An ITA for the 21st century

During the summer, the “long-simmering dispute over tariffs on IT products” heated up when the US lodged a formal complaint with the WTO against the EU’s tariffs. As I explained, the trouble stems from the fact that the 1996 Information Technology Agreement did not link its zero-tariff commitments to the harmonized product classification schedule. Moreover, technological progress inevitably renders old categorizations obsolete.

In a new ECIPE working paper, Iana Dreyer and Brian Hindley take an in-depth look at the agreement’s shortcomings that led to the current dispute over multifunction IT products and suggest how governments might bring the ITA up to speed. They say that new negotiations are necessary, though they want the current dispute to play itself out before the settlement panel (in contrast, the EU has perhaps seen negotiations as an alternative to litigation). The panel’s ruling regarding product classification might provide a basis for new negotaitions, which Dreyer and Hindley say should ambitiously cover all consumer electronics. I think it is going to be a while before any such negotiations get off the ground, given the current political and economic environment.