Since the adoption of the ITA, it has been recognized that the emergence of new products, more sophisticated products, and even convergence products would create new challenges with regard to product classification. In recent months for example, the ITA Committee of the WTO has discussed the appropriate tariff classifications for, and potential ITA coverage of, such diverse products as flat panel displays, paging alert devices, printed circuit assemblies, proprietary format storage devices, encapsulation equipment for semiconductor assembly, repeaters, multifunction printers, wafer probers, and apparatus for the wet etching, and/or developing, stripping, or cleaning semiconductor wafers.
In several notable cases however, questions regarding product classification have led ITA signatories to unilaterally act to discontinue duty-free treatment for some products. In a prominent example, the EU has acted to deny certain flat panel displays duty-free treatment that they had formerly received, and which they still receive from other ITA signatories.
Even though the underlying technology of the product may have existed at the time of adoption of the ITA, the fact that the additional functions or applications to those products did not, seems to be the primary justification for unilaterally classifying such products as outside the scope of the ITA and therefore subject to duties. There is speculation that the EU or other entities may take the same action with regard to other multi-functional IT products, such as printers, set top boxes, or digital cameras.
A number of U.S. technology trade associations have expressed concern that the unilateral removal of products previously accorded duty-free status conflicts with the consensus nature of the WTO in general and the ITA in particular. It conflicts with the expressed intent of the ITA to ‘enhance market access opportunities for information technology products.' It arbitrarily increases taxes on consumers and businesses, stifles development, and undermines the agreement generally.
In July 2006, the U.S. requested that the Chair of the WTO's ITA committee (Martin Pospisil of the Czech Republic) conduct informal consultations with committee members. The chair would be asked to solicit views on any issues or concerns about ITA products that members feel may not be receiving the duty-free treatment to which they are entitled. The ultimate goal is to reach a consensus on how to ensure duty-free treatment for such products will be maintained. If a member proposes a change in the customs classification of a product that would have the effect of reclassifying imports for which the member was providing duty free-treatment under the ITA into dutiable tariff codes in its customs schedule, it is proposed that the member notify other members of the proposed change in order to afford an opportunity for comment and consultations.
EIA seeks seek support for a position that opposes unilateral withdrawal of products and classes of products from ITA coverage, and is in favor of consultation among ITA signatories with regard to such questions. Further, EIA believes that ITA signatories should abide by the terms of the ITA, with regard to enhanced market access opportunities for IT products.
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