By Andreas Geiger - 06/25/08 06:57 PM EDT
Under pressure from high-tech companies, the Bush administration has asked for formal World Trade Organization (WTO) consultations with the European Union (EU) over barriers to U.S. computers, printers, video cameras and other products. This is the first step towards litigation in the WTO. The International Computing Technology (ICT) Industry and the participants of the WTO Information Technology Agreement (ITA) have been putting pressure on the Bush administration to act.
The ITA was established in 1996 as a tariff-cutting mechanism by the WTO. Duties for ICT products covered by the agreement were eliminated for all participants. The purpose of this WTO agreement is defined in Paragraph 1: “Each party’s trade regime should evolve in a manner that enhances market access opportunities for information technology products.”
The dispute has arisen in part because of the EU’s very literal interpretation of the agreement. The EU has threatened to introduce duties on a variety of ICT products as companies add additional functions that did not exist at the emergence in 1996. The problem is that this decade-old agreement has never been amended. For years the global ICT industry has been asking the EU to reassess these WTO trade rules on high-tech products to allow for some technological progress. In fact, shortly after the ITA was signed, a committee was established to consider revising the ITA to add additional categories. But nothing happened, and the EU has argued ever since that the products in question are not covered under the ITA.
Critics say the European Union has never really supported the idea of amending the agreement to account for the rapid development of high-tech products. Tech companies like Apple, Oracle, Intel or Cisco therefore assert that their products are being unfairly hit by high tariffs by the EU, even though the products should be protected by the ITA. These tech companies argue that European Union has interpreted the agreement inconsistently, undermining the foundation and the principles of the agreement. It appears to them that the EU is waiting for the development of products just so it can exclude them from the ITA.
The EU needs to be responsive to the ICT industry’s concerns. There are some really convincing arguments for the EU to act: the negative consequences of the European Commission’s introduction of tariffs to ITA products significantly outweigh the marginal benefits that some component manufacturers within Europe might receive. Consumers, in the end, will pay the price as the costs for ICT products rise due to import tariffs.
But for now, European decisionmakers give little indication that they want to revisit the ITA. Even so, taking the EU to WTO trade court may not be the best response; it will inevitably lead to a protracted fight that leads to sore feelings on both sides. It may be better for American companies to take their case directly to Brussels, the seat of the EU, and argue, through direct lobbying, why free-trade policies need to be supported.
Geiger is founder and managing partner of Alber & Geiger, a leading EU government relations law firm with offices in Brussels and Berlin. Before that, Geiger was head of the EU Law Center of Ernst & Young, and president and CEO of Cassidy & Associates Europe. He has written a handbook on lobbying the EU.