China ‘has not budged an inch’: Beijing urged to make changes to global tariff-cut deal on ICT products ahead of WTO meet

Country faces mounting pressure to add finishing touches to new Information Technology Agreement pact, with last-minute negotiations expected at the World Trade Organisation Ministerial Conference in Nairobi, Kenya next week

PUBLISHED : Friday, 11 December, 2015, 7:41pm
UPDATED : Friday, 11 December, 2015, 7:46pm

China is under pressure to put the finishing touches on a new global pact to expand tariff cuts on information and communications technology products, with last-minute negotiations expected next week at the World Trade Organisation (WTO) Ministerial Conference in Nairobi, Kenya.

Nearly five months after 54 WTO member economies agreed to expand the scope of duty-free products under the Information Technology Agreement (ITA), China has not pared down the number of products that it wants to keep tariffs on for an extended period of five to seven years.

“China has positioned itself as the only significant obstacle standing in the way of getting ITA expansion wrapped up next week,” John Neuffer, the president and chief executive of the Semiconductor Industry Association, told the South China Morning Post on Friday.

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 WTO in 18 years.

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

Once this enlarged scheme takes effect, it will scrap import 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.

Neuffer, however, pointed out that China “has not budged an inch” in terms of revising its national tariff schedule of the products covered by the agreement.

More than 80 industry groups from around the world have called on negotiators to push for a faster implementation of the expanded ITA.

They want to see a revised schedule from Beijing that includes more ambitious tariff phase-out periods, known as “staging”, for the covered products.

“China’s staging requests are remarkably super-sized,” Neuffer said.

“China wants a whopping 81 of its tariff lines, out of the 201 lines covered in the agreement, to receive extended phase-out periods of five or seven years.”

For most of the past two months, ITA negotiators have been pushing forward with assigning specific time frames for tariff elimination of the myriad products covered by the expanded ITA.

Thailand this week reduced to 16, down from 104, the number of tariff lines that it is requesting for a seven-year phase-out period.

Taiwan had also improved its offer by moving 35 lines from three-year staging to zero once the expanded ITA pact is in force.

Japan, Norway and Singapore are among the economies that have already committed to move all 201 lines in the expanded agreement to zero tariff on July 1 next year.

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

Despite the lingering issues with China, Neuffer said proponents in the industry “remain hopeful ITA expansion will get done early next week”.

For the global economy, ITA expansion is estimated to add an additional US$190 billion annually to the global gross domestic product through wider trade in information and communications technology products.

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 deals 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.