European Tariffs Spur Infotech Lobbying

U.S. government officials have become tangled in an international mediation as they attempt to eliminate European tariffs on infotech products that industry executives say cost them roughly $1 billion a year.

The main hurdle is the reluctance of the European Commission to end its tariffs on imported semiconductors, computers and computer components, said Jan Goebel, a spokeswoman for the Washington-based Information Technology Industry Council. The commission is the central bureaucracy of the 15-nation European Union. The tariffs raise the price of U.S.-built infotech products sold in Europe by 2 percent to 14 percent, depending on the product.

U.S. companies are particularly concerned by the decision of some European customs officials to levy a 21 percent tariff on imported computers, said Goebel. The 21 percent tariff was imposed on some imported computers after customs officials decided the computers could serve as entertainment devices rather than as business tools, she said.

The European tariffs add $1 billion to the price of U.S .information technology sold in Europe, said Meghan Rainey, chief lobbyist for the council, whose membership consists of major U.S companies such as IBM Corp. and Compaq Computer Corp.

In negotiations, Japanese, Canadian and U.S. officials have offered to reduce their remaining infotech tariffs to zero by 2000, said Rainey. To complete the agreement, "we need to get the Europeans back to the table," she said.

But "Europe wants something in return" for eliminating the infotech tariffs, said Ella Krucoff, a Washington-based spokeswoman for the European Community. For example, European officials would like full participation in the U.S.-Japanese semiconductor agreement signed Aug. 2, she said.

The agreement was signed in Vancouver, Canada, and is intended to promote U.S.-Japanese trade in semiconductor chips. Under the agreement, trade cooperation between the two countries will be aided by a new industry-operated Semiconductor Council and a government-operated Global Government Forum.

The August agreement replaced the 1991 U.S.-Japanese semiconductor trade agreement that had expired July 31. The old agreement helped boost the U.S. share of the Japanese market for semiconductors from 16.7 percent in 1992 to 25.4 percent in 1995. European leaders had objected to the 1991 agreement saying it hurt European semiconductor manufacturers seeking to sell computer chips in Japan.

But regardless of the semiconductor agreement, a European decision to drop tariffs would help Europe's economic strength by reducing the cost of computers purchased by European-based companies, said Mary Irace, vice president for trade issues at the Washington-based National Foreign Trade Council.

This week, U.S. officials, led by Charlene Barshefsky, the U.S. trade representative, met with European officials to discuss the tariff dispute. The European delegation was led by Sir Leon Brittan, the European Union's commissioner for trade policy.

If the United States can't cement an agreement with Europe, it could try to forge a similar no-tariff agreement with Asian countries, said Rainey.

In November, U.S. and Pacific government leaders are scheduled to meet at the Asia-Pacific Economic Council's November summit in the Philippines.

"If we can't get [the Europeans] aboard, we'll go to other countries," such as Korea and Indonesia, she said.