Taiwan wins against EU in WTO ruling on LCD imports

Taiwan’s LCD manufacturers could be set to save a ton of money, following a trade dispute against the EU which put allegedly unfair tariffs on the country’s panel industry. But industry experts say that this may only have minimal impact as it’s too little too late.

EU bodies said that larger LCDs are consumer products and placed a tariff on them, but the Geneva-based World Trade Organisation has now ruled that the EU should not be able to restrict LCD imports or other technology products.

It’s the first time Taiwan has filed a trade complaint since jointing the WTO back in 2002. Economics officials first got miffed about the unfair EU rulings back in June 2008 after LCD manufacturers started whinging about Europe. They claimed that the EU had been ignoring obligations under the 1994 WTO Information Technology Agreement when it demanded a 14 percent tariff on LCD panel imports that were bigger than 19 inches, and also those which shipped with HDI and DVI.

Suits at the EU said that because the products could be used with consumer kit like DVD players, game consoles and projectors, they should be considered consumer products. However, the manufacturers argued that they should be considered information technology products so they can carry on shipping duty-free under the trade agreement.

It’s thought, reports the Taipei Times, that the WTO siding with Taiwan could save local manufacturers up to NT $19.6 billion in tariffs, boosting competitiveness. To put that into perspective, last year Taiwan flogged NT $1.34 trillion in LCDs – and this was down from 2008. 

While this seems like a victory for Taiwan and a loss for the EU, a source in the know about this sort of thing tells us that the same day this measure got signed off, the EU got a break and a deal was done on distilled spirits such as French brandy in something disturbingly like a scratch our back, we’ll scratch yours sort of trade off. “This is just the way these work,” our source told us. The US, Taiwan and Japan wanted to flog its kit over in Europe while Europe wanted an easier route into shooting booze off into these markets.

The real money’s going to start coming in from the companies who have been paying that 14 percent duty even though they have known it was wrong from the start. We talked to Bob Raikes at Meko.co.uk who told us that tons of manufacturers will be getting their cash back on what they’ve been paying over the last forever. If customs say you’ve got to pay, then you can lodge an appeal. Then if you can ever prove that customs was wrong, you can get dosh back up to a certain amount of years. Raikes reckons that when the dust settles, companies are going to go back to customs and try to wrestle back dough.

And he told TechEye that for the overall LCD industry, it’s not going to have a huge impact. While manufacturers in Taiwan may save some money, it won’t make a huge difference. Some specialist suppliers will be able to import more cheaply. 

The real question here – and it’s been going on for a long time now – is when is a product a TV and when is it a monitor? A while ago the difference between a monitor and a TV was very obvious. When CRTs were shipping, monitors would have a sharp focus while TVs would be very bright.

With the advent of LCD the difference became blurred – LCDs are converged displays. The whole palaver wouldn’t have happened if displays didn’t converge, but the arrival of LCDs acted as that catalyst.

A few years ago, some people flogging and importing plasma TVs began to put tuners into their boxes, then the panel itself, and claiming that it was a monitor. The EU doesn’t like this sort of thing because the 14 percent tariff – which applies to all TVs with no exception – is in place to safeguard production and assembly in the region, much of it happening east of Germany. 

If this case had been settled four or five years ago, it would have had a massive impact. But the fact is, suppliers and manufacturers have been either biting the bullet and just paying the 14 percent duty, or they have managed to find workarounds. Not only that, Bob told us that over half the cost of products don’t come from LCDs themselves but are in metalwork and chips. So rather than full monitors being sent over completed from the factory of the world, they are actually being assembled in Eastern Europe – contrary to a lot of popular opinion, products don’t arrive all the way from Asia just as they are.

Raikes told us that the ongoing argument in Europe, which has been tediously carrying on as these things tend to for about seven years, can be oversimplified in laymens terms: the EU says anything with a widescreen or DVI is definitely a TV – although to anyone who’s remotely interested in tech it’s clear that this isn’t the definitive case.

The Dutch just last year* brought this up with the European Court of Justice and won against the EU commission, but it’s still going on – because although the EU’s loose definition of what constitutes a TV was ruled wrong, it still hasn’t managed to define what the clear difference is between that and a monitor.

While the EU has taken something of a beating, Bob thinks it’s still going to try to wriggle out of settling for duty free imports of public displays like airport or train terminal screens. 

* We’re told by a source that an official Dutch ruling was expected in September, but with Holland doing so well in the World Cup meetings have been delayed and postponed. After the entire team challenged the cast of Mortal Kombat in yesterday’s final they’re more likely to get things done – so watch this space.