The United States asked the World Trade Organization (WTO) for a dispute panel to settle a row with the European Union over tariffs on hi-tech goods, saying talks with Brussels had failed to reach an agreement.

But the EU rejected US assertions that it was violating the terms of a 1996 WTO accord aimed at limiting barriers to hi-tech trade, suggesting it would fight the case stoutly.

Washington’s move marks an escalation in an increasingly rancorous dispute over the WTO’s Information Technology Agreement (ITA) that eliminated duties on a range of high-tech goods from July 1997 to encourage trade.

Since 2005 the EU has re-imposed duties on new versions of computer screens, multi-function printers and TV set-top boxes that can access the Internet, arguing they are now consumer products rather than pure high-tech goods.

“We regret that formal consultations have not been successful in resolving our concerns over the duties that the EU is imposing on several high-tech products,” US Trade Representative Susan Schwab said in a statement from Washington.

“We believe that these duties are inconsistent with the EU’s commitments on these products, and that they discourage technological innovation in the IT sector,” she said.

In Brussels, a spokesman for Trade Commissioner Peter Mandelson said the United States was seeking to change the ITA through litigation while refusing EU suggestions that it agree to review the pact’s coverage with all its signatories.

Changing the accord “is not something we can negotiate bilaterally with the United States,” he declared.

Japan and Taiwan joined the US request for a panel. The request will be put to the next meeting of the WTO’s dispute settlement body on Aug. 29, when under WTO rules the European Union will be able to object, although it cannot block a panel at the second request.

Washington estimates that global exports of the products under dispute, which are made by companies like HYPERLINK “javascript:void(0);“Hewlett-Packard Co of the United States or HYPERLINK “javascript:void(0);“Canon Inc and HYPERLINK “javascript:void(0);“Ricoh Co Ltd of Japan, total more than $70 billion.

The US statement said the EU was charging duties on the products because they incorporated technologies that did not exist at the launch of the ITA, which now has 71 signatories.

“In effect the EU is taxing innovation—a move that could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers,” the US statement said.

US officials say the EU imports $11 billion of the three products each year. The US goods are mainly manufactured in countries such as China and Malaysia but based on US designs and engineering and sold under US brand names.

China, Singapore, Thailand and the Philippines, which all have important electronics manufacturing sectors, also asked to join the consultations that the US requested on May 28 and are likely to join the dispute panel as third parties. (Reuters)