EUROPEAN COMMUNITIES AND ITS MEMBER STATES – TARIFF TREATMENT OF CERTAIN INFORMATION TECHNOLOGY PRODUCTS
Document: Request for Consultations by Japan
Date: 2 June 2008
Document codes: WT/DS376/1; G/L/852
Complainant: Japan
Respondent: EU
Third parties: Australia, Brazil, China, Costa Rica, Hong Kong, India, South Korea, Philippines, Singapore, Taiwan, Thailand, Turkey, U.S., 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 Japan

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

 Upon instruction from my authorities, I hereby wish to convey the request of the Government
of Japan for consultations with the European Communities and its member States (hereinafter referred
to as "the EC") 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 EC's tariff treatm ent of multifunctional printers ("MFPs"), liquid
crystal display ("LCD") monitors, and set-top boxes ("STBs") with a communication function.

As a participant in the Ministerial Declaration on Trade in Information Technology Products ,
or "ITA" (Information Technology Agreement)
1, the EC committed itself to eliminate its tariffs on
certain information technology products, such as "i nput or output units" including printers and LCD
monitors, facsimile machines, and STBs with a comm unication function. Specifically, as to printers,
the EC's ITA commitments are set forth in ITA Attachment A, Section 1 (HS96 8471.60 "input or
output units") and Attachment B ("Network e quipment: … input or output units ….").
2 A s t o
facsimile machines, the EC's ITA commitments are set forth in ITA Attachment A Section 1 (HS96
8517.21 "facsimile machines") and Attachment B ("Ne twork equipment: … input or output units
…."). 3 As to LCD monitors, the EC's ITA commitments are set forth in ITA Attachment A, Section I
(HS96 8471.60 "input or output units") and Att achment B ("Flat panel displays (including
LCD…)...."). 4 As to STBs with a communication function, the EC's ITA commitments are set forth in
ITA Attachment B ("Set top boxes which have a communication function…").

 The EC modified its Schedule of Concessions ("EC Schedule") to reflect the commitments it
made under the ITA.
5 Such modifications became effective on 2 July 1997. 6 Accordingly, under
Schedule LXXX, the EC has the obligation not to apply any customs duties and other duties and
charges of any kind, within the meaning of Article II: 1(b) of the GATT 1994, with respect to the
above products.

1 Ministerial Declaration on Tr ade in Information Technology Products, 13 December 1996
(WT/MIN(96)/16).
2 See id.
3 See id.
4 See id.
5 G/MA/TAR/RS/16 (2 April 1997).
6 WT/Let/156 (15 August 1997).

 This request for consultations is intended to address current EC laws, regulations, policies and
practices, as well as any changes or amendments to those laws, regulations, policies or practices that
may be in process or may be implemented in the future.

MFPs

 With regard to MFPs, the measures at i ssue include Commission Regulation No. 517/1999 of
9 March 1999, Report of conclusi ons of the 360th meeting of the Committee held in Brussels from
26 January 2005 to 28 January 2005
7, Commission Regulation No. 400/2006 of 8 March 2006,
Commission Regulation No. 1549/2006 of 7 October 2006, Commission Regulation No. 1214/2007 of
20 September 2007, and the EC Combined Nomenclature (CN) for 2008 ("2008 CN") 8. These
measures provide the basis for other measures at is sue in regards to MFPs, including the past, present
and/or future application by the EC of a six pe r cent customs duty on imports of MFPs, in excess of
the EC's tariff commitment for "input or output units" or facsimile machines.

 The 2008 CN is binding on all EC member states. The 2008 CN established CN code
8443.31, which provides as follows:

CN code Description Conventional rate
of duty (%)
1 2 3
8443

Printing machinery used for printing by means of plates, cylinders
and other printing components of heading 8442; other printers,
copying machines and facsimile ma chines, whether or not combined;
parts and accessories thereof:

8443 31

- - Machines which perform two or more of the functions of printing,
copying, or facsimile transmissi on, capable of connecting to an
automatic data-processing machine or two a network:

8443 31 10

- - - Machines performing the func tions of copying and facsimile
transmission, whether or not with a printing function, with a copying
speed not exceeding 12 monochrome pages per minute

Free
 - - - Other:
8443 31 91

- - - - Machines performing a copying function by scanning the original
and printing the copies by means of an electrostatic print engine

6
8443 31 99 - - -Other Free

 As a result of the measures at issue, th e EC classify certain MFPs under subheading
8443.31.91 of the CN. The EC thus apply a six pe r cent duty on such products, which appears to be
inconsistent with the EC's commitment not to ap ply any customs duties and other duties and charges
of any kind, within the meaning of Article II:1 (b) of the GATT 1994, with respect to all "input or
output units" and facsimile machines under the EC Schedule and ITA. Japan is challenging the
aforementioned EC measures as such, as well as the way in which those tariff schedules have been
and will be applied so as to impose higher than permitted import duties.

7 Customs Code Committee, Tariff and Statistical Nomenclature Section (Mechanical), Report of
conclusions of the 360th meeting of the Committee held in Brussels from 26 January 2005 and 28 January 2005,
Brussels, March 2005, TAXUD/555/2005-EN.
8 Commission Regulation (EC) No. 1214/2007 (20 September 2007). The 2008 CN went into effect on
1 January 2008.

LCD Monitors

 With regard to LCD monitors, the measures at issue are Council Regulation No. 493/2005 of
16 March 2005, Commission Regulation No. 634/ 2005 of 26 April 2005, Commission Regulation
No. 2171/2005 of 23 December 2005, Commission Regulation No. 1549/2006 of 7 October 2006,
Uniform Application of the Combined Nomenclature No. 2006/C332/05 (published
30 December 2006), Commission Regulation No. 1214/2007 of 20 September 2007, and the 2008
CN. These measures provide the basis for other me asures at issue in regards to LCD monitors,
including the past, present and/or future appli cation by the EC of a 14 per cent customs duty on
imports of LCD monitors, in excess of the EC's tari ff commitment for "input or output units" or flat
panel display devices.

 Under Council Regulation No. 493/2005, Co mmission Regulations 634/2005 and 2171/2005,
the EC classified certain LCD monitors as dutiable "video monitors".

 Furthermore, as part of the amendments inco rporated into the 2008 CN, the EC established
CN code 8528.51 and 8528.59, both of which provide as follows:

CN code Description Conventional rate
of duty (%)
1 2 3
8528

Monitors and projectors, not incorporating television reception
apparatus; reception apparatus for television, whether or not
incorporating radio-broadcast receivers or sound or video recording
or reporducing apparatus:

 …
 -Other monitors:
8528 51 00

- - Of a kind solely or principally used in an automatic data-
processing system of heading 8471

Free
8528 59 - - Other:
8528 59 10 - - - Black and white or other monochrome 14
8528 59 90 - - - Colour 14 (1)

(1) Customs duty autonomously suspended, until 31 December 2008, for monitors with a diagonal measurement
of the screen of 48,5 cm or less and with an aspect ratio of 4:3 or 5:4 (TARIC code 8528 59 90 30).

 As a result of the measures at issue, the EC classify certain LCD monitors under subheading
8528.59.10 or subheading 8528.59.90 and, thus, apply a 14 per cent duty on such products. The
application of a 14 per cent duty appears to be inc onsistent with the EC's commitment not to apply
any customs duties and other duties and charges of an y kind, within the meaning of Article II:1 (b) of
the GATT 1994, with respect to "input or output units" and flat panel display devices under the EC
Schedule and ITA. Japan is challenging both the foregoing EC measures as such as well as the way in
which those tariff schedules have been and/or w ill be applied so as to impose higher than permitted
import duties.

STBs with a communication function

 With regard to STBs with a communication function, the measures at issue are Explanatory
Notes to the Combined Nomenclature of the European Communities, 2008/C 112/03 (7 May, 2008),
Commission Regulation No. 1214/2007 of 20 Sept ember 2007 and the 2008 CN. These measures
provide the basis for other measures at issue in regards to STBs with a communication function,
including the past and/or future application by the EC of a 13.9 per cent customs duty on imports of
STBs with a communication function, in excess of the EC's tariff commitment for STBs with a
communication function.

The EC established CN code 8521.90 and 8528.71, both of which provide as follows:

CN code Description Conventional rate of
duty (%)
1 2 3
8521 Video recording or reproducing apparatus, whether or not
incorporating a video tuner:

 …
8521 90 00 - - Other: 13.9
8528

Reception apparatus for television, whether or not
incorporating radio-broadcast receivers or sound or video
recording or reproducing appa ratus: Not designed to
incorporate a video display or screen: Video tuners:

8528 71 13 -- Apparatus with a microprocessor-based device
incorporating a modem for gaining access to the Internet, and
having a function of interactive information exchange, capable
of receiving television sign als ("set-top boxes with
communication function")
Free

 The measures at issue provide that the subheading 8528.71.13 does not include set top boxes
with modems of certain types (e.g., Ethernet m odems) or set top boxes which incorporate a device
performing a recording or reproducing function (e .g., a hard disk or DVD drive) and that the
subheading 8521.90.00 includes set top boxes which incorporate a device performing a recording
function. As a result, the EC classify certain STBs with a communication function under subheading
8521.90.00 of the CN. The EC therefore apply a 13.9 per cent duty on such products, which appears
to be inconsistent with the EC's commitment not to apply any customs duties and other duties and
charges of any kind, within the meaning of Article II:1 (b) of the GATT 1994, with respect to all
STBs with a communication function under the EC Schedule and ITA.

WTO Inconsistency of the EC Measures at Issue

 The Government of Japan considers the fo regoing measures at issue taken by the EC
concerning MFPs, LCD monitors, and STBs with a co mmunication function appear to be inconsistent
with the EC's obligations under the relevant provisions of GATT 1994 and the Marrakesh Agreement
Establishing the World Trade Organization (the Marrakesh Agreement) including, but not limited to,
Article II of the GATT 1994. The measures in question also nullify or impair , within the meaning of
Article XXIII:1 of the GATT 1994, benefits accruing to Japan directly or indirectly under the
GATT 1994.

 The Government of Japan reserves the right to raise further facts and claims during the course
of consultations.

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