CONCERNS ABOUT THE CUSTOMS CLASSIFICATION OF PACKAGED IGBT DEVICES
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1 12 September 2011 CONCERNS ABOUT THE CUSTOMS CLASSIFICATION OF PACKAGED IGBT DEVICES 1. SCOPE AND PURPOSE OF THIS DOCUMENT Since at least 1999, Packaged Insulated Gate Bipolar Transistor Devices ( Packaged IGBT Devices ) have been imported into the EU under customs heading 8541 (a duty-free rate) confirmed by a decision from the Dutch customs authorities. However, in September 2008, the German customs authorities decided to classify them under headings 8535 (duty 2.7%) and 8536 (duty 2.3%). These proposed new classifications are in conflict with most other national interpretations: the United States, Russia, Japan, India, Brazil and most other major economies classify Packaged IGBT Devices under the heading China classifies them under heading 8504, which is also duty-free. The proposed new classifications are also in conflict with the EU s own definitions and explanatory notes contained in the Combined Nomenclature regarding the classification of products under heading The EU s Customs Code Committee will meet in September 2011 and could vote to adopt a draft Regulation to re-classify Packaged IGBT Devices under headings 8535 and Such a Regulation will have a serious and detrimental impact on all European companies importing and using imported Packaged IGBT Devices. This position paper outlines the main technical reasons for retaining the 8541 classification and the negative commercial impact that changing it would have for EU manufacturers and consequently on European consumers. 2. DEFINITION Packaged IGBT Devices are power semiconductor devices that supply regulated electric power to a load with a high degree of speed and efficiency. They receive control signals from an external control unit in response to which they use pulse width modulation techniques to control output power by very rapidly opening and closing the load current path; this modulation frequency may be up to several thousand times per second. Packaged IGBT Devices are used in many applications including electric cars and trains, general purpose inverters, uninterruptible power supplies, solar panels, domestic appliances (e.g. air conditioners and variable speed refrigerators), electrical welding equipment and wind generation equipment. DIGITALEUROPE aisbl Rue Joseph II, 20 >> B-1000 Brussels [Belgium] T >> F >> 1 of 5
2 3. IGBT MARKET AND BACKGROUND According to independent analysis 1, the European market for Packaged IGBT Devices was worth around US$459 million in It is forecast to grow to US$888 million in 2014, a compound annual growth rate of 14.1%. Europe is a major user of Packaged IGBT Devices, accounting for around 42% of global sales. Less than 60% of European sales in 2009 were manufactured in Europe. Therefore, in order to maintain supply of the product to European users, a significant proportion has to be imported. Changing the classification as proposed, with the consequent increase in customs duty payable, will have the effect of increasing costs for these European users. These costs plus operating margins will have to be passed on by the IGBT Device suppliers to European manufacturers, who in turn will pass on this cost plus their own operating margins to European consumers. The effect of this will be to decrease the cost competitiveness of European companies that use imported Packaged IGBT Devices and these companies do not have a European alternative to turn to. It will also increase costs for companies who export finished products containing imported Packaged IGBT Devices, impacting on their competitiveness in important export markets. It will particularly hit environmental industries like electric cars, hybrid cars, electric trains, solar panels and wind power generation equipment at a time when we should be encouraging and helping these industries and not burdening them with additional costs. 4. IGBT CLASSIFICATION Customs heading 8541 is used for, Diodes, transistors and similar semiconductor devices; Customs headings 8535 and 8536 are used for, Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits... (The two headings simply relate to devices exceeding and not exceeding 1,000 volts.) We believe that Packaged IGBT Devices should be classified under heading 8541 for the following reasons: Firstly, Packaged IGBT Devices are considered to be power semiconductor devices according to international electrical standards (IEC Standard and JEDEC Standard 77C.01). Secondly, classifying Packaged IGBT Devices under heading 8535 or 8536 as switches ignores the technical characteristics of the product, which are different from the switches referred to in these headings, and the legal requirements that they should be classified under heading 8541 for transistors and similar semiconductor devices. An IGBT Device >> 2 of 5
3 consists of insulated gate bipolar transistors combined with semiconductor diodes and certain ancillary elements in a common housing. It is in all aspects a semiconductor device and therefore classifiable under heading 8541: - It satisfies the key criterion of legally binding Note 8(a) to Chapter 85 of the Combined Nomenclature which requires that its operation depends on variations in resistivity. - Under the legally binding HS Chapter Notes (Notes 2 and 8 to Chapter 85), heading 8541 takes precedence over headings 8535 and Heading 8541 must be preferred even if the product s function is also referred to in other headings (such as headings 8535 and 8536). - The key elements of the device (IGBTs, diodes, housing) are all classified in subheadings of heading 8541, supporting the fact that this is a semiconductor device. The fact that the device also contains certain non-semiconductor elements (e.g. aluminum wires) does not affect the classification of the device since these elements do not alter the fundamental characteristics of the semiconductor elements as confirmed by the EU s Optocouplers judgment. Thirdly, most other jurisdictions around the world have classified Packaged IGBT Devices under heading The Japanese government intends to raise the matter for discussion by the World Customs Organisation s Harmonised System Committee meeting in September and believes that they will support classification under heading We believe that, in the interest of achieving a uniform interpretation of the Harmonised System, the EU level decision in the Nomenclature Committee should be postponed. 5. CONCLUSION DIGITALEUROPE strongly encourages the EU Customs Code Committee s Nomenclature Committee to continue to classify Packaged IGBT Devices under heading 8541 for the reasons summarised below and outlined in this position paper: Packaged IGBT Devices are power semiconductor devices under international electrical standards and so should be classified under heading Packaged IGBT Devices satisfy the various notes in the Combined Nomenclature and are entirely consistent with heading Packaged IGBT Devices are classified under heading 8541 by most other major global economies. The Customs Code Committee should not pre-judge the issue ahead of a meeting with World Customs Organisation, which presents an opportunity to take an agreed and consistent international approach. Applying either of the proposed headings will result in higher costs for European manufacturers and, as a result, for European consumers; it will also make export products less competitive. Packaged IGBT Devices are extremely important enablers in the development and production of environmentally desirable products such as electric cars, hybrid electric cars, solar panels and wind power generation equipment. It would be wrong to hamper >> 3 of 5
4 the development of these products at a time when we should be encouraging and helping them. 1. IMS Research, 2010 >> 4 of 5
5 ABOUT DIGITALEUROPE DIGITALEUROPE is the voice of the European digital economy including information and communication technologies and consumer electronics. DIGITALEUROPE is dedicated to improving the business environment for the European digital technology industry and to promoting our sector s contribution to economic growth and social progress in the European Union. DIGITALEUROPE ensures industry participation in the development and implementation of EU policies. DIGITALEUROPE s members include 61 global corporations and 37 national trade associations from across Europe. In total, 10,000 companies employing two million citizens and generating 1 trillion in revenues. Our website provides further information on our recent news and activities: THE MEMBERSHIP OF DIGITALEUROPE COMPANY MEMBERS: Acer, Alcatel-Lucent, AMD, APC by Schneider Electric, Apple, Bang & Olufsen, BenQ Europa BV, Bose, Brother, Buffalo, Canon, Cassidian, Cisco, Dassault Systems, Dell, Epson, Ericsson, Fujitsu, Hitachi, HP, Huawei, IBM, Ingram Micro, Intel, JVC, Kenwood, Kodak, Konica Minolta, Lexmark, LG, Loewe, Microsoft, Mitsubishi, Motorola Mobility, Motorola Solutions, NEC, Nokia, Nokia Siemens Networks, Océ, Oki, Optoma, Oracle, Panasonic, Philips, Pioneer, Qualcomm, Research In Motion, Ricoh, Samsung, Sanyo, SAP, Sharp, Siemens, Smart Technologies, Sony, Sony Ericsson, Swatch Group, Technicolor, Texas Instruments, Toshiba, Xerox NATIONAL TRADE ASSOCIATIONS: Austria: FEEI; Belgium: AGORIA; Bulgaria: BAIT; Cyprus: CITEA; Czech Republic: ASE; Denmark: DI ITEK, IT-BRANCHEN; Estonia: ITL; Finland: FFTI; France: SIMAVELEC; Germany: BITKOM, ZVEI; Greece: SEPE; Hungary: IVSZ; Ireland: ICT IRELAND; Italy: ANITEC; Lithuania: INFOBALT; Netherlands: ICT OFFICE, FIAR; Poland: KIGEIT, PIIT; Portugal: AGEFE, APDC; Romania: APDETIC; Slovakia: ITAS; Slovenia: GZS; Spain: AMETIC; Sweden: IT&Telekomföretagen; United Kingdom: INTELLECT Belarus: INFOPARK; Norway: ABELIA, IKT NORGE; Switzerland: SWICO; Turkey: ECID, TESID, TÜBISAD; Ukraine: IT UKRAINE >> 5 of 5
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