US complains over European tech taxes

The US has protested about the imposition of tariffs on high-tech products by the EU, alleging that such taxes are in breach of a Word Trade Organisation agreement.

The Office of the U.S. Trade Representative (USTR) , as well as the government of Japan, have filed complaints with the WTO, alleging that the EU is illegally imposing import duties on cable and satellite boxes that can access the Internet, flat-panel computer monitors and some multifunction computer printers. Those products represented a $70 billion global export market in 2007, the USTR said in a news release.

"It is critical that the European Union live up to its [WTO] obligations instead of imposing new taxes and duties on innovative technologies," said US Trade Representative Susan Schwab. "The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products."

Representatives of the EU did not immediately respond to a request for comments.

US complaints against the EU have been simmering for several months.

The USTR alleged that the import duties violate the WTO's Information Technology Agreement (ITA), a pact negotiated in 1996 that eliminated import tariffs on a wide range of IT products designed for businesses.

The EU believes, however, that the agreement didn't eliminate tariffs on consumer products, and the EU has maintained import tariffs of 6 to 14 percent on the disputed products. As the price of flat-screen monitors and other products covered in the complaint have dropped in recent years, consumers have increasingly purchased them. The EU has begun to re-classify some tech products as consumer goods.

The European Commission, the EU's representative body on trade matters, has defended this practice. The EU classifies products on the basis of "objective criteria," Peter Power, the commission's trade spokesman, said in a September statement. "US claims of EU re-classifying products in violation of ITA commitments are unfounded," he said then.

The Information Technology Industry Council (ITI), a US tech trade group, disputed the EU's reading of the WTO agreement. "There's never been a distinction - never was, never will be - between consumer lines and business lines of products in the ITA," said John Neuffer, ITI's vice president for technology and trade. "It's always been about high-tech products."

The EU's attempts to classify the disputed products as consumer goods is an "artificial distinction," Neuffer added.

The USTR suggested the EU is "taxing innovation." The EU's actions "could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers," the USTR said in a statement.

ITI praised the USTR's decision to file a complaint. It's "very clear" these products should be covered by the WTO agreement, ITI said.

"In our view, the EU has been systematically ticking off products that are covered by the ITA and dumping then out of the ITA," Neuffer said. "We see this as an assault on free trade ... and we also see this as an assault on innovation."

"This case is about the EU's systematic failure to live up to its international obligations," Rhett Dawson, ITI's president, said in a statement. "The EU's willful disregard of its commitments harms America's innovative high-tech firms and their workers, who face an uneven playing field in Europe because of the arbitrary tariffs."