EU moves to bring down the price of IT products

16 Sep 2008

The European Commission has presented a plan to the World Trade Organisation (WTO) that could see custom duties on certain IT products removed.

The Commission has proposed to expand and update the Information Technology Agreement (ITA), an existing trade deal between some of the world’s biggest trading powers that lowers the cost of IT products.

The proposal aims to take account of new products that have entered the market since the agreement was originally signed in 1996.

The Commission also wants to tackle non-tariff barriers “behind the border”, as well as problems caused by the failure of procedures provided for in the original ITA.

“The ITA remains a milestone duty-free agreement. But it risks being left behind after 12 years of technological development. We need an ITA for the 21st century that will continue to benefit our consumers and businesses,” said EU Trade Commissioner, Peter Mandelson.

The ITA was negotiated and signed in 1996, with the goal of expanding trade in IT and telecommunication products by eliminating tariffs on an agreed range of products.

The ITA initially had 14 signatories representing more than 90pc of world trade in IT products. This has since grown to a total of 43 signatories, representing 70 countries or separate customs territories and more than 97pc of world trade in IT.

The global trading system has seen an unprecedented expansion of trade in IT products since the signature of the ITA. IT products now account for over US$1,500bn of exports worldwide – one fifth of total world exports of manufactured products, up from US$600bn in 1996.

The European Commission has argued for some time that the ITA should be updated. The current agreement has reached its limits in solving issues such as the elimination of non-tariff barriers, the expansion of product coverage to take account of technological evolution and convergence and the expansion of its membership to include all major IT-producing countries.

The US, Japan and Chinese Taipei recently requested a WTO dispute settlement panel against the EU with respect to its tariff treatment of certain information technology products.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years