Maintenance of the ITA

1
Maintenance of the ITA

• Renee Stein, Microsoft
• U.S. High-Tech Trade Coalition
• Presentation to the WTO ITA Committee
• Geneva, January 18, 2007

2
Role of the WTO

• ITA is a WTO trade policy instrument
• Not a Customs agreement
• ITA product coverage expressed using both HS
  codes and product descriptions
• Customs classification codes should implement the
  ITA, not dictate coverage
• Tariff codes covered by the ITA need to be
  updated to take into account the intent of the
  ITA negotiators (HS 2007)

3
Objectives of WTO Maintenance Initiative

• Ensure that Signatories continue to bind and
  eliminate customs duties for products covered
  under the existing Agreement to
• Meet objectives
• Avoid obsolescence

4
Maintenance Issues

• Tariff codes set forth in Attachment A reflect
  the 1996 version of Harmonized System
  Nomenclature
• HS codes should be updated (1996?2002?2007)
• Certain signatories have classified newer
  versions of ITA products under tariff codes not
  covered by the Agreement
• However, such products retain the essential
  characteristics and functions of ITA-covered
  goods
• Signatories should continue to bind and
  eliminate duties on such products, per paragraph
  2(a) of Agreement

5
ITA Maintenance Buckets
Multifunction Products
Same Technology, New Application
Technical Corrections
6
Bucket 1 Multifunction Products
Laser Multifunction Units Set-top Boxes Flat
Panel Monitors
7
Example Laser Multifunction Printers

• Multifunction printers combine functions of
  computer printers, scanners, fax machines and
  copiers
• Introduced to market in early 1990s
• Each function, when presented as separate
  machine, is covered under the ITA, except for
  laser-based copiers
• Multi-function printers not expressly dealt with
  in ITA
• Multi-function printers marketed today should be
  covered under ITA
• Continue to be primarily printers
• Still incorporate secondary functions of
  scanning, facsimile transmission and copying
• Use same basic laser technology, although they
  can now carry out their functions faster and
  yield better resolution output
• Some countries classify laser-based,
  multi-function printers under the tariff code for
  traditional stand-alone laser copiers
• In these jurisdictions, laser multi-function
  units are not receiving duty-free treatment, per
  the ITA, though they should be

8
Facsimile Machines Treated as Multifunction
Units

• Stand-alone facsimile machines
• By design, can produce a print or copy
• Recently been characterized as multifunction
  units
• Classified under new tariff provision for
  multifunction units as of January 2007
• Some jurisdictions, reclassified stand-alone
  facsimile machines classified as laser copiers
• Stand-along facsimile machines are listed on
  Attachment A to the ITA by tariff number (8517.21
  - Facsimile Machines (2006))
• Stand-alone facsimile machines have not changed
  in the ten years since the ITA was signed

9
Example Set-Top Box
1996
2006

• Tuning
• Decoding
• Decrypting
• RF or Telco Modem

• Tuning
• Decoding
• Including HD
• Including H.264
• Decrypting
• Cable or Ethernet Modem
• DVR Functionality

• Tuning
• Decoding
• Including HD
• Decrypting
• RF or Cable Modem
• DVR Functionality

Covered under Attachment B Duty-free regardless
where classified in HS Some signatories want to
reclassify as video recording device Recording
capability is ancillary Current technology meets
ITA STB definition
10
Flat Panel Computer Monitor

• ITA covers ADP displays, but not televisions
• ADP Flat Panel Displays are increasingly popular
  with PC users (Annex B to ITA)
• However, in many jurisdictions, not they are not
  ITA eligible if they have a fugitive., or non
  principal use, e.g., camcorders, digital cameras,
  set top boxes

11
Bucket 2 Technical Corrections
ITA Products Unintentionally Excluded
Ink-jet and Toner Cartridges Batteries Network
and Spectrum Analyzers
12
Parts of ITA Products

• ITA covers tariff codes for parts and accessories
  of many IT products
• Including, for example, tariff codes for parts
  and accessories of computers and printers.
• Certain parts of ITA products not classified in
  tariff code for parts
• Because a separate tariff code more specifically
  covers the goods
• Some countries classify printer cartridges under
  tariff codes for ink or toner
• Tariff codes covering batteries not covered under
  the ITA
• Even though they are parts for ITA products, such
  as laptop computers
• Some parts provisions for ITA products were
  overlooked and not accorded duty free status
• Such unforeseen omissions should be fixed via
  technical correction

13
Network and Spectrum Analyzers

• Network and spectrum analyzers are testing
  equipment for telecommunication networks
• Attachment B specifically covers network
  equipment
• Attachment A of the ITA covers subheading
  9030.40
• instruments and apparatus for measuring and
  checking, specially designed for
  telecommunications
• Intent was to cover testing equipment for
  telecommunications networks
• But, some signatories do not classify network and
  spectrum analyzers under subheading 9030.40
• Signatories should provide duty-free treatment
  for testing equipment for telecommunications
  networks, regardless of where classified
• Suggest technical correction

14
Bucket 3 Same Technology, New Applications

• Computers

15
Example

• Computers clearly covered under the ITA
• When ITA entered into force, computers were
  generally used in an office environment
• Over time, speed of computers has greatly
  increased
• Rendering them suitable for new uses
• e.g., playing movies, digital photos, storing and
  playing music
• Computers must continue to be covered by the ITA,
  regardless of their intended use

16
Conclusions

• ITA coverage dictated by Agreement, not customs
• Implementation via tariff, but should not dictate
  coverage
• Over last ten years, ITA products have evolved in
  ways that may impact their product classification
• Tariff codes covered by the ITA need to be
  updated consistent with HS Rewrite (HS 2007)
• Maintenance issues include
• Multi-function products that retain the
  characteristics of ITA goods
• Technical corrections
• ITA covered products being put to new uses
• Expansion should be addressed at a later stage

17
Q A