Broader tariff cutting plans under scrutiny

Date: 05/06/1997

GOVERNMENTS are scrutinising a range of proposals from European Commission trade officials aimed at building on internationally agreed cuts in duties on information technology equipment.

Officials are working on a raft of options under which the EU would go further and faster than the tariff reductions it signed up to early this year as part of the World Trade Organisation (WTO) Information Technology Agreement.

These options should be adopted as a formal proposal by Commissioners within the few next days and are due to be presented to governments by the end of July, after they have formally cleared the internationally agreed WTO package of cuts.

Early soundings in Union capitals suggest some of the fresh duty cuts will be approved without a second thought.

Others, however, pose some painful problems, with winners and losers in different sectors of EU industry.

One idea being floated is for a faster series of tariff cuts than those foreseen under the WTO agreement. This provides for a three-stage reduction in duties, with a 50&percent; cut in July followed by 25&percent; cuts during the next two years.

Another is for the scrapping of certain 'nuisance duties' which cost more to collect than they are worth.

But problems are likely in agreeing the cut off point at which these duties - which are little more than symbolic - stay or go and the need for any other measures to keep track of imports.

A more controversial proposal is for some higher duties to be cut and new products brought into the process. Currently, for example, there are higher duties on some printer components than on the end-product. This makes it more expensive to produce printers within the EU and helps to export jobs out of the Union.

The costly tubes in most computer monitors are excluded from the current duty reductions, with trade officials considering whether this should be corrected with a unilateral round of reductions by the Union.

This suggestion pits the few EU producers of the tubes who oppose the idea against the wider range of companies producing monitors.

Dutch electronics giant Philips, which produces tubes in Austria, is in the first camp, with a number of Finnish information technology and UK computer companies in the second.

In a separate case, trade officials are still considering whether to safeguard local producers of semiconductors with protective measures against imports or allow users to buy at the cheapest world prices.

A recommendation is likely to go to the full Commission on 25 June, with big producers such as Germany's Siemens lobbying hard for minimum prices to be imposed on imports of D-RAM (dynamic access random memory) chips from Japan and South Korea. High-technology firms such as Sweden's Ericsson and Finland's Nokio are pushing hard for a free-for-all for these key computer components.

National officials following the dossier say Trade Commissioner Sir Leon Brittan's staff are working on a compromise package. One option being looked at is some sort of agreement under which Japanese and Korean companies would be forced to keep the Commission informed of the level and price of their exports to the EU so that anti-dumping duties could be imposed quickly if problems arose.

A similar agreement on computer chips has already been signed between Japan and the United States.