has warned that Europe and Japan could fall out over non-tariff barriers, such as complicated technical requirements for products, because Japan and South Korea have used such methods to keep European goods out of their markets.

In a recent paper, the EICTA said that Finnish mobile phone manufacturer Nokia has practically no presence on the Japanese market due to these local barriers, even though Japanese manufacturers are well established on the European market.

Non-tariff barriers aren't covered by the ITA but the European Commission wants them included in the WTO talks it is calling for.