ITA Violation Case against EU Stands. Whether Zero Tariff on Imports of Three IT Products to Europe Will Resume May be Determined July 2009 at the Eearliest.

Taiwan, the USA, and Japan jointly submitted the request under the WTO dispute resolution mechanism for disposition of EU’s alleged breach of the 1996 Information Technology Agreement (ITA).  A dispute resolution panel was formed on 23 September 2008 to hear the case and the matter now officially enters the proceedings.  Taiwan requests that the tariff-free status of the imports of three products to Europe be resumed.  The three products are LCD monitors, set top boxes with a hard disk, and multi-function printers.  The panel may decide the case in July 2009 at the earliest.

The EU canceled in 2006 the tariff-free status of certain IT products under the ITA by enforcing referential tax regulations.  The EU has done so by reason that the target products with strengthened or additional functionality over the original items under the ITA shall be remove from the coverage of the zero tariff treatment.  By operation of the said referential regulations, a 14%, 13.9% and 6% tariff is imposed on the import of the three above-mentioned products, which are the top three heaviest among the applicable rates.  An estimate shows that the value of the imports of the above three products affected in 2007 alone amounts to USD11 billion.  Taiwanese manufacturers of the three IT products marketed worldwide in their own brands or on OEM or ODM basis are substantially affected as well by the EU’s change of the tariff-free coverage.

Upon the announcement of the formation of the dispute resolution panel, eight other ITA signatories each requested to participate as a third party.  They are Brazil, Thailand, the Philippines, Vietnam, China, HK, Korea, and India.  The other ITA signatories have a period of 10 days to request for third-party participation in the case if they wish to do so.

According to the usual timeframe by which WTO dispute resolution panels have heard and decided dispute resolution cases, the complainant party shall submit the written complaint by early December 2008.  The panel will hold hearing(s) at the end of the year or early 2009.  The Office of Trade Negotiation, MOEA will form and dispatch a special legal team to represent Taiwan at the hearing(s).

This case is the first-ever in which Taiwan has requested the WTO for a dispute resolution panel to hear and decide on a trade dispute between Taiwan and another WTO member.  (2008.9)
/EMA