EUROPEAN COMMUNITIES AND ITS MEMBER STATES – TARIFF TREATMENT OF CERTAIN INFORMATION TECHNOLOGY PRODUCTS
Document: Request for Consultations by the United States
Date: 2 June 2008
Document codes: WT/DS375/1; G/L/851
Complainant: U.S.
Respondent: EU
Third parties: Australia, Brazil, China, Costa Rica, Hong Kong, India, Japan, South Korea, Philippines, Singapore, Taiwan, Thailand, Turkey, Vietnam
Dispute stage: Panel
Agreements cited: Art. II:1, X:1, X:2, XXIII  GATT 1994

EUROPEAN COMMUNITIES AND ITS MEMBER STATES – TARIFF TREATMENT
OF CERTAIN INFORMATION TECHNOLOGY PRODUCTS

Request for Consultations by the United States

 The following communication, dated 28 May 2008, from the delegation of the United States
to the delegation of the European Communities and to the Chairman of the Dispute Settlement Body,
is circulated in accordance with Article 4.4 of the DSU.

 My authorities have instructed me to request consultations with the European Communities
("EC") and its member States pursuant to Article 4 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU") and Article XXII:1 of the General Agreement on
Tariffs and Trade 1994 ("GATT 1994") regarding the tariff treatme nt the EC and its member States
accord to set-top boxes with a communication function, flat panel displays, "input or output units,"
and facsimile machines.

The EC, in its Schedule of Concessions to the GATT 1994 ("Schedule"), and its member
States, in their Schedules of Concessions to the GATT 1994, committed to provide duty-free
treatment for these products. The EC and its member States granted these tariff concessions as a
result of the Information Technology Agreement ("ITA").

However, the EC and its member States im pose duties on these products. The measures
pursuant to which these duties are imposed include:

− Set-top boxes with a communication function
. On 7 May 2008, the EC published an
amendment to the Explanatory Notes to the EC's Combined Nomenclature (CN),
which provides that the duty-free heading CN 8528 71 13 ("set-top boxes with a
communication function") no longer includes set-top boxes with modems of certain
types ( e.g., Ethernet modems) or set-top boxes which "incorporate a device
performing a recording or reproducing func tion (for example, a hard disk or DVD
drive)."
1 As a result of this exclusion, the EC and its member States impose a duty on
these set-top boxes. In addition, the EC adde d an explanatory note to CN 8521 90 00
indicating that the subheading includes set -top boxes "which incorporate a device
performing a recording or reproducing func tion (for example, a hard disk or DVD
drive)."2 Products classified in CN 8521 90 00 are subject to an MFN duty of 13.9%.

1 Explanatory Notes to the Combined Nomenclature of the European Communities, 2008/C 112/03,
O.J. C 112 (7 May 2008), pp. 8-9.
2 Explanatory Notes to the Combined Nomenclature of the European Communities, 2008/C 112/03,
O.J. C 112 (7 May 2008), pp. 8-9.

EC member States assess duties on set-top boxes with a communication function.

− Flat panel displays (including LCD, el ectro luminescence, plasma and other
technologies). On 31 March 2005, the EC published Council Regulation (EC)
No 493/2005, stating that certain flat pane l displays using LCD technology that are
"capable of reproducing video images from a source other than an automatic data-
processing machine" are not covered by the ITA or by the Communication on its
implementation (Council Decisi on 97/359/EC of 24 March 1997).
3 O n
26 April 2005, the EC published Commission Regulation (EC) No 634/2005, stating
that flat panel displays with certain attr ibutes, including DVI, would be classified in a
dutiable tariff line.
4 On 29 December 2005, the EC published Commission
Regulation (EC) No 2171/2005, which also pr ovided that certain flat panel displays
would be classified in a dutiable tariff line if they had certain attributes, including
DVI.5 On 30 December 2006, the EC published amendments to the Explanatory
Notes to accompany CN 8471 60 80 and 8528 21 90. 6 Like the regulations, the
Explanatory Notes provide that flat panel displays with certain attributes, such as
DVI, may not be classified in the duty-free tariff line 8471 60 80 and would be
classified in a dutiable tariff line.
EC member States assess duties on flat panel displays. Furthermore, while the EC has temporarily
suspended the collection of duties on some flat panel displays, it appears to fail to accord tariff
treatment that is no less favorable than that provided for in its Schedule.

− "Input or output units" and facsimile machines
. In 1999, the EC published
Commission Regulation (EC) No 517/99, whic h provided that certain "output units"
would be classified in a tariff line with a 6% MFN duty. 7 On 9 March 2006, the EC
published Commission Regulation (EC) No 400/2006, which classified certain
"output units" or facsimile machines, under CN subheading 9009 12 00, as indirect
process electrostatic photocopiers.
8 The EC Customs Code Committee also issued a
statement indicating that "if a multifunctional device (fax, printer, scanner, copier) has
the capability of photocopying in black a nd white 12 or more pages per minute (A4
format) this indicates that the product is classifiable in heading 9009 as a
photocopying apparatus." 9 Consistent with that statement, on 31 October 2006, the
EC published Commission Regulation (EC) No 1549/2006, which provides that
certain "output units" or facsimile machin es capable of copying more than 12
monochrome pages per minute are classified in a dutiable tariff line.10
EC member States assess duties on certain "input or output units" and facsimile machines.

3 Council Regulation (EC) No 493/2005 of 16 March 2005, O.J. L 82 (31 March 2005), pp. 1-2.
4 Commission Regulation (EC) No 634/2005 of 26 April 2005, O.J. L 106 (27 April 2005), pp. 7-9.
5 Commission Regulation (EC) No 2171/2005 of 23 December 2005, O.J. L 346 (29 December 2005),
pp. 7-9.
6 Explanatory notes adopted in acco rdance with the procedure define d in Article 10 (1) of Council
Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common
Customs Tariff, 2006/C 332/05, O.J. C 332 (30 December 2006), pp. 7-9.
7 Commission Regulation (EC) No 517/99 of 9 March 1999, O.J. L 61 (10 March 1999), pp. 23-24.
8 Commission Regulation (EC) No 400/2006 of 8 March 2006, O.J. L 70 (9 March 2006), pp. 9-11.
9 Customs Code Committee, Tariff and Statistical Nomenclature Section, Report of conclusions of the
360th meeting of the Committee, TAXUD/555/2005-EN, Annex VII (March 2005).
10 Commission Regulation (EC) No 1549/2006 of 17 October 2006, O.J. L 31.10.2006
(31 October 2006), pp. 1, 541.

The United States considers that these measures, alone or in combination with Council
Regulation (EEC) No 2658/87 of 23 July 1987 on th e tariff and statistical nomenclature and on the
Common Customs Tariff, including all annexes thereto, as amended, appear to be inconsistent with
the EC's obligations under Articles II:1(a) and II: 1(b) of the GATT 1994 and its Schedule and with
the member States' obligations under Articles II:1(a) and II:1(b) of the GATT 1994 and their
Schedules and to nullify or impair benefits accr uing to the United States under the GATT 1994. In
addition, with respect to set-top boxes, the Tariff and Statistical Nomenclature Section of the Customs
Code Committee delivered favorable opinions with respect to the proposed amendments to the
Explanatory Notes contained in 2008/C 112/03 in Oc tober 2006 and May 2007, respectively. It did
not publish the amended explanatory notes in the EC Official Journal until 7 May 2008. Furthermore,
member States were applying duties to set-top box es using the approach specified in 2008/C 112/03
prior to 7 May 2008. The United States considers that these actions appear to be inconsistent with the
EC's obligations under GATT 1994 Articles X:1 and X:2.

We look forward to receiving your reply to this request and to fixing a mutually acceptable
date for consultations.