Brussels, 12/11/2014 (Agence Europe) - It was announced on the sidelines of the APEC summit in Beijing on Tuesday 11 November that agreement had been reached between China and the United States on the outstanding issues in the review of the WTO Information Technology Agreement (ITA). This now paves the way for agreement among the 54 countries taking part in the review on expanding the list by 200 new products which will enjoy customs duty reductions.
The ITA, signed by 29 countries in 1996 and in force since 1997, is a WTO plurilateral agreement which requires participating nations to completely remove their customs duties on the products covered by the agreement (computers, telephones and digital cameras, for example). The number of ITA participants has increased to 78 countries, representing 97% of global trade in these products. The ITA has brought about the trebling of trade in the products it covers, estimated today at $4,000 billion per year. According to the WTO, the ITA has brought savings of $1,600 billion in customs duties between 1997 and 2013.
Talks on updating the ITA were opened in May 2012 with the aim of extending the list of products in the internet age to reduce or remove customs duties on 200 new products (computers, telephones, fax machines, computer software, GPS devices, games consoles, advanced semi-conductors, advanced measuring and monitoring instruments, office machinery, medical equipment, etc.). World trade in these products is worth €1,100 billion, or 10% of world trade, and expansion of the list will bring a 70% increase in the value of the trade in the products covered by the revised agreement. For example, customs duties of a worldwide average of 25% are imposed on new generation semi-conductors, and GPS devices face 8% taxes.
The negotiations had been deadlocked by China, which wanted a large number (more than half) of these new products (particularly semi-conductors) to be classed as sensitive products and to exclude about one third, but could now be concluded following the announcement by US President Barack Obama, on the sidelines of the APEC summit, of an agreement between the United States and China on this dossier. The agreement between the two countries will now be put to the other WTO member countries participating in the ITA.
WTO chief Roberto Azevedo of Brazil, who is facing a fresh deadlock within the organisation in Doha talks, did not seek to hide his pleasure at “the announcement of this breakthrough, which represents a significant step forward in the negotiations on an expansion of the ITA”. “I hope it will create renewed momentum, enabling negotiations to be concluded as quickly as possible. Agreement on expanding the ITA would be the first successful tariff-cutting negotiation in the WTO for over a decade and a half”, he stressed. While the precise figures for the effect of the expansion of the list of products covered by the ITA are not yet available, some estimates envisage a liberalisation package that could range from US$800 billion to US$1,400 billion of annual trade, bigger than the current trade in automotive products and three times bigger than trade in the clothing sector, the WTO says in a press release.
The announcement was also warmly welcomed in the EU. New Trade Commissioner Cecilia Malmström hailed the progress in ITA review talks. “The EU has been a strong supporter of this deal and worked hard to find the best solutions for Europe, while at the same time bridging the positions of other participants. EU companies are at the forefront when it comes to the products covered by this deal and I intend to take all necessary steps to finalise the agreement in the coming weeks. This agreement will contribute to job creation and growth in Europe”, she said. The Commission says the value of EU exports information technology (IT) products is €82 billion per year and the value of imports is €68 billion - a surplus of €14 billion for the EU. “The EU has been a constructive participant in the negotiations all along and will continue working with the US, China and other participants of the talks to finalise the agreement and ensure the largest possible participation of other countries”, adds a Commission press release. In addition to the expected gains for the EU, Malmström also hopes that the revised ITA “will give a boost to the multilateral trading system”. (EH)