INFORMATION TECHNOLOGY

Progress of global tech tariff cuts may hinge on China’s G20 efforts

As world’s biggest trader of information and communications technology products, country is expected to benefit most from the expanded ITA

PUBLISHED : Friday, 01 July, 2016, 7:34pm
UPDATED : Friday, 01 July, 2016, 11:23pm

Proponents of a global deal to remove tariffs on more information and communications technology products, which came into force on Friday, are hoping the upcoming G20 meetings in mainland China will help speed up its implementation.

The United States, China and more than 50 other economies on December 16 wrapped up negotiations to widen the scope of the Information Technology Agreement (ITA), which is expected to boost the global economy by an estimated US$190 billion annually.

That expanded agreement, which was signed at the 10th World Trade Organisation (WTO) Ministerial Conference in Nairobi, capital of Kenya, eliminate annual tariffs worth US$1.3 trillion on 201 product lines from July 1 this year.

The first wave of tariff cuts, however, will not likely be implemented by some ITA signatories as scheduled because of the slow progress by China, South Korea and Japan, according to John Neuffer, the president and chief executive of the Semiconductor Industry Association (SIA).

“While most signatories to the ITA have ably completed the technical work they needed ... to live up to the commitments they made in Nairobi to implement on July 1, there are some notable slow pokes,” Neuffer told the South China Morning Post.

He said the ITA expansion declaration provided “some implementation wiggle room” that enabled parties to the agreement to first complete certain “domestic procedural requirements” before initiating the tariff cuts.

After four gruelling years of negotiations and the many ... benefits ITA expansion will yield, it’s pretty disappointing some of the major beneficiaries are relying on this technical, process clause and missing the deadline
John Neuffer, the president and chief executive of the Semiconductor Industry Association

“After four gruelling years of negotiations and the many ... benefits ITA expansion will yield, it’s pretty disappointing some of the major beneficiaries are relying on this technical, process clause and missing the deadline,” Neuffer said.

China, the world’s biggest importer and exporter of information and communications technology products, is expected to benefit the most from the expanded ITA.

The SIA, which represents major multinational chip makers and developers like Intel, IBM, Texas Instruments and Qualcomm, hoped that the scheduled G20 meetings in China this year would help China focus on completing its ITA work, according to Neuffer.

Trade ministers of the G20, the international forum for the governments and central bank governors from 20 major economies,are set to meet in Shanghai on July 9. The G20 leaders’ summit will be held in Hangzhou from September 4 to 5.

“Since ITA expansion is all about getting innovative tech products into the hands of consumers and promoting growth through expanded trade, it would be in China’s interest to finish implementation before those meetings,” Neuffer said.

Foreign Minister Wang Yi in May said China aimed to help transform the “G20 from a crisis-handling mechanism to one that leads the world’s economic growth and international economic cooperation in the long term”.

The expanded ITA marked the first tariff-cutting deal at the WTO since the original pact went into force in 1997 and removed duties on 190 product lines.

Products covered by the new agreement include global positioning system devices, video game consoles, touch screens, printer ink cartridges, magnetic resonance imaging machines, advanced semiconductors, solid-state drives, loudspeakers and video cameras.

It was agreed tariffs on some products, however, were to be phased out over the next several years in a process know as “staging”.

The Information Technology and Innovation Foundation, a US think tank, estimated that increased global demand for information and communications technology products induced by the expanded ITA would boost China’s exports of these goods by US$12 billion annually.