Low-Def Policymaking at the EU on Trade

By May 29, 2008Trade

U.S. Trade Representative Susan Schwab has announced a challenge to the European Union’s duties being imposed on certain high-tech products, invoking the WTO’s dispute resolution since these products are supposed to be duty free under the WTO Information Technology Agreement. (Schwab news release here, and her statement is here.)

The EU’s behavior is your basic protectionism, but in trying to shield its high-tech manufacturers from competitors it violates a trade agreement that sought to encourage global trade and innovation. Specifically, the products included in the technology agreement but now facing duties.

  • Cable or satellite boxes capable of accessing the Internet
  • Flat panel displays for computers
  • Certain computer printers that can scan, copy or fax.
  • The EU’s action would, for example, redefine computer monitors that can receive video signals to be television sets, hitting them with a 14 percent duty. And the stakes are high: Schwab said global exports of these products are estimated at more than $70 billion.

    As the NAM’s John Engler said in a news release,

    If the EU is permitted to make its own definitions of what is covered, everyone else will do so too – and pretty soon the Information Technology Agreement will just be history. Exports of high technology goods such as integrated circuits and related products are the largest U.S. export. Maintaining an environment that supports the U.S. high tech manufacturing sectors is critical to the future of U.S manufacturing.

    You would think the EU has learned by now that walling yourself off from the world is no way to encourage innovation. Computers are morphing into cell-phones are transmogrifying into televisions becoming who-knows-what and the EU thinks it gains an edge by keeping out new products its consumers want? In the short term, perhap its manufacturers benefits, but in the long term protectionism invites stagnation.

    Of course, it’s not our concern if the EU adopts stupid policies that damage its member countries. That’s their business, especially since no politicians here in the United States regard the European Union as a superior model for trade or labor policy, right? But when the EU violates agreements and harm manufacturers based in the United States, it is time to act – and the WTO provides us a rules-guided venue in which to do so.

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