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(Sep 27, 2010) On September 21, 2010, the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) formally adopted a panel ruling that condemns the European Union for keeping in place import tariffs on high technology goods in three categories: flat-panel displays, Internet-accessible cable and satellite set-top boxes, and multifunctional digital machines (e.g., devices that can fax, scan, and/or copy documents). (Daniel Pruzin, WTO Adopts Ruling Condemning EU Tariffs on High-Tech Goods After Appeal Declined, WTO REPORTER (Sept. 22, 2010), Bureau of National Affairs online subscription database, The DSB action followed the EU's decision not to appeal the ruling of the three-member panel. The EU must now negotiate with the complainants –Chinese Taipei, Japan, and the United States – to set a deadline for its implementation of the findings. (Id.)

Under the WTO's 1996 Information Technology Agreement (ITA), the EU had promised to give the covered imported goods duty-free treatment; its tariffs on the imports violated those commitments. Member States of the ITA are required "to eliminate import tariffs on some 180 covered information technology products such as semiconductors, computers, and telecommunications equipment." (Id.) According to the complainants, the EU was still imposing a 13.9% tariff on set-top box imports, a 14% import tariff on flat panel displays, and 6% duty on the multifunctional devices, which are classified as photocopiers. (Id.; Ministerial Declaration on Trade in Information Technology Products [Text of ITA, including Annexes A & B on the products covered], WTO website,, & Information Technology Agreement, WTO website, (both last visited Sept. 23, 2010).) The EU contended that the products had new functions and technical capabilities since the ITA's adoption, making them no longer subject to the EU's tariff commitments under the agreement. (Pruzin, supra.)

However, the panel ruled "that while WTO members may propose precise, even exclusive terms to define a tariff concession, or qualify or limit the scope of coverage, the EU's concessions did not contain any such limitations." Nor did the panel accept the EU's contention that the products were "objectively different" from goods specifically listed for coverage under the ITA and therefore not automatically eligible for duty-free treatment. (Id.) The panel noted that there was "no evidence" to confirm the EU statement that it planned to remove some of the measures at issue on the import tariffs for certain types of flat-panel displays and multifunctional devices, and so the panel "proceeded on the basis that the measures were still in force." The panel added that this EU decision, in connection with suspending application of import duties on the flat panels, failed to make the measure consistent with the EU commitment to duty-free treatment, "because there remains the potential of deleterious effects on competition" due to the ongoing uncertainty over the goods' tariff status. (Id.)

United States officials told the DSB that the implications of the DSB panel ruling went importantly beyond the three products concerned. On the one hand, they stated, the ruling affirmed that the scope of ITA tariff concessions is "not dictated by classification technicalities" and that product coverage under the ITA "is not, as the EU argued, circumscribed by the state of technology at the time the concession is made"; on the other, the ruling "provides an important foundation for Doha [Round] negotiations on duty-free treatment for additional electronics products." (Id.)

Chinese Taipei, Japan, and the United States had jointly and severally requested the establishment of a panel on August 18, 2008; the DSB established it on September 23, 2008, and Brazil, China, Hong Kong, India, Korea, the Philippines, Thailand, and Viet Nam reserved their third-party rights. Australia, Costa Rica, Singapore, and Turkey subsequently also reserved their third-party rights. On January 23, 2009, the United States, Japan, and Chinese Taipei reserved their third party rights in the respective disputes. Because of "the complexity of the matter and the fact that the proceedings involve three complainants," the panel was unable to complete its work within six months from the date of the panel's composition on January 22, 2009. (European Communities and its Member States — Tariff Treatment of Certain Information Technology Products [Dispute DS377], WTO website, (last visited Sept. 23, 2010).) It took until August 16, 2010, for the panel reports to be circulated to WTO Members. (Note: The three panel reports on the disputes WT/DS375, WT/DS376, and WT/DS377 of the complainants the United States, Japan, and Chinese Taipei, respectively, were issued in a single document.) (Id. [on right hand side of webpage, click on "all documents" under "Find all documents from this case," then click on the first item, Part 1 "Preview (HTML)"].)

Author: Wendy Zeldin More by this author
Topic: Foreign trade and international finance More on this topic
Jurisdiction: World Trade Organization More about this jurisdiction

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Last updated: 09/27/2010