WRITTEN QUESTION E-1277/97 by Peter Pex (PPE) to the Commission (11 April 1997)

Subject: Classification of multimedia products

The Commission's plans to reclassify computer equipment by raising the tariffs on the import of electronic consumer goods or telecommunications hardware (LAN, CD-ROM drives, multimedia PCs and PC TVs) have unwelcome implications. As a result of the reclassification, the tariff will increase to some 14% in the year 2000. It would seem that all of this is an attempt to protect the market in electronic consumer goods and/or is intended to offset the loss in revenue resulting from the GATT tariff reductions. However, this reclassification may undermine the competitiveness of the IT industry located in the European Union, since it poses a direct threat to the development of the information society.

In addition, it is quite possible that third countries, in particular developing countries (the emerging markets for computer equipment), will follow the European Union's lead and raise their tariffs, with the result that European IT firms will lose export opportunities.

Is the Commission aware of the problem outlined above and to what extent has the problem been solved by the conclusion of the IT Agreement (ITA) hammered out at the recent WTO Ministerial Conference in Singapore? Has the Commission changed its view following the statement by the World Customs Organization (WCO) that the EU policy was not consistent with international legal principles?

Answer given by Sir Leon Brittan on behalf of the Commission (12 May 1997)

The question raises two issues - one on customs classification, the other on the reduction or elimination of customs duties. As explained below, the Commission considers these questions separate from one another.

On classification, the Community classifies products in conformity with the harmonised system (HS) rules and guidelines established by the World customs organisation (WCO). Classification regulations are issued to ensure an uniform application of the common customs tariff (CCT) by Member States. In interpreting the HS, the Commission ensures that these matters are dealt with on their merits, separate from the economic issues such as protection or the raising of revenue. International disputes over classification are handled by the WCO. The outcome of discussions often results in the WCO issuing an opinion on a specific product. The Community, unlike some of its trading partners, has always accepted such opinions and brought its classification practice into line, even where this has gone against the Community's stated position. This was the case, for example, when the issue of classifying CD-ROMS was recently the subject of such an opinion.

On customs duties, contrary to what may be implied in the question, the Commission is in favour of the multilateral elimination of customs duties for information technology (IT) products. It has been the main driving force behind such an objective with a view to reducing costs to Community industry and improving Community supplier access to third country markets. In this context, the Honourable Member is aware that the Commission, on behalf of the Community, successfully negotiated and reached agreement with all of the Community's important trading partners on an information technology agreement (ITA) to eliminate duties on an expansive and agreed list of IT products. The results of the ITA negotiations were approved by the Council on 13 December 1996 and the ITA was formally concluded on 24 March 1997. The first tariff reduction will take place on 1 July 1997. The products referred to in the question (local area network (LAN), CD (ROM) drives and computers with multimedia functions) are covered by the agreement and therefore their import tariffs will be eliminated by the parties to the agreement.