Comments on: What does “for” mean? The US-European dispute over multi-function IT products http://www.tradediversion.net/archives/2008/08/what-does-for-mean-the-us-european-dispute-over-multi-function-it-products.html Commentary on development, globalization, and trade by Jonathan Dingel Mon, 08 Mar 2010 08:56:20 -0800 http://wordpress.org/?v=2.8 hourly 1 By: Global Conditions http://www.tradediversion.net/archives/2008/08/what-does-for-mean-the-us-european-dispute-over-multi-function-it-products.html/comment-page-1#comment-278 Global Conditions Thu, 21 Aug 2008 14:34:27 +0000 http://www.tradediversion.net/?p=929#comment-278 Thanks for this entry, Jonathan! The case is very complicated, and it is really not clear who is, in purely legalistic terms, right or wrong: the US or the EU. Economically it is of course quite absurd to to what the EU is doing. There was already a similar classification case in 1996-1997 on computers, where the appellate body couldn't ultimately prove the EU wrong:http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds62_e.htm . For me there are two main issues: 1) Differences in the fundamental approach to the ITA. The EU has always been rigid about its will to exlude many consumer electronics products such as TVs, DVDs, video cameras etc. It is simply sticking to its line. The "General Rules of Interpretation" provided with the Harmonized system stipulate that "goods consisting of different materials or made up of different components (...) shall be classified as if they consisted of the material or component which gives them their essential character". But what is the "essential character" of a contemporary LCD monitor? 2) It was probably a mistake to have a positive list of items to free from duties as a basis for the agreement. Given that many products were excluded, the negotiators haggled over a list of products classified at the detailed 6-digit-level (not the more generic 4-digit classification). They couldn't agree on everything, which explains the setup of Annex B. This means that Annex B was contentious from scratch. If the agreement is ever renegotiated to extend product coverage, then it might be wise to adopt a negative list, with, if necessary, precise exclusions. It might make life easier. Hope indeed that the International Economic Law and Policy Blog will provide us with extra insights! Thanks for this entry, Jonathan! The case is very complicated, and it is really not clear who is, in purely legalistic terms, right or wrong: the US or the EU. Economically it is of course quite absurd to to what the EU is doing. There was already a similar classification case in 1996-1997 on computers, where the appellate body couldn’t ultimately prove the EU wrong:http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds62_e.htm .

For me there are two main issues:

1) Differences in the fundamental approach to the ITA. The EU has always been rigid about its will to exlude many consumer electronics products such as TVs, DVDs, video cameras etc. It is simply sticking to its line. The “General Rules of Interpretation” provided with the Harmonized system stipulate that “goods consisting of different materials or made up of different components (…) shall be classified as if they consisted of the material or component which gives them their essential character”. But what is the “essential character” of a contemporary LCD monitor?

2) It was probably a mistake to have a positive list of items to free from duties as a basis for the agreement. Given that many products were excluded, the negotiators haggled over a list of products classified at the detailed 6-digit-level (not the more generic 4-digit classification). They couldn’t agree on everything, which explains the setup of Annex B. This means that Annex B was contentious from scratch. If the agreement is ever renegotiated to extend product coverage, then it might be wise to adopt a negative list, with, if necessary, precise exclusions. It might make life easier.

Hope indeed that the International Economic Law and Policy Blog will provide us with extra insights!

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