Info Service on WTO and Trade Issues (Oct13/14)
29 October 2013
Third World Network
unions, civil society deeply concerned over ITA-II talks
Published in SUNS #7682 dated 25 October 2013
Geneva, 24 Oct (Kanaga Raja) -- Over 160 civil society organisations
(CSOs) and trade unions worldwide, including the International Trade
Union Confederation (ITUC), have expressed deep concern over the current
negotiations at the World Trade Organisation (WTO) to expand the plurilateral
Information Technology Agreement (ITA).
In a joint letter this week to the ITA negotiating parties, the CSOs
and trade unions, which they say represent hundreds of millions of
members across the globe, are concerned that the expansion of the
ITA (to ITA-II) "could further harm workers, particularly in
developing countries, that have not yet benefited from the agreement,
and possibly deteriorate the developmental prospects for those which
"The information and communication technology (ICT) sector has
enormous capacity to contribute to domestic industry creation, employment
generation, and technological development. Unfortunately, claims of
the ITA's potential benefits have failed to materialize for the majority
of workers in participating countries," the letter noted.
[According to trade officials, following a suspension of more than
three months, the negotiations on expanding the product coverage under
the ITA resumed again this week among some 25 members including the
Apart from the ITUC, which it says represents some 175 million workers
in 156 countries and territories, the letter to the WTO members was
also endorsed by international CSOs and trade unions including Arab
NGO Network for Development (ANND), ACP Civil Society Forum, Dignity
International, IBON, International Union of Food Workers (IUF-UITA-IUL)
and UNI Global Union (UNI).
Also signing on to the letter are a host of CSOs and trade unions
from the African, Americas, Asia-Pacific, and European regions.
In their letter, the CSOs and trade unions said that the necessary
diffusion of technology and the need to overcome the digital divide
within and across countries requires policy space for governments
in order to implement industrial policies that enable them to develop
their own industries or to increase the ownership of production of
ICTs in supply chains in which they operate.
"Instead of promoting industrial capacity, job creation, and
technological diffusion, the ITA has eroded policy space for the majority
of developing country participants. Experiences with the ITA indicate
that from the point of view of developing and Least Developed Countries
(LDCs), irreversible and binding commitments under the potential ITA-II
could likely damage their present and future growth potential."
An expanded ITA might lead to an erosion of domestic manufacturing
and loss of growth potential, the letter stressed, further noting
that ICT is an important manufacturing sector with the potential to
generate domestic industries and exports.
"Unfortunately, ITA tariff reductions have opened the flood gates
to imports into the domestic markets of many developing countries,
with many local manufacturers being pushed out of the market. In many
countries, large numbers of domestic manufacturers have turned into
assemblers and traders of ICT products, or have seen a reduction in
the domestic content of ICT goods," it said.
Developing countries could give an advantage to their producers if
they excluded their ICT markets until their domestic industries become
competitive internationally, thus also providing avenues for higher
domestic investment in production.
The CSOs and trade unions underlined that any negotiations on goods
"should focus on expanding the potential for decent jobs",
which the proposed ITA-II does not.
According to them, the claimed benefits of economic growth and potential
job creation in ICT manufacturing have failed to materialize for the
majority of ITA members.
"The creation of new industry is essential for the generation
of sustainable decent jobs; yet domestic ICT manufacturing, and thus
jobs, have been eroded rather than expanded. Where ICT jobs do exist
in developing countries, workers have yet to be able to capture a
fair share of the alleged gains."
The letter further noted that workers in developing countries are
often trapped in performing only low value-added processes in the
ICT sector, often in export processing zones (EPZs) and special economic
zones (SEZs), where workers do not enjoy the right to unionise and
collectively bargain or the right to sick leave and social insurance.
EPZs and SEZs are "isolated production enclaves with few forward
and backward linkages", the letter said, adding that low taxation
and high repatriation of profits further reduce domestic investment
in job creation or other development priorities.
"Negotiations on goods must begin with a focus on decent job
creation, to be based on the principles of fairness and equity in
order to lift living standards by supporting employment growth, improving
social protections and providing for fundamental workers' rights and
environmental standards. Expanding the ITA goes in the wrong direction,
and would hinder, rather than contribute to, a resolution of the global
jobs crisis," the letter asserted.
The CSOs and trade unions were also of the view that an expanded ITA
will likely benefit Transnational Corporations (TNCs) in countries
with advanced technological development, particularly given patent
monopolies and the lack of technology transfer.
"A small number of TNCs from developed countries reap the largest
benefits from the intellect-intensive processes of technological design
and marketing. The domination of the global ICT sector by a few corporations
poses threats to the utilization of technology to address developmental
concerns of developing countries and LDCs."
In many countries, the letter said, the effects of mass production
have not benefited consumers and users of technology due to the oligopolistic
Patents on technologies account for the largest part of value added,
and have increased disproportionately compared to other industry sectors
in both developed and developing top-trading ITA participants.
Although several global ICT producers have invested in research and
development in developing countries, these countries have enjoyed
very limited technology transfer, and consequently have seen only
marginal increases in their value added and in employment.
The letter called on developing countries not to accept de-linking
tariffs and Non-Tariff Barriers (NTBs) in any negotiations.
"The ITA brought tariffs to zero in 76 countries; unfortunately,
the significant amount of NTBs, especially in the form of national
standards and regulation, remained unaddressed," said the letter,
stressing that the issue of NTBs has exposed inherent weaknesses in
the WTO system and the lopsided negotiation process dominated by a
few developed countries, even in the plurilateral talks.
"While there has been much interest in tariff elimination in
the ITA and in the proposed ITA-II, there has been no corresponding
interest among the leading ITA members to address NTBs - even though
three in four NTBs notified to the WTO are implemented in developed
According to the letter, the current status of NTBs effectively restricts
developing countries' exports to developed countries, except when
developing countries are well-integrated in global production chains
owned and operated by developed countries' corporations.
"Negotiating parties should strike the right balance in NTBs
so as to ensure high-quality products on the one hand and facilitate
access to developed markets on the other."
The CSOs and trade unions further said that governments considering
engaging in ITA-II negotiations must conduct impact assessments so
as to be able to make decisions based on research and assessment rather
than unproven claims.
"It is rather appalling that after 15 years of the ITA, a comprehensive
impact assessment has yet to be conducted. Prior to commencing in
negotiations to expand the ITA, governments should conduct a comprehensive
assessment of the existing agreement's impact on the environment and
on economic and social development, particularly regarding employment
in the ICT sector."
They should then examine the potential expansion of the agreement
in light of financial market weaknesses and instability; a persisting
jobs crisis; growing inequalities; and other major challenges.
"The decision of countries as to whether or not to participate
in ITA-II negotiations should be based on actual and projected social,
economic and developmental impacts rather than mere claims about the
benefits of ITA or ITA-II," the letter underscored.
According to the letter, assessments must take into account the losses
of government revenue from tariff reductions.
It noted that developing countries are more likely to use tariffs
than subsidies in their protection of domestic industries.
"The reduction of tariffs to zero on ITA-included products by
2005 thus affected developing countries more than developed countries.
In addition to impacting levels of employment, tariff elimination
reduces revenues which the government could have used for spending
on other important developmental activities, such as health care,
education, and infrastructure."
For some LDCs, the letter emphasised, tariffs constitute a significant
source of revenue for the national budget. Therefore, countries should
take this into account in their consideration of whether to participate
in ITA expansion negotiations.
Developing countries, and particularly LDCs, can enjoy market access
benefits on a non-reciprocal basis if they do not join the ITA-II,
said the letter.
"Signatories to the ITA are mandated to extend the benefits of
tariff elimination to all WTO members on a Most Favoured Nation (MFN)
basis. Therefore, countries that are not yet competitive in ICT manufacturing
can already benefit from market access of other participating member,
without having to join the agreement. LDCs already enjoy preferential
access to most major markets, and would not gain more by joining the
National security issues should be taken into account, said the letter,
noting that as some products included in the proposed ITA-II are used
in armed forces and intelligence, some countries have raised concerns
with regard to national security.
"The agreement should leave ample space for countries to deal
with these issues as they deem appropriate."
Furthermore, the CSOs and trade unions called for any negotiations
to be transparent and accessible.
"Negotiations with such major implications as the ITA-II should
be transparent and accessible by civil society and interest groups
so as to increase the probability of a fair, inclusive and relevant
agreement for all. In addition, making trade inclusive has been stated
as a global goal in several international fora, and should be built
into the negotiations process of any international or plurilateral
agreement," the letter concluded.
"Governments negotiating the ITA-II must guarantee a fair level
of transparency and accessibility, and they must conduct impact assessments
that take into account financial instability, the persisting jobs
crisis and other major challenges so as to be able to engage in informed
negotiations," said ITUC General Secretary Sharan Burrow in an
ITUC news release.