ITA II Talks Resume in Geneva with 25

Phasing Out Tariffs Planned for Sensitive Goods

Negotiations to expand the list of products covered by the WTO’s Information Technology Agreement (ITA) resumed in Geneva last week, following a three-month suspension. Members of the group are now hoping to finalise their product list in the coming weeks, sources say, with the goal of presenting an outcome at the global trade body’s upcoming ministerial conference in December.

Talks to revise the ITA - a plurilateral pact that eliminates tariffs on a series of information and communication technology (ICT) products - kicked off last year, when Canada, Costa Rica, Japan, Korea, Malaysia, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Singapore, and the US presented a concept paper calling for talks to expand the pact’s product coverage and membership. The group negotiating the expansion has since increased to 25 of the ITA’s 50 signatories, with Albania and Colombia joining last week.

Negotiators had previously aimed to conclude their expanded product list by July, only for the talks to be derailed after some members took issue with the number of products that Beijing wanted excluded from the final list, due to their being “sensitive” products for the Asian economic giant. China is currently the world’s top exporter of ICT goods, and serves as a manufacturing and assembly base for many of the products covered under the ITA.

Participants in the expansion process then announced at the Asia-Pacific Economic Cooperation (APEC) summit earlier this month that they were ready to resume negotiations, following bilateral discussions with China to resolve some of these differences.

Shorter list of “sensitive items”

Following last week’s meetings, the number of items that countries have deemed “sensitive” has been shortened, sources say. Participants are now also considering the option of “staging” some of these products - in other words, gradually phasing out tariffs on these products over a set time period - rather than excluding them from the expansion list entirely.

Under the terms of the proposed “staging,” should participants decide to stage specific items, this process would not go beyond five years, and would be done in six equal annual reductions. For products that are particularly sensitive, however, this period could be extended for longer, sources say.

The group negotiating the expansion is now slated to have a revised list of products to add to the ITA by 4 November. This would then allow for them to start the next - and potentially final - round of talks during the week of 11 November, which would likely last for two weeks.

Changing trade landscape

The original ITA was finalised in 1996, entering into force in the following year. In the seventeen years since, bilateral ICT trade has skyrocketed from US$1.2 trillion annually to over US$4 trillion, according to some estimates. However, no new products have been added to the current list’s coverage, leading many to argue that the ITA should be updated to reflect the changes in today’s trade.

The existing ITA fully eliminates tariffs on several categories of ICT products and subcomponents. A 2010 report produced by Copenhagen Economics for the European Commission notes that nearly 80 percent of ITA trade is in computers, telecommunications equipment, and semi-conductors and integrated circuits.

However, technological advances over the past two decades have caused some products, such as those traditionally considered to be semiconductor products, to no longer qualify for duty-free treatment under the current ITA. Trade in some ITA products as a share of total world trade, industry groups warn, has fallen as a result.

While some of the items on the list have been rendered obsolete, new products have also entered the market. Advocates say that a revised product list could help address these “next generation” technologies, and some estimates place the expansion of the ITA as generating an additional US$800 billion in bilateral trade and US$190 billion to global GDP.

Push for new signatories

Since its adoption in 1996, the number of signatories to the agreement has ballooned from 29 participants to 78, if counting EU member states individually. Counting the EU collectively, this means that 50 of the WTO’s 159 members have signed onto the deal, accounting for approximately 97 percent of global IT trade.

For instance, Brazil, Chile, Mexico, and South Africa are among those to demonstrate a strong increase in trade in ICT goods over the past several years, but are not yet ITA signatories. Russia, which has become a major ICT importer, joined onto the ITA earlier this year.