IT Agreement II Signed by 22 Majors (China, Taiwan, Japan, Thai, MY, SG, EU, US)

· 27 Other Signatories of ITA I (India, Indonesia, Russia, Egypt) not on Board

· New ITA not to Cover Consumer Goods

· Telecomm Broadened, Instruments and Multi Components ICs in, Wider Coverage for Monitors

· Implementation by End of 2015, Final Zero Duty by End 2018

EU Ambassador to the WTO Angelos Pangratis told a meeting of the WTO’s General Council that the two Asian nations - both large producers of IT products - have joined other leading traders of high-tech goods in accepting the deal, which will see tariffs removed on products such as new-generation semi-conductors, GPS navigation systems, tools for manufacturing printed circuits, telecommunications satellites, and touch screens.

• 44 WTO members signed agreement to expand product coverage of Information Technology Agreement (ITA). Nearly all the participants have now confirmed their acceptance of the product coverage list, which was finalized on 24 July.

• Ambassador Pangratis said he would present to WTO members the outcome of the negotiations, which includes a declaration setting out a road map for finalising the overall negotiations in time for the WTO’s 10th Ministerial Conference in Nairobi in December. He also provided members with the list of 201 high-tech goods that will eventually have their tariffs reduced to zero.

• Both the EU Ambassador and the Director-General underlined that the Agreement brings benefits to all WTO members, since it will be implemented on a most-favoured nation basis. This means that exports of covered goods from all WTO members will enjoy duty-free treatment in the participating members.

• They also noted the Agreement is open to all members to join at any time, regardless of whether they have participated in the negotiations up to now.

• Under the declaration, participants have agreed to reduce tariffs on the covered goods in four equal annual reductions of customs duties, beginning on 1 July 2016 and concluding on 1 July 2019. Extended staging of reductions for some sensitive products may be necessary in limited circumstances.

• Each participant will, by 30 October, submit draft schedules detailing how they will provide duty-free treatment to the covered products and make them binding under WTO rules. These schedules will be reviewed and approved by participants no later than 4 December.

• The Agreement takes effect once participants accounting for approximately 90 per cent of world trade in the covered goods have their draft schedules approved. This threshold is expected to be reached in time for the 10th Ministerial Conference in December.

• The participants have also agreed to meet no later than January 2018 to review the product coverage and consider whether the coverage list should be updated to incorporate additional products. In addition, they have agreed to intensify their discussions concerning non-tariff barriers in the information technology sector.

What is the ITA?

The original Information Technology Agreement (ITA) was reached on 13 December 1996 at Singapore Ministerial, through a “Ministerial Declaration on Trade in Information Technology Products”, at the first WTO Ministerial Conference, held in Singapore. India joined the Agreement in 2000 with a phased programme to introduce zero duties.

Elimination of import duties on products which in 2013 accounted for an estimated US$ 1.6 trillion, almost three times as much as when it was signed in 1996. The IT sector has been one of the fastest growing sectors in world trade. Today, trade in these products accounts for approximately 10 per cent of global merchandise exports.

The ITA covers a large number of high technology products, including computers, telecommunication equipment, semiconductors, semiconductor manufacturing and testing equipment, software, scientific instruments, as well as most of the parts and accessories of these products.

The ITA now covers 81 WTO members, which account for approximately 97 per cent of world trade in information technology products.

The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement.

The tariff elimination is implemented on a most-favoured nation (MFN) basis. This means that the 80 or so non Signatories such as Brazil and South Africa can export IT goods to the 80 Signatories at zero duty even as they impose duties on imports.

Product expansion negotiations

In May 2012, on the occasion of the 15th anniversary of the ITA, it was recognized that new categories of IT products had been developed, including a number of products which do not fall within the scope of the existing ITA. In light of new technological developments, some WTO members considered that the current product coverage of the ITA should be expanded.

After 17 rounds of negotiations, on Saturday, 18 July 2015, negotiators edged close to an agreement on a list of products for an ITA expansion, together with a draft declaration which spells out how the agreement would be implemented.

What is the current level of MFN applied tariffs for the products under the ITA expansion?

Import duties on some of the covered products are relatively high in some markets. In the United States, for instance, applied duties on certain parts of telephone handsets are at 8.5%, while in China 35% duties are applied on video cameras, the EU tariff applied on DVD recorders is 14% and Thailand applies a duty of 30% on certain magnetic cards.

Beyond the monetary gains for the IT industry resulting from the elimination of import duties, investors and traders would also gain from significantly improved market access, predictability and certainty. This is because a number of these products are either currently unbound (i.e. they are not subject to a legal maximum limit at the WTO) or are bound at high tariff levels. With the ITA product expansion, the participating members would have the legal obligation not to impose import duties on covered products.

What happens next?

Under the terms of the agreement, the majority of tariffs will be eliminated on the 201 products within three years, with reductions beginning in 2016. By the end of October 2015, each of the participating members will submit to the other participants a draft schedule which spells out how the terms of the agreement would be met. Participants will spend the coming months preparing and verifying these schedules. The objective is to conclude this technical work in time for the Nairobi Ministerial Conference in December.

Roadblocks on LCDs

Most recently, participants in the ITA expansion effort had put their talks on hold this past December, after China and South Korea found themselves at odds over whether to include items such as liquid-crystal displays (LCDs) in the final agreement, with Seoul arguing for their inclusion. Taiwan had also expressed an interest in including these and other products.

Sources familiar with last week’s discussions said that while LCD displays ultimately did not make it into the final product list, there were some concessions by other participants to help form a package that could be more attractive for Seoul to accept. The key negotiations in these final stages were mainly between China, South Korea, the US, and the EU.

Even so, some sources noted that Taiwan was less satisfied with the outcome than many of the other ITA-II participants, though whether this dissatisfaction will be enough for it not to approve the final list tomorrow was unclear.

Nairobi next

The work of providing the schedules would be concluded in time for the WTO’s Tenth Ministerial Conference (MC10) in Nairobi, Kenya, scheduled for 15-18 December of this year, in order for ministers to approve the overall result. The goal would then be to have ITA-II enter into force by July 2016, subject to the agreed staging of tariff lines.

“All parties in the talks are to be congratulated,” said DIGITALEUROPE’s Director General John Higgins in a statement. “They have paved the way for a deal that will have a major boost to the global trade in tech products, many of which didn’t exist when the ITA was signed.”

DIGITALEUROPE is a group that includes 59 corporate members and 36 national trade associations from across Europe, representing much of the digital technology industry.

“In all of US industry’s meetings with the various parties to the negotiation this week, the one common thread in our discussions was that these talks have gone on too long and the time for delay is over,” said John Neuffer, President and CEO of the Semiconductor Industry Association, in a blog post.

Among the products covered in this agreement are new-generation semi-conductors, GPS navigation systems, medical products which include magnetic resonance imaging machines, machine tools for manufacturing printed circuits, telecommunications satellites and touch screens.

ITA Majors

Member	Exports	Imports
	Average	2011-13 ($bn)
Australia	3.6	18.9
Canada	16.3	34.5
China	300.4	372.6
European Union (28)	196.7	178.8
Israel	10.4	7.1
Hong Kong, China	0.9	19.2
Japan	139.7	79.1
Korea	95.5	67.3
Malaysia	45.6	41.0
Norway	3.4	6.2
Philippines	4.7	6.9
Singapore	120.9	85.0
Switzerland	19.0	13.6
Chinese Taipei	95.1	62.8
Thailand	23.0	26.7
Turkey*	1.9	10.8
United States	178.9	212.0

1) excluding EU-intra trade and re-exports of Hong Kong, China.

*Participation in the expanded ITA to be confirmed

Source: WTO Secretariat (based on data from UN Comtrade).

ITA II Members

1. Albania

2. Australia

3. Canada

4. China

5. Costa Rica

6. European Union

7. Guatemala

8. Hong Kong, China

9. Iceland

10. Israel

11. Japan

12. Korea

13. Malaysia

14. Montenegro

15. New Zealand

16. Norway

17. Philippines

18. Singapore

19. Switzerland1

20. Taiwan, Penghu, Kinmen and Matsu

21. Thailand

22. United States

ITA I Members – Not Joined ITA II

1. Bahrain

2. Colombia

3. Dominican

4. Egypt

5. El Salvador

6. Georgia

7. Honduras

8. India

9. Indonesia

10. Jordan

11. Kuwait

12. Kyrgyz

13. Macao

14. Mauritius

15. Moldova

16. Morocco

17. Nicaragua

18. Oman

19. Qatar

20. Russia

21. Saudi Arabia

22. Seychelles

23. Tajikistan

24. Turkey

25. Ukraine

26. UAE

27. Vietnam

Important Items

Item	HS 2007	ex*	Product Description
037	847689	ex	Money-changing machines
038	847690	ex	Parts of money-changing machines
039	847989	ex	Automated electronic component placement machines of a kind used solely or principally for the manufacture of printed circuit assemblies
040	847990	ex	Parts of automated electronic component placement machines of a kind used solely or principally for the manufacture of printed circuit assemblies
041	848610		Machines and apparatus for the manufacture of boules or wafers
042	848620		Machines and apparatus for the manufacture of semiconductor devices or of electronic integrated circuits
043	848630		Machines and apparatus for the manufacture of flat panel displays
044	848640		Machines and apparatus specified in Note 9(C) to this Chapter
045	848690		Parts and accessories
046	850440		Static converters
047	850450		Other Inductors
048	850490		Parts
049	850590	ex	Electromagnets of a kind used solely or principally for magnetic resonance imaging apparatus other than electromagnets of heading 90.18
050	851430	ex	Other furnaces and ovens of a kind used solely or principally for the manufacture of printed circuits or printed circuit assemblies
051	851490	ex	Parts of other furnaces and ovens of a kind used solely or principally for the manufacture of printed circuits or printed circuit assemblies
052	851519	ex	Other wave soldering machines of a kind used solely or principally for the manufacture of printed circuit assemblies
053	851590	ex	Parts of other wave soldering machines of a kind used solely or principally for the manufacture of printed circuit assemblies
054	851761		Base stations
055	851762		Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus
056	851769		Other
057	851770		Parts
058	851810		Microphones and stands therefor
059	851821		Single loudspeakers, mounted in their enclosures
060	851822		Multiple loudspeakers, mounted in the same enclosure
061	851829		Other
062	851830		Headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers
063	851840		Audio-frequency electric amplifiers
064	851850		Electric sound amplifier sets
065	851890		Parts
066	851981		Using magnetic, optical or semiconductor media
067	851989		Other
068	852110		Magnetic tape-type
069	852190		Other
070	852290		Other
071	852321		Cards incorporating a magnetic stripe
072	852329		Other
073	852340		Optical media
074	852351		Solid-state non-volatile storage devices
075	852352		“Smart cards”
076	852359		Other
077	852380		Other
078	852550		Transmission apparatus
079	852560		Transmission apparatus incorporating reception apparatus
080	852580		Television cameras, digital cameras and video camera recorders
081	852610		Radar apparatus
082	852691		Radio navigational aid apparatus
083	852692		Radio remote control apparatus
084	852712		Pocket-size radio cassette-players
085	852713		Other apparatus combined with sound recording or reproducing apparatus
086	852719		Other
087	852721	ex	Radio-broadcast receivers not capable of operating without an external source of power, of a kind used in motor vehicles, combined with sound recording or reproducing apparatus capable of receiving and decoding digital radio data system signals
088	852729		Other
089	852791		Combined with sound recording or reproducing apparatus
090	852792		Not combined with sound recording or reproducing apparatus but combined with a clock
091	852799		Other
092	852849		Other
093	852871		Not designed to incorporate a video display or screen
094	852910		Aerials and aerial reflectors of all kinds; parts suitable for use therewith
095	852990	ex	Other, excluding organic light emitting diode modules and organic light emitting diode panels for the apparatus of subheadings 8528.72 or 8528.73
096	853180	ex	Other apparatus excluding doorbells, chimes, buzzers and similar
097	853190		Parts
098	853630		Other apparatus for protecting electrical circuits
099	853650		Other switches
100	853690	ex	Other apparatus, excluding battery clamp of a kind used for motor vehicles of heading 8702, 8703, 8704, or 8711
101	853810		Boards, panels, consoles, desks, cabinets and other bases for the goods of heading 8537, not equipped with their apparatus
102	853939	ex	Cold-cathode fluorescent lamps(CCFLs) for backlighting of flat panel displays
103	854231		Processors and controllers, whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits
104	854232		Memories
105	854233		Amplifiers
106	854239		Other
107	854290		Parts
108	854320		Signal generators
109	854330	ex	Electroplating and electrolysis machines of a kind used solely or principally for the manufacture of printed circuits
110	854370	ex	Articles specifically designed for connection to telegraphic or telephonic apparatus or instruments or to telegraphic or telephonic networks
111	854370	ex	Microwave amplifiers
112	854370	ex	Cordless infrared remote control devices for video game consoles
113	854370	ex	Digital flight-data recorders
114	854370	ex	Portable battery operated electronic reader for recording and reproducing text, still image or audio file
115	854370	ex	Digital signal processing apparatus capable of connecting to a wired or wireless network for the mixing of sound
116	854390		Parts
117	880260	ex	Telecommunications satellites
118	880390	ex	Parts of telecommunication satellites
119	880521		Air combat simulators and parts thereof
120	880529		Other
121	900120		Sheets and plates of polarising material
122	900190		Other
123	900219		Other
124	900220		Filters
125	900290		Other
126	901050		Other apparatus and equipment for photographic (including cinematographic) laboratories; negatoscopes
127	901060		Projection screens
128	901090	ex	Parts and accessories of articles of subheadings 901050 and 901060
129	901110		Stereoscopic microscopes
130	901180		Other microscopes
131	901190		Parts and accessories
132	901210		Microscopes other than optical microscopes; diffraction apparatus
133	901290		Parts and accessories
134	901310	ex	Telescopes designed to form parts of machines, appliances, instruments or apparatus of this Chapter or Section XVI
135	901320		Lasers, other than laser diodes
136	901390	ex	Parts and accessories, other than for telescopic sights for fitting to arms or for periscopes
137	901410		Direction finding compasses
138	901420		Instruments and appliances for aeronautical or space navigation (other than compasses)
139	901480		Other instruments and appliances
140	901490		Parts and accessories
141	901510		Rangefinders
142	901520		Theodolites and tachymeters (tacheometers)
143	901540		Photogrammetrical surveying instruments and appliances
144	901580		Other instruments and appliances
145	901590		Parts and accessories
146	901811		Electro-cardiographs
147	901812		Ultrasonic scanning apparatus
148	901813		Magnetic resonance imaging apparatus
149	901819		Other
150	901820		Ultra-violet or infra-red ray apparatus
151	901850		Other ophthalmic instruments and appliances
152	901890	ex	Electro-surgical or electro-medical instruments and appliances, and parts and accessories thereof
153	902150		Pacemakers for stimulating heart muscles, excluding parts and accessories
154	902190		Other
155	902212		Computed tomography apparatus
156	902213		Other, for dental uses
157	902214		Other, for medical, surgical or veterinary uses
158	902219		For other uses
159	902221		For medical, surgical, dental or veterinary uses
160	902229		For other uses
161	902230		X-ray tubes
162	902290	ex	Parts and accessories of apparatus based on the use of X-rays
163	902300		Instruments, apparatus and models, designed for demonstrational purposes (for example, in education or exhibitions), unsuitable for other uses
164	902410		Machines and appliances for testing metals
165	902480		Other machines and appliances
166	902490		Parts and accessories
167	902519		Other
168	902590		Parts and accessories
169	902710		Gas or smoke analysis apparatus
170	902780		Other instruments and apparatus
171	902790		Microtomes; parts and accessories
172	902830		Electricity meters
173	902890		Parts and accessories
174	903010		Instruments and apparatus for measuring or detecting ionising radiations
175	903020		Oscilloscopes and oscillographs
176	903031		Multimeters without a recording device
177	903032		Multimeters with a recording device
178	903033	ex	Other, without a recording device, excluding resistance measuring instruments
179	903039		Other, with a recording device
180	903084		Other, with a recording device
181	903089		Other
182	903090		Parts and Accessories
183	903110		Machines for balancing mechanical parts
184	903149		Other
185	903180		Other instruments, appliances and machines
186	903190		Parts and accessories
187	903220		Manostats
188	903281		Hydraulic or pneumatic
189	950410		Video games of a kind used with a television receiver
190	950430	ex	Other games, operated by coins, banknotes, bank cards, token, or by any other means of payment, other than automatic bowling equipment and games of chance that immediately return a monetary award
191	950490	ex	Video game consoles and machines, other than those of subheading 950430

* Partially covered subheadings are identified by the symbol “ex”.

192	Multi-component integrated circuits (MCOs): a combination of one or more monolithic, hybrid, or multi-chip integrated circuits with at least one of the following components: silicon-based sensors, actuators, oscillators, resonators or combinations thereof, or components performing the functions of articles classifiable under heading 8532, 8533, 8541, or inductors classifiable under heading 8504, formed to all intents and purposes indivisibly into a single body like an integrated circuit, as a component of a kind used for assembly onto a printed circuit board (PCB) or other carrier, through the connecting of pins, leads, balls, lands, bumps, or pads.
	For the purpose of this definition the following expressions mean:
	1. “Components” may be discrete, manufactured independently then assembled onto the rest of the MCO, or integrated into other components.
	2. “Silicon based” means built on a silicon substrate, or made of silicon materials, or manufactured onto integrated circuit die.
	(a). “Silicon based sensors” consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of detecting physical or chemical quantities and transducing these into electric signals, caused by resulting variations in electric properties or displacement of a mechanical structure.
	“Physical or chemical quantities” relates to real world phenomena, such as pressure, acoustic waves, acceleration, vibration, movement, orientation, strain, magnetic field strength, electric field strength, light, radioactivity, humidity, flow, chemicals concentration, etc.
	3(b). “Silicon based actuators” consist of microelectronic and mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of converting electrical signals into physical movement.
	3(c). “Silicon based resonators” are components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures in response to an external input.
	3(d). “Silicon based oscillators” are active components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures.
193	Light-Emitting Diode (LED) Backlights modules, which are lighting sources that consist of one or more LEDs, and one or more connectors and are mounted on a printed circuit or other similar substrate, and other passive components, whether or not combined with optical components or protective diodes, and used as backlights illumination for liquid crystal displays (LCDs)
194	Touch-Sensitive Data Input Devices (so-called touch screens) without display capabilities, for incorporation into apparatus having a display, which function by detecting the presence and location of a touch within the display area. The sensing of touch may be obtained by means of resistance, electrostatic capacity, acoustic pulse recognition, infra-red lights, or other touch-sensitive technology
195	Ink cartridges (with or without an integrated print head) for insertion into apparatus of HS subheadings 844331, 844332 or 844339, and incorporating mechanical or electrical components; thermoplastic or electrostatic toner cartridges (with or without moving parts) for insertion into apparatus of HS subheadings 844331, 844332 or 844339; solid ink in engineered shapes for insertion into apparatus of HS subheadings 844331, 844332 or 844339
196	Printed matter which grants the right to access, install, reproduce or otherwise use software (including games), data, internet content (including in-game or in-application content) or services, or telecommunications services (including mobile services)**
197	Self-adhesive circular polishing pads of a kind used for the manufacture of semiconductor wafers
198	Boxes, cases, crates and similar articles, of plastic, specially shaped or fitted for the conveyance or packing of semiconductor wafers, masks, or reticles, of subheading 392310 or 848690
199	Vacuum pumps of a kind used solely or principally for the manufacture of semiconductors or flat panel displays
200	Plasma cleaner machines that remove organic contaminants from electron microscopy specimens and specimen holders
201	Portable interactive electronic education devices primarily designed for children

** The tariff elimination for printed matter shall only affect the rights and obligations with respect to trade in goods, that is, it shall not affect market access other than tariffs of the participants. Nothing in the ITA expansion agreement shall prevent an ITA member from regulating the content of such goods, including Internet content, among other things. Nothing in the ITA expansion agreement shall affect a member’s market access rights and obligations on trade in services or prevent a member from regulating its services market.