NET RESULTS:A hidden levy paid by technology companies based in Ireland is a big source of acrimony

MP3s, DIGITAL cameras and other consumer electronics are a popular purchase for holiday- makers in the US and Europe.

Long before the Director of Consumer Affairs encouraged consumers to question high prices in Irish shops, savvy Irish technology buyers were making significant savings by purchasing overseas.

Few people are aware, however, that Ireland is just one of five European Union countries where MP3 players, blank DVDs, mobile phones and other consumer electronics do not carry a rarely discussed hidden cost.

In 22 of the 27 EU member states, "private copying levies" are added to the price of electronics products which can be used to make digital copies of copyrighted works. They are designed to compensate artists and musicians for the illegal copying of their work and have been around since the days of cassette tapes.

These levies are a source of acrimony between electronics manufacturers, who add the cost to the price of their equipment, and the collection agencies who receive the levies on behalf of their members - in the main musicians.

For US companies operating in the euro zone, the levies are seen as just another cost at a time when they are trying to closely control manufacturing inputs. Levies are also applied at different rates and to different classes in different member states.

Representatives of the electronics industry also say that they haven't been updated to reflect the "digital reality" of 2008.

The European Information and Communications Technology Industry Association claims that in the last three years, the number of states applying levies has increased, not only because of the enlargement of the EU but because national copyright levies have been extended to cover a wider range of goods as technology has developed.

The manufacturers have been lobbying for reform for some time and seemed to have found a friend in Ireland's EU commissioner Charlie McCreevy. In 2006, he proposed reform of the system which would largely deliver the transparency the tech industry was seeking.

Enter then French prime minister Dominique de Villepin.

In a December 2006 letter seen by The Irish Times, de Villepin wrote to European Commission president José Manuel Barroso stressing the importance of the levies to struggling artists and how any proposals for reform raised strong emotions in the artistic community.

Subsequently, in February 2007, the chief executives of 10 of the world's leading technology companies, including Intel, HP, Nokia, Dell, Philips and Sony, wrote to Barroso expressing their "concern and deep disappointment" at his decision to postpone indefinitely the planned reforms.

The Copyright Levies Reform Alliance, as the CEOs styled themselves, claims it has yet to receive a response to that letter.

Although the levies do not directly affect Irish shoppers, they have a significant impact on manufacturers of ICT equipment based here who account for more than 15 per cent of the Republic's GDP. One Irish-based manufacturer is understood to have annual liabilities of hundreds of millions of euro in a single European market for a single product line as a result of the levies.

Probably because of the significance of the issue for the Irish economy, and the lack of awareness of it locally, the Irish media were invited to a briefing in Dublin last month by the Business Software Alliance, which represents Microsoft, Dell, Apple, IBM, Cisco and Symantec, among others.

However, the event was cancelled at short notice - officially because the alliance did not want to prejudice a public hearing on the issue in Brussels the following week, which had been called by McCreevy.

It is estimated that the levies account for anywhere between 10 and 20 per cent of most collecting agencies' revenues. But last week's meeting in Brussels heard a Belgian artists' organisation say that far less than 1 per cent of artists' income comes from the levies.

At the end of the hearing, the commission recommended that a forum be established with representatives of creative artists, consumers, collection agencies and the electronics industry to see if any common ground can be established.

It is safe to assume the artists' representatives will have been a lot happier with that outcome. It was also unlikely that the commission was going to make a definitive decision on such a divisive issue just weeks before the Irish go to the polls on the Lisbon Treaty.

ICT Ireland, the Ibec-affiliate which represents the technology industry locally, is advocating a Yes vote to Lisbon. "Europe has been very good for the technology sector," says Kathryn Raleigh, director of ICT Ireland. "The levies issue, however, is causing big problems for technology companies and urgently needs to be sorted."

This week, in exchange for their support for Lisbon, Irish farm leaders coaxed a promise from Brian Cowen that he would veto any WTO trade agreement that provided a bad deal for Irish farmers. One has to wonder if Irish technology leaders have not missed a golden opportunity by failing to present their own shopping list in advance of pledging their support.