Trade Negotiators Clinch Tentative Deal to Expand ITA Product List

23 July 2015

Countries negotiating the expansion of the WTO’s Information Technology Agreement (ITA) are aiming to sign off on Friday on a final list of approximately 200 products that they intend to add to the pact’s coverage, after having reached a tentative breakthrough in the talks last weekend.

Along with the product list, the countries involved in the expansion initiative have prepared a draft declaration, which they also aim to approve tomorrow. The deadline for receiving approval from capitals on both is Friday midday.

The final product list, if approved, would see tariffs brought to zero on goods such as next-generation semiconductors, magnetic resonance imaging (MRI) machines, global positioning system (GPS) devices, video game consoles, printer ink cartridges, and computed tomography (CT) scanners, to name a few. 

This new list would mark the first new tariff-cutting deal at the WTO in nearly two decades, and some estimates have placed the potential value of the additional 200 or so products at US$1 trillion in annual trade.

The participants involved in the updated tech trade deal include only a subset of the organisation’s membership: counting the EU’s member states individually, 54 countries have tentatively agreed to this updated list, out of the 80 participants in the current ITA and the 161 members of the entire WTO.

These 54 countries cover approximately 90 percent of global trade in information technology products, sources say.

However, both the original tech trade deal – dubbed ITA-I – and the planned expansion, known as ITA-II, are open plurilaterals. This means that even though only some WTO members have taken on commitments, the benefits are extended to the global trade body’s full membership on a most-favoured nation (MFN) basis.

The original ITA was agreed in December 1996 by 29 participants, with the deal entering into force the following year. The 80 participants that have now signed on to ITA-I together cover approximately 97 percent of global trade in information technology goods, according to WTO statistics. 

Reaching agreement

While global trade covered by the original ITA has more than tripled since its entry into force, now hitting more than US$4 trillion annually, many of the items on that list are now falling out of use, while new technologies have rapidly entered the market.

These changes, in turn, prompted the effort among interested ITA participants to negotiate an updated list that would better reflect the new realities in today’s technology trade. However, the process has been a difficult one, with the negotiations hitting multiple snags in recent years.

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. (See Bridges Weekly, 18 December 2014)

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, sources said.

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 as Bridges went to press on Thursday.

The 14-18 July round of negotiations leading to the breakthrough was chaired by EU Ambassador Angelos Pangratis, who commended all sides for demonstrating “the necessary leadership and flexibility that allowed for this important outcome,” according to an e-mailed statement.

The EU official also noted the contribution made by WTO Director-General Roberto Azevêdo in the process, who Pangratis said was “constantly involved in the most challenging aspects of this negotiation,” thus helping reach this result. Other sources familiar with the talks similarly noted Azevêdo’s role in facilitating these final stages.

Nairobi next

Should the product list and draft declaration be approved tomorrow, as expected, the next step will involve the negotiation of “staging periods” for bringing these tariffs on the individual products down to zero. These discussions would begin in the autumn, sources say.

Another part of the process would then include providing revised tariff schedules to the WTO and then verifying those schedules.

Ideally, this work 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, though sources noted that the domestic ratification processes of some participants may take longer than others.

Some sources speculated that this latest breakthrough – along with a final outcome at MC10 – could potentially provide some useful momentum to the overall WTO, which has struggled to advance global trade negotiations under the Doha Round.

The global trade body’s members had been aiming to reach a work programme on how to address the outstanding areas of the Doha Development Agenda by 31 July of this year; however, that deadline is very likely to be missed, sources suggest, raising questions over what might come out of the December ministerial meet. (See Bridges Weekly, 16 July 2015)

Industry groups respond

The news of last weekend’s breakthrough has drawn a positive response from many technology industry groups, some of whom noted that an update to the 18-year-old ITA list has been a long time coming.

“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.

“As the leaders in the various capitals consider whether to place their final stamp of approval on the three years of labour their negotiating teams have put into the deal that emerged [Saturday], let’s hope they appreciate the importance a successful expansion of the ITA will mean to global trade, economic growth, innovation, and the credibility of the WTO, which very much needs to demonstrate it’s back in the business of forging market-opening trade agreements,” Neuffer added.

ICTSD reporting.

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