New tariff deal to boost electronic components trade

Date: 04/12/1997

By Chris Johnstone

A FRESH round of moves to boost trade in electronic components and equipment is taking shape as the EU, its main trading partners and manufacturers finalise their positions on new cuts in tariffs and begin to look at other ways of increasing business.

The Union only has until the end of the year to put forward its ideas on how the tariff-cutting Information Technology Agreement (ITA) should be followed up, even though the ink is barely dry on the last deal thrashed out in March by the World Trade Organisation (WTO).

The next agreement should give a small but significant bonus to trade, with duty cuts expected to save 2-3 billion ecu a year in a sector whose global turnover already stands at more than 500 billion ecu and is set to soar as the information society takes off.

Informal talks have already identified some areas which look likely to benefit.

EU, US and Japanese producers and users of printed circuit boards (used widely in information technology) have jointly called for the equipment which fills in circuit boards to be freed from duties.

Photocopying machines and the fibres in fibre-optic cables are other products which the Union would like included in a new agreement.

"Fibre-optic cables were covered last time round, but not the fibres that go in them. It was rather an important omission given their importance for information highways," said one official, who added: "It seems likely that they will be put in this time."

However, electronic consumer goods such as televisions, video-recorders and satellite recording equipment are likely to be left out in spite of rearguard action by some EU countries.

Commission officials are also beginning to focus on non-duty barriers to trade with the aim of winning world-wide acceptance for a new framework which would cut bureaucratic delays associated with the import and export of electronic and information technology products.

The Union has tabled proposals at the WTO which would scythe through existing national clearance procedures for such products.

In essence, countries would be asked to drop their own checks on the acceptability of new products and to accept instead suppliers' guarantees that they would not create problems - known as declarations of conformity.

"This would be an extremely important step," said an EU official.

As an opening move in its bid to win support for this concept, the Union has called for the WTO to check how far such suppliers' declarations are currently used to smooth world trade.

The US has been an enthusiastic supporter of the EU initiative. However, somewhat strangely given its massive trade surplus in electronic goods, Japan has been stalling progress until further studies have been carried out by Tokyo on its implications for the sector.

In principle, Japan signed up to a simplification of non-tariff barriers when it declared at the EU-Japan summit in June that it was in favour of relaxing certification rules in appropriate sectors.

European electronics companies, grouped together in the European Association of Consumer Electronics Manufacturers (EACHEM), say acceptance of the simplification measure is likely from developed countries, but developing ones might be reluctant.

"It is a big step to take products on trust because of a manufacturer's declaration. We, however, have already had experience of this in the single market and it works," said EACHEM chairman Hugh Peltor.