Debate over computer import tariffs

Date: 20/06/1996

By Elizabeth Wise

THE European Commission is considering Union-wide classification of a range of computer equipment to avoid rows with trading partners over import tariffs on computers.

A US complaint last month to the World Trade Organisation (WTO) that Ireland and the UK had pushed some computer hardware into higher tax categories by renaming them, and an earlier charge by Japan over the reclassification of CD-Rom drives into higher tariff brackets, have led to

the rethink.

Officials say Commissioners Mario Monti (tax and customs), Martin Bangemann (industry) and Sir Leon Brittan (trade) are working on a joint communiqué to present to their colleagues before the summer holiday.

“We need a global reflection on all these things,” said an aide to Monti. “If we take them on a case-by-case basis, we lose a consistent and global approach.”

The discussion will cover not only the impact of classification on foreign trade, but also its effect on EU industry and inconsistencies between customs rules within the internal market.

While the three Commissioners have nearly completed their reflections and plan to have a text ready in the next few weeks, it remains uncertain whether the full Commission will discuss the document before August. Once the proposed communiqué has been approved, it will be submitted to a committee of trade officials from EU member states.

Neither the Commission nor the committee are likely to take tariff decisions before November, when the World Customs Organisation is to discuss Local Area Network (LAN) equipment, PCTVs (personal computers that can be used as televisions) and CD-Rom drives.

But pressure is building from the US to get the matter cleared up soon. When Brittan met acting US Trade Representative Charlene Barshefsky last week in the margins of the EU-US summit in Washington, she brought up the issue. “We agreed to look at it further,” said a Brittan aide, who added: “The US is pressuring us to get it the way they want.”

Washington's envoy to the WTO complained last month that Ireland appeared to have reclassified networking equipment as telecoms devices, raising import duty on it to 7.5&percent; instead of the 3.5&percent; rate for computer equipment.

He also criticised London's move to label PCTVs as consumer electronics, which carry import tariffs of 14&percent;. In the absence of an EU decision on how to classify such equipment, member states may set their own tariff classifications on goods.