ISC Argues Against Proposed U.S. Tariffs on China-Imported Printer, Copier Supplies

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In the wake of President Donald Trump’s renewed efforts to impose a 25-percent tariff on billions of dollars worth of Chinese goods imported into the United States, the Imaging Supplies Coalition (ISC) has issued an executive memorandum to the U.S. Trade Representative (USTR) seeking to exempt printer and copier supplies, including ink and toner cartridges, from the proposed tariff.

The ISC is a non-profit trade association dedicated to preventing the sale and use of counterfeit printer and copier toner and ink supplies. Members of the group include Brother International, Canon U.S.A., Epson America, HP Inc., Lexmark International, and Xerox.

The ISC argues that imposing tariffs on ink and toner cartridges is unfair to existing owners. After-the-fact tariffs would also be unfair to printer makers whose replacement cartridges would now face an artificial comparative disadvantage versus non-branded cartridges imported from countries other than China that would not face these tariffs.

The ISC also stated that a recent study by Trade Partnership Worldwide prepared for the Consumer Technology Association and the National Retail Federation estimates that the tariffs would cause U.S. consumers to pay $529 million more than they now pay for ink and toner cartridges. The same study projects that the tariff will cause negative impact to the U.S. economy of about $180 million. Moreover, the study estimates that consumers will cut back on purchases of ink and cartridges by 7.8 percent, “which will severely undermine companies based in the United States.”

The ISC also stated that the proposed tariffs on Chinese ink and toner imported into the United States would have several negative effects.

First, the ISC says the tariffs are unlikely to reduce imports from China in the near- or mid-term. It argues that most printer parts and accessories are proprietary items, featuring patented technology, and designed to be used with only one, or a few, models of printers. By definition, printer parts are items essential to operation of the printers they are designed to work with, and accessories are essential to optimizing these devices’ operating capabilities. Because replacements or substitutes are not readily available, purchasers would have no choice but to  continue sourcing Chinese-origin printer parts and accessories for the foreseeable future, and paying the 25-percent proposed additional tariff. This means that in the near- to mid-term, the proposed additional tariff would have no negative impact on Chinese manufacturing or exporting, but would simply result in additional costs to be passed to U.S. businesses and consumers.

Second, the ISC says that imposing these tariffs on printer parts and accessories could reduce productivity in the United States, “given the important role of the printing industry in supporting other U.S. industries.” It says that printers and copiers are “an essential component of the information technology infrastructure of virtually all United States businesses, universities, schools, and government offices.” Reducing users’ access to essential parts, components and supplies, or increasing their cost “would simply place an unnecessary tax on these institutions, and those who depend upon them.” It would also have an adverse impact on U.S. firms responsible for maintaining, repairing, and installing technology infrastructure in the United States. The ISC states that if the operation of IT systems is disrupted by shortages of necessary printer components and supplies, this will contribute to reduced productivity across the U.S. economy.

Third, the ISC states that the proposed tariffs on printer parts would be counterproductive to economic growth generally, because it would adversely affect the operation of the international Information Technology Agreement (ITA). In 1996, the United States and its principal trading partners, who collectively account for over 90 percent of world trade in information technology goods, adopted the ITA, under which they agreed to permanently eliminate their tariffs,on a Most Favored Nation (MFN) basis, on information technology goods and parts. The agreement was expanded in 2015 to include new information technologies, and a greater range of materials used in producing ITA goods. The parties’ intention was to allow the then-fledgling IT industry to grow without regard to tariff constraints.

The ISC says the results of the ITA “have been spectacular, with global IT trade expanding from approximately $1.2 trillion when the ITA entered into force, to about $4.0 trillion after the pact had been in effect for just 12 years.” Several new countries have joined the ITA, including China, and participation in the pact has increased from 29 countries in 1996, to some 82 today.

Fourth, the ISC says that imposing tariffs would be at odds with, and could damage the potential success of, the U.S. Commerce Department’s plan, announced in the April 12, 2018 Federal Register, to devise a  strategy to assist U.S. manufacturers of IT and communication technology hardware from being victimized by forced localization policies and other measures. The Commerce Department is soliciting input designed to help the government determine how best to confront protectionist policies in the ICT sector.

According to the ISC, Imposing tariffs on printer parts and accessories and other IT products would invite retaliatory measures from trading partners, which could retard this strategy.

For these reasons, the ISC recommends that the following tariff lines be removed from the proposed tariff product
list: “Printer supplies, including ink and toner cartridges (HTS 84439920, 84439925, 84439950])”

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