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U.S. industry eyes win in IT trade case versus EU

By Doug Palmer

WASHINGTON (Reuters) - U.S. technology companies hope a preliminary World Trade Organization ruling expected on Friday will persuade the European Union to drop tariffs on three products at the center of the dispute.

John Neuffer, vice president for global policy at the Information Technology Industry Council, said he was optimistic the WTO panel will agree that EU duties on flat-panel displays, multifunction printers and TV set-top boxes violated terms of the WTO's Information Technology Agreement.

"The primary purpose of the case is not just the three products that are under consideration, but to preserve the ITA," which starting in 1997 eliminated tariffs on most information technology products, Neuffer said.

The United States, Japan and Taiwan complained to the WTO in 2008 that EU customs authorities had reimposed tariffs on the three products after new features were added, such as hard drives to allow settop boxes to record TV shows.

Because information technology products are constantly being upgraded, eventually nothing would be covered by the pact using that standard, industry groups argued.

The EU imported about $11 billion worth of the three products from all suppliers in 2007, in many cases collecting tariffs of 6 to 14 percent.

The preliminary ruling is confidential and both EU and U.S. officials have said they would not comment until the final report becomes public later this year.

Brazil, China, Hong Kong, India, South Korea, the Philippines, Thailand, Vietnam, Australia, Costa Rica, Singapore, and Turkey have also signaled their interest in the case by reserving their third-party rights at the WTO.

"I think there is increasing recognition that the EC has been on the wrong side," said David Weller, a partner with WilmerHale who has represented U.S. industry in the case.

The European Court of Justice, in two recent cases involving tariffs on flat panel displays and multifunction printers, "found the commission was taking an overly narrow interpretation," Weller said.

The WTO challenge also appears to have discouraged EU customs authorities from impose tariffs on additional information technology products, Neuffer said.

One exception was an attempt last year to slap duties on smart phones, but that was turned back by stiff opposition from Nordic EU members, he said.

(Reporting by Doug Palmer; Editing by Sandra Maler)

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