America accuses EU of 'act of bad faith' over import duties

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The Independent Online

A row between America and the European Union over import taxes on certain technology products spilled over into outright hostilities yesterday when the US government lodged a formal complaint with the World Trade Organisation.

The 1996 Information Technology Agreement (ITA), which has 71 signatory countries, was designed to boost trade by eliminating tariffs on hi-tech goods.

But the EU claims that some products – including flat-screen monitors, multi-function printers and cable and satellite boxes with internet access – have altered so much in the intervening years that they are now different products altogether. They therefore fall outside the agreement and should be subject to import duty.

But Susan Schwab, the US trade representative, speaking in Washington, said taxes on US-made goods exported to Europe, which were sometimes as high as 14 per cent, were an "act of bad faith" that threatened to undermine the entire treaty. It is a slippery slope because, extended to its logical conclusion, nothing will be covered by the ITA because technology by its nature evolves," Ms Schwab said. "Technology is organic and advances are made almost before the ink is dry on trade agreements. That is why the categories covered by the ITA are broadly defined. The EU should be working with the US to promote new technology, not finding protectionist gimmicks to apply new duties."

The EU is equally intransigent and insists the US allegations are "unfounded". According to EU law-makers, the ITA makes clear that duty-free status is not automatic but subject to periodic review by all signatories, and the US has refused repeated offers to update the treaty.

"The European Commission strongly rejects US claims that the EU is not fulfilling its obligations under the ITA," said a spokesman for the EU trade commissioner, Peter Mandelson. "It has also explicitly said it is willing to reassess the current ITA product coverage to reflect new technology in a negotiation with all ITA signatories."

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