HONG KONG – The convergence of computer technology and consumer electronics threatens to collide with trade laws, groups representing technology companies said as officials from nearly 150 countries met for World Trade Organization talks.
The groups, which represented companies in all the major tech manufacturing countries except China, said they would ask trade ministers to organize negotiations to eliminate tariffs and nontariff barriers for electronics products such as televisions and DVD players. In 1997, WTO countries ratified an agreement that wiped out tariffs on computers and related information-technology products.
Now, many consumer-electronics products contain the same components as computers, such as hard drives and memory chips. But trade rules that are rooted in decades of countries trying to protect local electronics makers are being outmoded by the spread of digital technology.
"It's very difficult to make a distinction anymore between an IT product and a consumer product," Ann Rollins of the U.S. High Tech Trade Coalition said at a news conference with other electronics industry groups and companies, including International Business Machines Corp., Eastman Kodak Co. and Matsushita Electric Industrial Co., which manufactures under the Panasonic brand. "They should all have market access. They should all be duty free," Ms. Rollins said.
For instance, digital cameras were classified by WTO countries as an information-technology product, free under the 1997 agreement from tariffs and duties. Now, however, many digital cameras can also act as video camcorders, which are classified as consumer-electronics products that face duties as high as 15% in some countries.
"Convergence is driving customs officials crazy," said Melika Carroll, trade policy director for Intel Corp.
The chip maker demonstrated a prototype of a personal computer that acts as an entertainment center by recording and storing music and videos, attaching to a TV and responding to commands from a remote control rather than a keyboard. Under current trade laws, it's unclear whether the device would be considered an IT product that is free from tariffs or a consumer-electronics gizmo subject to them.
Even the existing duty-free treatment of computer products and components isn't free of problems for manufacturers. The U.S., Korea and Europe last year started charging duties on flash-memory chips built with circuits layered on top of each other, a newer type of design that allows such chips to store more data.
Flash chips built with single layers of circuits were part of the 1997 duty-free agreement. Chip makers recently won an agreement from trade officials to eliminate the duties on the multilayer chips, which are now common for higher-capacity memory cards used in PCs, hand-held computers and cameras. The agreement takes effect at the start of 2006.
With WTO negotiators expected to take up nonagricultural issues later in the week, the representatives of the electronics makers said they will urge trade ministers to create separate negotiations to address the technology-sector issues.
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