RealTime IT News

U.S., EU Spar Over Tech Taxes

The United States and European Union traded shots Wednesday in a dispute over imports of certain technology goods that the U.S. claims are tax-free under World Trade Organization law.

U.S. Trade Representative Susan Schwab charged that the EU is defying its responsibilities under the 1996 Information Technology Agreement, or ITA, which holds that certain tech products are exempt from international duties and taxes. The United States filed a complaint with the WTO, appealing for formal consultation on the matter with the EU. Japan co-signed the complaint.

"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 EU fired back that its customs classifications are in line with the ITA, and that it is willing to revisit the original stipulations of the law to address how technology has changed.

"We oppose the idea that there is an automatic extension of the ITA coverage as technology develops," an EU official told InternetNews.com, pointing out that the United States has refused to come to the table to update the products covered under the ITA.

Even if some of the technologies in question are not explicitly named in the original language of the 14-year-old bill, the United States is arguing that it is flexible enough not to require a formal renegotiation.

"The agreement as drafted took all of this into consideration," Assistant U.S. Trade Representative Sean Spicer told InternetNews.com. "It was signed acknowledging that technology changes and the world grows."

Spicer defended the United States' stance against revising the law. He looks at Europe's position as a cynical ploy to exact trade concessions from the United States from a tit-for-tat negotiating process, while no reassessment is even needed.

"They're trying to take a second bite of the apple," he said.

The ITA, which now counts 71 nations as signatories, was drafted to ensure "market access opportunities for information technology products" by reducing trade barriers.

Internet-enabled satellite and cable boxes, flat panel monitors and more

The issue's central friction is a definition of terms. The U.S. complaint alleges that the EU has rejiggered its customs rules to begin taxing imports of goods that should be exempt under the ITA, namely certain Internet-enabled satellite and cable boxes, flat panel monitors and all-in-one printers. The United States estimates that global exports of the products in question amount to $70 billion.

In the case of the flat-panel monitors, for instance, Spicer argued that the EU has revised its customs classification because they have the ability to support external video devices, such as DVD players. But their core functionality has not changed, he said. If a device is classified as a computer monitor, it is exempt from import duties under the ITA. If it is classified a video monitor, it is not.

Spicer said that U.S. and EU trade officials had been discussing the issue for almost two years, but that it became apparent they were at an impasses, so the United States moved ahead with the formal complaint. Under ITA rules, if they do not reach agreement within 60 days, the United States and Japan can call for a panel to determine whether the EU is complying with the law.