EUROPEAN COMMUNITIES AND ITS MEMBER STATES – TARIFF TREATMENT OF CERTAIN INFORMATION TECHNOLOGY PRODUCTS
Document: Request for the Establishment of a Panel by the United States, Japan and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
Date: 19 August 2008
Document codes: WT/DS375/8; WT/DS376/8; WT/DS377/6
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 the Establishment of a Panel by the United States, Japan and
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu

 The following communication, dated 18 Augus t 2008, from the delegations of the United
States, Japan and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Articles 4.7 and 6.2 of the DSU.

 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), the United States, Japan, and the Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu requested cons ultations with the European Co mmunities (EC) and its member
States regarding the tariff treatment the EC and its member States accord to certain information
technology products. The United States requested consultations with the EC and its member States on
28 May 2008, and the request was circulated on 2 June 2008 as document ,
Japan requested consultations with the EC and its member States on the same matter on 28 May 2008,
and the request was circulated on 2 June 2008 as document , The Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu requested consultations with the EC and its
member States on the same matter on 12 June 2008, a nd the request was circulated on 18 June 2008
as document ,

The United States and the EC and its member States held consultations on 25-26 June 2008
and 14-15 July 2008 in Geneva. Japan and the EC and its member States held consultations on
26 June 2008 and 16-17 July 2008 in Geneva. Th e Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu and the EC and its member States held consultations on 3 July 2008, 18 July 2008,
and 25 July 2008 in Geneva. Those consultations we re held with a view to reaching a mutually
satisfactory solution. Unfortunately, those consultations failed to find such a solution.

 Therefore, the United States, Japan, and the Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu, acting jointly and severally, each in the exercise of the rights accruing to it as a
member of the WTO, hereby request that a panel be established pursuant to Article 6 of the DSU and
Article XXIII of the GATT 1994 regarding the m easures specified below and any amendments or
extensions thereto as well as any related or implementing measures.

As participants in the Ministerial Declaration on Trade in Information Technology Products ,
or "ITA" (Information Technology Agreement),
1 the EC and its member States modified their
Schedules of Concessions to the GATT 1994 (EC Schedules) to reflect the commitments made under
the ITA.2 Such modifications became effective 2 July 1997. 3 Accordingly, the EC and its member
States shall grant duty-free treatment for flat panel displays, set-top boxes (STBs) with a
communication function, and "input or output units" of "automatic data processing machines" and
facsimile machines. However, as a result of the a pplication of certain EC measures, the EC and its
member States impose duties on these products.

Flat panel displays
 Customs authorities of EC member States impose duties on flat panel displays. The measures
at issue through which they do so include:
1. Council Regulation (EC) No. 493/2005 of 16 March 2005;
2. Commission Regulation (EC) No. 634/2005 of 26 April 2005;
3. Commission Regulation (EC) No. 2171/2005 of 23 December 2005;
4. Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as
amended;
4 and
5. Explanatory Notes to the Combined Nomenclature of the European Communities,
2008/C 133/01 (May 30 2008), alone or in combination with Council Regulation
(EEC) No. 2658/87 of 23 July 1987,
as well as any amendments or extensions and any related or implementing measures.5
On 2 July 1997, the EC modified Schedule LXXX – European Communities to the
Marrakesh Agreement Establishing the World Trade Organization (the Marrakesh Agreement).
Those concessions include the concession for "[i]np ut or output units...Other" as in HS item 8471 60
90. This subcategory carries a zero duty rate. The Schedule also provides in a headnote that "[w]ith
respect to any product described in or for Attachment B to the Annex to the Ministerial Declaration on
Trade in Information Technology Products, to the extent not specifically provided for in this
Schedule, the customs duties on such product, as we ll as any other duties and charges of any kind …
shall be bound and eliminated, as set forth in para graph 2(a) of the Annex to the Declaration,
wherever the product is classified." Attachment B includes "[f]lat panel display devices (including
LCD, Electro Luminescence, Plasma, Vacuum-Fluorescence and other technologies) for products
falling within this agreement and parts thereof." The bound duty rate for this product, as set forth in
HS items 8471 60 90, 8473 30 10, 8473 30 90, 8531 20 30, 8531 20 51, 8531 20 59, 8531 20 80, 8531

1 Ministerial Declaration on Trade in Information Technology Products , 13 December 1996
(WT/MIN(96)/16), see also Implementation of the Ministerial Declaration on Trade in Information Technology
Products, 2 April 1997 (G/L/160).
2 G/MA/TAR/RS/16 (2 April 1997).
3 WT/Let/156 (15 August 1997).
4 Including amendments adopted pursuant to Commission Regulation No. 1214/2007 of 20 September
2007.
5 Including the actual application by customs authorities of EC member States of a 14% customs duty
on imports of certain flat panel displays.

80 30, 8531 90 10, 8531 90 30, 9013 80 11, 9013 80 19, 9013 80 30 and 9013 90 10, and as specified
in the headnote, is zero.
As a result of these concessions, the EC and its member States are obliged to grant duty-free
treatment to flat panel displays. Nevertheless, the EC and its member States impose duties on these
products, as explained below.
On 31 March 2005, the EC published Council Regulation (EC) No 493/2005 which provides
that certain flat panel displays using LCD technol ogy that are "capable of reproducing video images
from a source other than an automatic data-process ing machine" are not covered by the ITA or the
Communication on its implementation (Council Decision 97/359/EC of 24 March 1997).
6
On 26 April 2005, the EC published Commission Regulation (EC) No 634/2005, which
provides that flat panel displays with certain attributes, including digital visual interface (DVI), would
be classified as dutiable.7
Also, on 29 December 2005, the EC published Commission Regulation (EC) No 2171/2005,
which also provides that flat panel displays with certain attributes, including DVI, would be classified
as dutiable.
8
On 20 September 2007, the EC published Co mmission Regulation 1214/2007, amending
Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and
on the Common Customs Tariff, and establishing Combined Nomenclature (CN) 8528 59 10 and
8528 59 90, which provided a duty rate of 14% on certain flat panel displays.
Furthermore, on 30 May 2008, the EC published an amendment to the Explanatory Notes to
the Combined Nomenclature of the European Co mmunities (2008/C 133/01) providing that flat panel
displays with certain attributes, such as DVI, would be classified as dutiable.
9
As a result, customs authorities of EC member States have been applying a 14% duty to
certain flat panel displays, instead of providing dut y-free treatment as required by the EC Schedules.
The United States, Japan, and the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu
consider that their commerce has been accorded treatment less favourable than that provided in the
EC Schedules, and that ordinary customs duties, or other duties and charges, in excess of those set
forth in the EC Schedules have been applied to ce rtain flat panel displays, inconsistent with the
obligations of the EC and its member States under Articles II:1(a) and II:1(b) of the GATT 1994.
While the EC has temporarily suspended the collectio n of duties on some flat panel displays pursuant
to Council Regulation (EC) No 493/2005 of 31 March 2005 and Council Regulation (EC) No
301/2007 of 22 March 2007, it fails to accord tariff treatment that is no le ss favourable than that
provided for in the EC Schedules. The measures at issue nullify or impair, within the meaning of
GATT Article XXIII, benefits accruing directly or indirectly to the United States, Japan, and the
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu under the GATT 1994.

6 Council Regulation (EC) 493/2005 of 16 March 2005, O.J. L 82 (31 March 2005), pp. 1-2.
7 Commission Regulation (EC) No 634/2005 of 26 April 2005, O.J. L 106 (27 April 2005), pp. 7-9.
8 Commission Regulation (EC) No 2171/2005 of 23 December 2005, O.J. L 346 (29 December 2005),
pp. 7-9.
9 Explanatory Notes to the Combined Nomenclature of the European Communities, 2008/C 133/01,
O.J. C 133 (30 May 2008), pp. 352-3.

STBs with a communication function
 Customs authorities of EC member States impose duties on STBs with a communication
function. The measures at issue through which they do so include:
1. Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as
amended;
10 and

2. Explanatory Notes to the Combined Nome nclature of the European Communities,
2008/C 112/03, (7 May 2008), alone or in combination with Council Regulation
(EEC) No. 2658/87 of 23 July 1987,
11

as well as any amendments or extensions and any related or implementing measures.12

On 2 July 1997, the EC modified Schedule L XXX – European Communities to the Marrakesh
Agreement. The Schedule provides in a headnote that "[w]ith respect to any product described in or
for Attachment B to the Annex to the Ministeria l Declaration on Trade in Information Technology
Products, to the extent not specifically provided fo r in this Schedule, the customs duties on such
product, as well as any other duties and charges of any kind…shall be bound and eliminated, as set
forth in paragraph 2(a) of the Annex to the Decl aration, wherever the product is classified."
Attachment B includes "set-top boxes which have a communication function: a microprocessor-based
device incorporating a modem for gaining access to th e Internet, and having a function of interactive
information exchange." The bound duty rate for this product, as set forth in HS items 8517 50 90,
8517 80 90, 8525 20 99, and 8528 12 91, and as specified in the headnote, is zero.
As a result of these concessions, the EC and its member States are obliged to grant duty free
treatment to STBs with a communication function. Nevertheless, the EC and its member States
impose duties on these products, as explained below.
On 7 May 2008, the EC published an amendment to the Explanatory Notes to the EC's CN,
which provides that the duty-free heading CN 8528 71 13 ("set-top boxes with a communication
function") does not include STBs with modems of certain types (e.g., Ethernet modems) or STBs
which incorporate a device performing a recording or reproducing function (e.g ., a hard disk or DVD
drive).
13 Moreover, in the same amendment, the EC added an explanatory note to accompany CN
8521 90 00 indicating that this subheading includes STBs which incorporate a device performing a
recording or reproducing function (e .g., a hard disk or DVD drive). 14 The duty rate for CN 8521 90
00 is 13.9%.
As a result, customs authorities of EC member States have been applying duties on STBs with
a communication function, instead of providing duty -free treatment as required by the EC Schedules.
The United States, Japan, and the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu

10 Including amendments adopted pursuant to Commission Regulation No. 1214/2007 of
20 September 2007.
11 See also the decisions of the Customs Code Committee discussed on page 5, infra.
12 Including the actual application by customs authorities of EC member States of customs duties on
imports of STBs with a communication function.
13 Explanatory Notes to the Combined Nomenclature of the European Communities, 2008/C 112/03,
O.J. C 112 (7 May 2008), pp. 8-9.
14 Explanatory Notes to the Combined Nomenclature of the European Communities, 2008/C 112/03,
O.J. C 112 (7 May 2008), pp. 8-9.

consider that their commerce has been accorded treatment less favourable than that provided in the
EC Schedules, and that ordinary customs duties, or other duties and charges, in excess of those set
forth in the EC Schedules have been applied to STBs with a communication function, inconsistent
with the obligations of the EC and its member States under Articles II:1(a) and II:1(b) of the
GATT 1994. The measures at issue nullify or impair, within the meaning of GATT Article XXIII,
benefits accruing, directly or i ndirectly, to the United States, Japan, and the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu under the GATT 1994.

In addition, with respect to STBs with a communication function, 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 October 2006 and
May 2007, respectively. It did not publish the amended explanatory notes in the EC Official Journal
until 7 May 2008. Furthermore, EC member States were applying duties to STBs using the approach
specified in 2008/C 112/03 prior to 7 May 2008. We consider that these actions are inconsistent with
the EC’s obligations under Articles X:1 and X:2 of the GATT 1994.

MFMs ("multifunctional digital machines")
15
 Customs authorities of EC member States impose duties on MFMs. The measures at issue
through which they do so include:
1. Commission Regulation (EC) No. 517/1999 of 9 March 1999;

2. Report of the Conclusions of the 360 th meeting of the Customs Code Committee,
Tariff and Statistical Nomenclature Section, TAXUD/555/2005-EN (March 2005);

3. Commission Regulation (EC) No. 400/2006 of 8 March 2006; and

4. Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as
amended,16

as well as any amendments or extensions and any related or implementing measures.17

On 2 July 1997, the EC modified Schedule L XXX – European Communities to the Marrakesh
Agreement, including the concessions for "[f]acsimile machines", as contained in HS 8517 21 00 and
"input or output units" of "autom atic data processing machines", as in HS category 8471 60. The
bound duty rate for both products is zero.
As a result of these concessions, the EC and its member States are obliged to grant duty free
treatment to MFMs. Nevertheless, the EC and its member States impose duties on these products, as
explained below.

15 In this panel request, the United States, Japan and the Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu use the term "MFMs" to refer to machines which perform two or more of the
functions of printing, copying, or facsimile transmission, capable of connecting to an automatic data processing
machine or to a network (including devices commerci ally known as MFPs (multifunctional printers), other
"input or output units" of "automatic data processing machines", and facsimile machines).
16 Including amendments adopted pursuant to Commission Regulation No. 1214/2007 of
20 September 2007.
17 Including the actual application by customs authorities of EC member States of a 6% duty on imports
of certain MFMs.

On 9 March 1999, the EC published Commis sion Regulation (EC) No 517/1999, which
provides that certain MFMs would be classified as indirect process electrostatic photocopiers under
CN 9009 12 00 with a duty rate of 6%.
18
In January of 2005, the Customs Code Committe e issued a statement providing that "if a
multifunctional device has the capability of photocopyin g in black and white 12 or more pages per
minute (A4 format)," it would be classified in heading 9009 as photocopying apparatus. 19
Photocopying apparatus classified in heading 9009 was subject to a 6% duty.
On 9 March 2006, the EC published Commis sion Regulation (EC) No 400/2006, which
provides that certain MFMs would be classified as photocopying apparatus, and would be subject to a
6% duty.20
On 31 October 2006, the EC amended Council Regulation (EEC) No. 2658/87 of 23 July 1987
on the tariff and statistical nomenclature and on the Common Customs Tariff, creating CN 8443 31 10
("[m]achines performing the functions of copying a nd facsimile transmission, whether or not with a
printing function, with a copying speed not exceeding 12 monochrome pages per minute"),
CN 8443 31 91 ("[o]ther; [m]achines performing a copying function by scanning the original and
printing the copies by means of an electrostatic engine ") and CN 8443 31 99 ("[o]ther"). By virtue of
these subcategories, MFMs with copying speeds of more than 12 monochrome pages per minute and
with an electrostatic engine are classified under CN 8443 31 91. The duty rate for CN 8443 31 91 is
6%.
21
As a result, customs authorities of EC member States have been applying a 6% duty on
imports of certain MFMs, instead of providing du ty-free treatment as required by the EC Schedules.
The United States, Japan, and the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu
consider that their commerce has been accorded treatment less favourable than that provided in the
EC Schedules, and that ordinary customs duties, or other duties and charges, in excess of those set
forth in the EC Schedules have been applied to certain "input or output uni ts" of "automatic data
processing machines" and facsimile machines, inconsis tent with the obligations of the EC and its
member States under Articles II:1(a) and II:1(b) of the GATT 1994. The measures at issue nullify or
impair, within the meaning of GATT Article XXIII, benefits accruing directly or indirectly to the
United States, Japan, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
under the GATT 1994.

The United States, Japan, and the Separate Customs Territory of Taiwan, Penghu, Kinmen
and Matsu request, pursuant to Articles 4.7 and 6 of the DSU, that a panel be established with
standard terms of reference as set out in Article 7.1 of the DSU, in order to examine the matter
described above.