The Office of the US Trade Representative (USTR) is requesting input regarding whether the United States should undertake negotiations to expand the World Trade Organization’s (WTO) Information Technology Agreement (ITA) and, if so:
(1) Which information and communications technology (ICT) products the United States should seek to include—and provide duty-free treatment—under the ITA. Products under consideration include products that existed when the ITA was concluded in 1996, but that were not covered under the agreement, as well as products that have been developed since then; and
(2) Which US trading partners that are significant producers or consumers of ICT products, and which are not currently participants in the ITA, the United States should seek to have join the ITA.
The ITA requires participants to eliminate import duties on computers and computer equipment, semiconductors and integrated circuits, computer software products, telecommunications equipment, semiconductor manufacturing equipment, and computer-based analytical instruments. The list of covered products has not been expanded since the ITA was concluded in 1996. This request for comment comes on the heels of a letter in March by many of the major technology company associations around the world advocating for such negotiations.
Importantly, the President has authority under current law to implement such an agreement. Once the President has followed certain Congressional notification procedures, he can unilaterally lower the tariffs necessary to implement an expanded ITA. In addition, unlike broad, multi-sector negotiations such as the Doha Round, WTO members who do not participate in the negotiations would not have veto-power over an ITA expansion. They would however still receive the export benefits, as the duty reductions implemented by ITA members would apply to the exports of all WTO members.
In December 1996, the United States and 36 other WTO members reached agreement to eliminate tariffs on a wide range of ICT products. The resulting agreement, the Ministerial Declaration on Trade in Information Technology Products (also termed the Information Technology Agreement, or ITA) was implemented under the auspices of the WTO. The number of ITA participants has since grown to 73, reflecting a significant increase in participation by developing countries, and currently represents approximately 97 percent of world trade in ITA products. However, many countries still remain outside of the agreement.
The elimination of duties under the ITA has helped to generate substantial growth in information technology products trade. Industry sources estimate that global trade in products currently covered under the ITA grew from $1.2 trillion in 1996 to $4.0 trillion in 2008.
USTR has requested comments by noon on June 13, 2011.
Congress has periodically delegated authority to the President to negotiate and to proclaim reductions in tariffs under reciprocal trade agreements, subject to specific conditions and limitations, without requiring further congressional action. The Uruguay Round Agreements Act provided certain limited, residual proclamation authority to the President with respect to tariffs. The Uruguay Round of negotiations took place from 1986–1993 (having begun in Punta del Este, Uruguay), and, among other things, established the WTO.
Specifically, Section 111(b) of the Uruguay Round Agreements Act (19 U.S.C. 3521(b)) authorized the President of the United States, after notification and consultation with Congress, to proclaim tariff modifications that result from multilateral WTO agreements to eliminate or harmonize tariffs—as long as the reduction applies to articles contained in a tariff category that was the subject of reciprocal duty elimination (so-called ”zero-for-zero elimination”) or harmonization negotiations during the Uruguay Round of multilateral trade negotiations. Thus, any agreement in the WTO to expand duty-free coverage to such products would not require additional legislation by Congress for the United States to implement.
The United States used the authority provided for in Section 111(b) to implement the original ITA and an agreement on distilled spirits in 1997, and on a number of occasions to implement pharmaceutical sector agreements. There are a number of other sectors that would also likely qualify for this Presidential negotiating authority.
Current ITA participants include Albania, Australia, Bahrain, Canada, China, Chinese Taipei, Costa Rica, Croatia, the Dominican Republic, Egypt, El Salvador, the European Union (on behalf of its 27 Member States), Georgia, Guatemala, Honduras, Hong Kong, Iceland, India, Indonesia, Israel, Japan, Jordan, Korea, Kuwait, the Kyrgyz Republic, Macao, Malaysia, Mauritius, Moldova, Morocco, New Zealand, Nicaragua, Norway, Oman, Panama, Peru, the Philippines, Saudi Arabia, Singapore, Switzerland and Liechtenstein, Thailand, Turkey, Ukraine, the United Arab Emirates, the United States, and Vietnam. Any WTO Member or any State or separate customs territory in the process of acceding to the WTO may become a participant in the ITA.
If you are interested in providing input on expanding the ITA or have additional questions about trade in information technology products or sector-specific WTO negotiations, please contact Tiffany Smith or Tim Keeler.
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