Industry groups want WTO’s global tariff-cutting deal for tech products to take effect sooner

Negotiators to discuss Information Technology Agreement next week in Geneva; most tariffs to be cut on 201 products within 3 years

PUBLISHED : Monday, 02 November, 2015, 12:05pm
UPDATED : Monday, 02 November, 2015, 12:05pm

More than 80 industry groups from around the world have called on negotiators to push for a faster implementation of the expanded Information Technology Agreement (ITA), ahead of a new round of trade talks scheduled in Geneva on November 9.

The United States, China and other major economies agreed in July to broaden the range of duty-free information and communications technology products covered by the ITA, a plurilateral trade pact, to mark the first major tariff-cutting deal under the World Trade Organisation (WTO) in 18 years.

Under the terms of the expanded deal, the majority of tariffs will be eliminated on 201 products — representing more than US$1.3 trillion in annual trade — within three years, with reductions starting from July 1 next year.

The so-called “staging” talks slated next week amount to a “show and tell” for ITA negotiators on how far their countries “are willing to go when it comes to assigning the specific timeframes for tariff elimination of the myriad tech products covered by the [expanded] agreement”, John Neuffer, the president and chief executive of the Semiconductor Industry Association (SIA), told the South China Morning Post on Monday.

READ MORE: China’s smartphone firms to win in WTO tariffs cut on more than 200 tech products

The ITA negotiating parties met at WTO headquarters in Geneva in September for an initial round of talks to determine the phase-out timeframes, or staging, for the 201 products covered by the ITA expansion.

In a joint statement, the industry associations urged ITA negotiators “to implement their tariff elimination commitments as quickly a possible, showing restraint in their requests for extended staging”.

Specifically, the groups called on all negotiating parties “to show restraint in seeking staging periods longer than three years, given the short innovation cycles for high-technology products”.

These groups included the Consumer Electronics Association, the SIA, DigitalEurope, the US Information Technology Office, Japan Electrical Manufacturers Association, Korea Electronics Association, the Hong Kong Electronic Industries Association and the Hong Kong Information Technology Federation.

Neuffer said negotiators can waive the baseline tariff phase-out period of three years and simply eliminate duties on some, or all, of the 201 products covered by the updated ITA when this deal is implemented in July next year.

“They can also indicate they want to stick with the default three-year staging period. Or they can opt for extended staging of five years or seven years to provide a bigger buffer for domestic producers to adapt to a tariff-free business environment,” Neuffer said.

“The real-life problem with so much extended staging is that the innovation life cycles of tech products are often shorter than seven or even five years” he added.

“So when the tariff relief finally comes, it has largely lost its relevance.”

The expanded ITA will cut tariffs on such products as video game consoles, liquid crystal display televisions, next-generation semiconductors, printer ink cartridges, global positioning system devices, loudspeakers, video cameras, solid state drives, magnetic resonance imaging machines and computed tomography scanners.

The 54 economies in the ITA talks account for 90 per cent of the annual global trade of information and communications technology products.

After all the technical details and tariff phase-out periods are hammered out, the WTO expects the expanded ITA to be formally concluded at its 10th Ministerial Conference in Nairobi next month.

Stephen Ezell, the vice-president for global innovation policy at US think tank the Information Technology and Innovation Foundation, said the ITA has been one of the most commercially successful trade agreements in history.

“The original agreement helped to boost annual worldwide information and communications technology trade from US$1.2 trillion in 1996, when it took effect, to more than US$5 trillion today,” Ezell said.

“The expanded ITA has the potential to deliver roughly US$50 billion in tariff savings on information and communications technology product sales each year globally, and add approximately US$190 billion to global GDP through increased trade.”