WTO members conclude ITA-II deal at MC10

The Nairobi Ministerial Conference also saw the finalization of an agreement to scrap import duties on over 200 information technology products.

by Kanaga Raja

GENEVA: The participants negotiating the expansion of trade in information technology (IT) products agreed at the Nairobi Ministerial Conference on the timetable for implementing an agreement that would eliminate tariffs on some 201 IT products valued at some $1.3 trillion per year, the WTO said on 16 December.

According to a news item on the WTO website, the breakthrough came following months of intensive negotiations among the participants.

The agreement is an expansion of the 1996 Information Technology Agreement (ITA) which involved 82 members.

The negotiations were conducted among 53 WTO members, including both developed and developing countries, which account for approximately 90% of world trade in these products.

According to the news item, all 162 WTO members will however benefit from the agreement, as they will all enjoy duty-free access to the markets of the members eliminating tariffs on these products.

As a result of these negotiations, approximately 65% of tariff lines will be fully eliminated by 1 July 2016.

According to an accompanying briefing note put out by the WTO secretariat, under the new WTO agreement, import duties will be eliminated on 201 high-tech products whose annual trade is estimated at $1.3 trillion, accounting for approximately 10% of world trade in goods.

The list of 201 products was originally agreed by the ITA participants in July 2015. They include: new generation multi-component integrated circuits (MCOs), touch screens, GPS navigation equipment, portable interactive electronic education devices, video game consoles and medical equipment, such as magnetic resonance imaging products and ultra-sonic scanning apparatus.

Under the agreed package, import tariffs for most of the 201 IT products will be eliminated either immediately or progressively over three years.

The WTO secretariat estimates that more than 65.3% of tariff lines, accounting for 88% of imports, will be immediately eliminated by 1 July 2016, when most participants will implement the first tariff cut.

By 2019, these figures will reach 88.8% of the tariff lines and 95.4% of imports, thereby showing the profound impact that the ITA expansion will have on trade in these products, said the briefing note.

According to the briefing note, for a very limited number of sensitive products, tariffs will be progressively eliminated over a period of five years, and seven years for the most exceptional cases.

It noted that some of the products covered by the ITA expansion have relatively high import duties in certain key markets. For instance, tariffs on certain parts of telephone handsets are 8.5%; video game consoles and DVD recorders 14%; compact disc players 30%; and video cameras 35%.

“I am delighted to mark this breakthrough here today at the Ministerial Conference,” said WTO Director-General Roberto Azevedo.

“This is a very significant achievement. Annual trade in these 201 products is valued at $1.3 trillion per year, and accounts for approximately 10% of total global trade. Eliminating tariffs on trade of this magnitude will have a huge impact. It will support lower prices – including in many other sectors that use IT products as inputs – it will create jobs and it will help to boost GDP growth around the world.”

According to the WTO news item, the agreement also contains a commitment to work to tackle non-tariff barriers in the IT sector, and to keep the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments. (SUNS8159)      

Third World Economics, Issue No. 605, 16-30 November 2015, pp13-14