Sept. 15 (Bloomberg) -- The European Union, facing a trade complaint by the U.S., Japan and Taiwan over tariffs on imported electronic equipment, proposed expanding the list of such products exempt from customs duties.

The proposal presented at the World Trade Organization today expands the 1996 Information Technology Agreement that was designed to buoy trade in electronic and telecommunications products by eliminating tariffs on certain goods. Those products account for more than $1.5 trillion of exports worldwide, or a fifth of total global exports of manufactured products, up from $600 billion in 1996.

``The ITA remains a milestone duty-free agreement,'' EU Trade Commissioner Peter Mandelson said in a statement in Brussels. ``But it risks being left behind after 12 years of technological development. We need an ITA for the 21st century that will continue to benefit our customers and businesses.''

When the U.S. and Japan lodged their complaint against the EU in May, they said the 27-nation bloc is undermining the ITA by insisting that some new products fall outside the scope of the agreement. The initial case involved three products, all developed after 1996, that the EU contends aren't covered by the accord: flat-panel computer monitors that show videos, cable converter boxes with Internet access and printers with other capabilities, such as faxing.

Scope Unclear

The EU's statement on its proposal doesn't identify which goods it would like to add to the ITA, saying only that it wants to give priority to multifunctional products.

Mandelson said the EU proposal could lead to an expansion of the ITA to goods including the three digital products at the center of the initial case.

``We don't rule that out at all,'' he told reporters today in Brussels. ``But it wouldn't be confined to that. That's the point. It's all very well being interested in a limited selection of goods which correspond to your commercial interests. Let's look at it in the round and negotiate from the point of view of everyone's commercial interests.''

While the European Information, Communications and Consumer Electronics Technology Industry Association, representing manufacturers, welcomed today's proposal, ``we absolutely overwhelmingly disagree with the commission's decision to classify'' the three digital products in a way that subjects them to duties, said Mark MacGann, Eicta's general director.

Commercial Losses

The Bush administration has pressed Europe on the issue for more than two years. While the U.S. exports less than 5 percent of the $11 billion Europe imports of those three goods, its commercial losses are more wide-ranging, U.S. and industry officials have said.

The EU proposal seeks to abolish all and prevent the creation of new non-tariff barriers affecting technology products, review the product coverage, ensure that the revised ITA takes technological development into account, and include major producers of such goods that remain outside the accord.

The deal originally had 29 signatories representing more than 90 percent of world trade in information-technology products. It has since grown to 44 signatories representing 71 countries or separate customs territories and about 97 percent of global trade in information technology, the WTO says.

`Separate Issue'

The U.S. trade office said expanding the ITA to cover new goods is a separate issue.

``Providing duty-free treatment to products already covered does not require a new negotiation,'' said Gretchen Hamel, a Trade Representative spokeswoman. The EU proposal ``appears premised on the idea that the existing agreement is inadequate, when the evidence suggests that the problem rests not with the agreement but with'' European implementation.

John Neuffer, vice president for technology and trade at the Information Technology Industry Council in Washington, said the EU's actions make it difficult to negotiate a new accord.

``We see this as a cynical attempt to change the subject,'' he said. ``It's clear that what is going on here is a diversionary tactic.''

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

Last Updated: September 15, 2008 13:42 EDT