EU-US relations face screen-test

Resentment between the EU and the US is building over the application of a decade-old trade agreement excluding certain information technology (IT) goods from tariffs.

EU trade negotiators claim that the US is trying to extend the agreement to consumer electronics goods without going through formal procedures at the World Trade Organization (WTO).

Technological developments have blurred the boundaries of the Information Technology Agreement (ITA), an opt-in zero-tariff regime adopted in 1996, which currently has 70 signatories representing 97% of the IT sector.

Consumer products, such as cameras and LCD monitors, have become much more sophisticated and functional over recent years, leading to confusion over whether they can be classified as IT products exempt from duties.

The EU claims that it has come under pressure from the US formally to consider such products as exempt even though member states often waive duties voluntarily. "The US administration has promised industry to get something through the back door without going through the front door," said a European Commission official.

US negotiators, said the official, are avoiding a return to formal negotiations at the WTO in Geneva because of the prospect of strong opposition from countries such as India. "As long as there are concessions, they don’t want to come to Geneva," she said.

IT industry association CompTIA yesterday (6 June) called on the Commission to resist the urge to clamp down on transatlantic imports of electronic goods with tariffs of 14%. "The EU will benefit from an open trade in IT products. Why would they want to reclassify products to exclude them from the open tariffs regime of the ITA?" asked vice-president Robert Kramer.

He claimed that the EU may have been looking for "something to negotiate in multilateral discussions". That ‘something’ could be inclusion in the ITA regime of fibre-optic products, which the EU failed to secure in 1996 after a successful lobbying campaign by US electronics firm Corbing.

CompTIA, which represents firms in the US as well as in the EU, warned that any attempts to restrict the scope of the ITA would lead to a ‘chain reaction’ of protectionist barriers being mounted in a sector of increasing importance to the world economy.

Resentments are expected to simmer on while the Doha round of multilateral trade talks remains blocked. Until a breakthrough is achieved on the issue of agricultural subsidies, the main bone of contention in WTO talks, progress on other dossiers is likely to remain frozen.

Resentment between the EU and the US is building over the application of a decade-old trade agreement excluding certain information technology (IT) goods from tariffs.