U.S. Seeks WTO Panel in Hi-Tech Row with EU

GENEVA (Reuters) -The United States asked the World Trade Organisation (WTO) on Mondayfor a dispute panel to settle a row with the European Union overtariffs on hi-tech goods, saying talks with Brussels had failed toreach an agreement.

But the EU rejected U.S. assertions that it was violating the termsof a 1996 WTO accord aimed at limiting barriers to hi-tech trade,suggesting it would fight the case stoutly.

Washington’s move marks an escalation in an increasingly rancorousdispute over the WTO’s Information Technology Agreement (ITA) whicheliminated duties on a range of high-tech goods from July 1997 toencourage trade.

Since 2005 the EU has re-imposed duties on new versions of computerscreens, multi-function printers and TV set-top boxes that can accessthe Internet, arguing they are now consumer products rather than purehigh-tech goods.

"We regret that formal consultations have not been successful inresolving our concerns over the duties that the EU is imposing onseveral high-tech products," U.S. Trade Representative Susan Schwabsaid in a statement from Washington.

"We believe that these duties are inconsistent with the EU’scommitments on these products, and that they discourage technologicalinnovation in the IT sector," she said.

In Brussels, a spokesman for Trade Commissioner Peter Mandelson saidthe United States was seeking to change the ITA through litigationwhile refusing EU suggestions that it agree to review the pact’scoverage with all its signatories.

Changing the accord "is not something we can negotiate bilaterally with the United States," he declared.

Japan and Taiwan joined the U.S. request for a panel. The requestwill be put to the next meeting of the WTO’s dispute settlement body onAugust 29, when under WTO rules the European Union will be able toobject, although it cannot block a panel at the second request.

Washington estimates that global exports of the products underdispute, which are made by companies like Hewlett-Packard Co (HPQ.N: Quote, Profile, Research, Stock Buzz) of the United States or Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) and Ricoh Co Ltd (7751.T: Quote, Profile, Research, Stock Buzz) of Japan, total more than $70 billion.

The U.S. statement said the EU was charging duties on the productsbecause they incorporated technologies that did not exist at the launchof the ITA, which now has 71 signatories.

"In effect the EU is taxing innovation — a move that could impaircontinued technological development in the information technologyindustry and raise prices for millions of businesses and consumers,"the U.S. statement said.

U.S. officials say the EU imports $11 billion of the three productseach year. The U.S. goods are mainly manufactured in countries such asChina and Malaysia but based on U.S. designs and engineering and soldunder U.S. brand names.

China, Singapore, Thailand and the Philippines, which all haveimportant electronics manufacturing sectors, also asked to join theconsultations that the U.S. requested on May 28 and are likely to jointhe dispute panel as third parties.

(Additional reporting by Darren Ennis in Brussels)

(Reporting by Jonathan Lynn; editing by Robert Evans and Robin Pomeroy)