A World Trade Organization panel has ruled that European Union tariffs on imports of widely used electronic products violate an international trade agreement, government officials familiar with the decision said Monday.

The U.S., Japan and Taiwan brought the complaint in 2008, arguing that the EU's duties on flat-panel computer screens, multifunction printers and certain cable boxes violate the Information Technology Agreement, a 1996 pact now signed by 70 nations that largely eliminated import tariffs on a broad range of electronics. The EU imported $11 billion of these products in 2007, according to the U.S., making the case one of the biggest trade disputes now before the WTO.

The panel delivered its final report Friday to the European Commission, the EU's executive arm, and the three complaining countries, finding that the EU tariffs largely violate the agreement, government officials said. The report will remain confidential until it has been distributed to all of the WTO's member countries.

The case is the second major loss for the EU in recent months at the WTO, after the body ruled several weeks ago that a broad range of government subsidies given to aerospace company Airbus were illegal. An EU commission spokesman declined to comment and the Office of the U.S. Trade Representative didn't respond to requests for comment.

The products at the center of the dispute have been subject to EU tariffs ranging from 6% to 14% after the EU claimed that technical innovations placed them outside the scope of the technology trade agreement. For example, the EU imposes tariffs of 14% on imports of flat-screen monitors that can also be connected to a computer.
Cable boxes that also include certain kinds of modems, DVD drives or hard disks face a 14% tariff. Multifunction printers and fax machines that print at higher speeds are subject to a 6% tariff under the EU's rules.

The EU argues that the information-technology deal must be updated to account for the proliferation of new products on the market. But the industry and the three governments, joined by at least 10 others, argued this interpretation is absurd given the pace of innovation in the sector.

"By the EU's logic, over time virtually every product in the ITA would innovate itself out of product coverage. That was clearly not the intent of the agreement," said John Neuffler, vice president of global policy at the Information Technology Industry Council, the U.S. lobby group for industry giants such as Hewlett-Packard <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=HPQ>  Co., Canon <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=CANN.EB>  Inc. and Sony <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=SNE>  Corp.

Since the pact entered into force in 1997, global trade in information-technology products has doubled to $1.5 trillion annually, according to the ITIC.

"It is viewed as a critically important, if not the most important, trade agreement in the sector," Mr. Neuffler said.

Source: The Wall Street Journal