The EU has operated a system of tariffs between six and 14 percent on a small range of technology goods that many other countries believe should fall under the 1996 Information Technology Agreement, when 70 countries, including EU members, agreed to eliminate duties on IT products, which would total several billion a year otherwise.
The EU, however, argued that certain products were not high-tech enough to fall under this Agreement and were thus subject to tariffs. These included flat-panel displays, set-top boxes, and ADP MFMs (all-in-one printers which can scan, fax, or copy in addition to printing).
A number of countries have been calling on the EU to reduce or abolish these tariffs for years, but considering that tariffs are worth several billion for these three types of products alone, it is not difficult to understand why the EU has been reluctant.
The three largest producers of technology products, the US, Japan, and Taiwan, were particularly vexed at the EU’s refusal to budge on the matter, bringing a case against it to the WTO in 2008. Now the WTO has made a ruling, accusing EU members states, which are also members of the WTO, of failing to meet WTO obligations.
The WTO has found that the EU “has acted inconsistently” with a number of articles set out in the 1994 General Agreement of Tariffs and Trade and recommended that the Dispute Settlement Body request the EU conform with its recommendations, which are to return to full compliance with the agreements its member states have already signed with the WTO.
If it fails to do this it may face possible WTO-mandated sanctions by the US, Japan, and Taiwan, which may in turn fuel a trade war that can only have a devastating effect on the world economy.
The EU has 60 days to appeal the WTO’s ruling.