Industry, Governments Push to Eliminate Tariffs on Remaining IT Products
GENEVA -- Expanding product coverage and national participation in a WTO agreement eliminating tariffs for certain information technology gear could give a big boost to global economic gains, officials and executives said at a symposium on the 15th anniversary of the Information Technology Agreement (ITA). The ITA “must be expanded,” said Charlene Barshefsky, an attorney with WilmerHale. Negotiations could address the nearly $1 trillion in annual trade that isn’t covered for tariff-free treatment, speakers said.
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Technology-friendly policies pursued during the Clinton administration “had dramatic and lasting effects,” said Barshefsky, a U.S. Trade Representative in that administration. The agreement expanded trade in IT products by eliminating tariffs, said Pascal Lamy, the WTO director general. Many IT products, however, aren’t covered by the agreement, he said. The 203 items covered in the agreement account for 10 percent of world trade, said Roy Santana, counselor in the WTO Market Access Division.
The growth potential from the ITA was underestimated in the 1990s, Barshefsky said. Two-way trade in IT products covered by the agreement now accounts for $4 trillion, up from $1.2 trillion in 1996, said Michael Anderson, chief of the U.S. International Trade Commission’s Advanced Technology and Machinery Division. Annual growth has been more than 10 percent despite the Internet bubble and the global recession, Anderson said.
The value of trade in IT products not covered by the ITA is “almost equal” to the value of trade initially covered by the 1996 agreement, Barshefsky said. Many products are outside its scope, she said, referring to GPS devices and certain semiconductor devices. The impact of ITA expansion would be just as significant as that brought on by the 1996 agreement, she said. Any projections of the benefits would likely be “vastly understated,” considering iPads didn’t exist just three years ago, she said.
Global industry is looking to WTO members to start and complete the negotiating process “quickly,” Barshefsky said. About $200 billion in additional annual gains to the global economy is “sitting on the table, well within reach,” she said. The negotiations must be framed for a “tangible, timely” result, she said, referring to tariff reductions.
Trade in routers, switches, hubs and other network gear rose significantly under the ITA, Anderson said. Trade in optical line terminal gear and pulse code modulation multiplexers by developing countries in the ITA doubled from 8 to 18 percent since 2007, he said. Computers and semiconductors lead ITA products, with over 60 percent in total ITA trade, he said.
Some countries will likely call for a review of product coverage during a May 15 meeting of the WTO Committee of Participants on the Expansion of Trade in Information Technology Products, an official said. More countries appear to be backing a May 2 proposal from Canada, Japan, South Korea, Taiwan, Singapore and the U.S. to expand product scope and national coverage of the agreement, he said. India and perhaps a few other countries likely won’t be very enthusiastic, he said.
Governments and industry groups are developing lists of products for coverage, a trade executive said. The lists aren’t being circulated publicly, executives said. European industry hasn’t finalized its list, an executive said. The U.S. list is the most advanced, executives said. European countries are still developing their list, an executive said. China’s list hasn’t been seen, she said. South Korea is more aligned with the U.S. than Japan, another executive said.