RD297 - ETNO Reflection Document on the Customs classification of Mobile Phones

Mobile phones are covered by the Information Technology Agreement (ITA), but other Information and Communication Technology (ICT) products such as Global Positioning System (GPS) receivers are not. The Nomenclature Committee (NC) of the European Union is evaluating whether sophisticated mobile phones should be reclassified and made subject to customs duties in line with products such as GPS-units, TVs and video cameras In this paper ETNO stresses that the move to reclassify multifunctional mobile telephones should not lead to higher customs tariffs. The Association urges the EU to respect its WTO commitments, promote free and fair trade and avoid obstructing the advance of the IT industry, as this is both the foundation for and the driver of industrial development.

Mobile phones are covered by the Information Technology Agreement (ITA), but other Information and Communication Technology (ICT) products such as Global Positioning System (GPS) receivers are not. The Nomenclature Committee (NC) of the European Union is evaluating whether sophisticated mobile phones should be reclassified and made subject to customs duties in line with products such as GPS-units, TVs and video cameras. If the EU reaches the conclusion that for some types of sophisticated and technically advanced mobile phones the principal function is no longer that of being a mobile phone, this could put a significant and rapidly increasing number of mobile phones at risk of falling out of ITA coverage, thereby taxing mobile phones for the first time.
Mobile phones have many secondary features, but ETNO wishes to underline that the principal function of the above-mentioned devices is clearly the mobile phone functionality, that has enhanced development of our members sophisticated communication services and accelerated utilization of network capacity.
ETNO’s position is that sophisticated and technically advanced mobile phones are characterised as transmission apparatus in cellular or wireless networks rather than an Automatic Data Processing (ADP) machine or camera or GPS receiver or TV-receiver, and therefore properly classifiable in 8517 12 00 by application of GIR 1 and Section XVI, Note 3, to the Combined Nomenclature.
On a more general note ETNO would like to stress that in a world of increasing convergence the problem of how to classify for the purpose of custom duties multipurpose ICT devices does not only relate to mobile phones, but to an ever growing broad variety of products offered by ETNO Members to their customers.
Independently of the question of whether such duties are justified or not, ETNO believes that the focus for the classification should be on the "essential character" of the device in question.