An EU Trade Dispute

Running Head: AN EU TRADE DISPUTE

An EU Trade Dispute Aron Blesch Walden University May 18, 2014

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AN EU TRADE DISPUTE

2 Abstract

The dispute settlement body of the World Trade Organization (WTO) negotiates agreements concerning global trade disputes. This short paper examines a trade dispute over import duties on modern IT products that occurred in 2010 between the U.S., Japan, and Taiwan, which were complainants and the EU, the respondent.

AN EU TRADE DISPUTE

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After years of dispute between the U.S., Japan, and Taiwan as complainants and the EU the respondent, the dispute settlement WTO panel ruled in August 2010 that local import duties on such devices as set-top boxes for televisions, computer flat screen monitors, and all-in-one printers, violate WTO law and practices (DS 375, 376, & 377). The four parties were among the countries that had committed themselves in 1996 to abolish import duties on information technology products in order to eliminate trade barriers for the hardware required to use the Internet and global communication; the significance the Internet has had on international trade is of noteworthy in this case. The EU had previously argued that a computer monitor could also function as a television, which would not be covered by the agreement for duty-free treatment. Moreover, printers that could be used as a fax machine, scanner and copier, were classified as copiers and were thus removed from agreed upon tariff concessions for printers. Conversely, the United States argued that the EU incorrectly categorized these novel devices, which in the EU’s view would not be covered by the agreement of 1996. This is why an up to 14% import duty was then levied on the products concerned. For the EU to renegotiate the original agreement, it was required that the products involved be treated by all trading partners in a uniform way. Until that occurred, the EU could continue to charge import duties in congruence with WTO law. In 2010 the dispute settlement body of the WTO found that the 1996 agreement must be interpreted in a manner that also covers areas affected by IT products, and the EU had wrongly imposed import duties for these goods. It is estimated that the complainants and subsequently consumers had paid up to one billion euros in duties (plus VAT) in recent years.

AN EU TRADE DISPUTE

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In this particular dispute a fundamental decision was taken, regarding the extent to which innovation and technical progress may lead to tariff concessions. The EU, which is committed to a now legally binding Charter of Fundamental Rights, in lieu of the Lisbon Treaty entering into force, had acted contrary to practice in the area of tariff legislation and WTO law. The WTO panel found that certain tariff provisions had been known by the EU months before their published application. The EU was found to have breached a principle contained in WTO law, which states that binding regulations must accessible to all concerned parties in a transparent manner.

AN EU TRADE DISPUTE

5 References

Dispute settlement: Dispute DS375 European communities and its member states — Tariff treatment of certain information technology products. (n.d.). World Trade Organization. Retrieved from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds375_e.htm. Dispute settlement: Dispute DS376 European communities and its member states — Tariff treatment of certain information technology products. (n.d.). World Trade Organization. Retrieved from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds376_e.htm. Dispute settlement: Dispute DS377 European communities and its member states — Tariff treatment of certain information technology products. (n.d.). World Trade Organization. Retrieved from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds377_e.htm.