The United States and more than 50 member governments of the World Trade Organization (WTO) announced a landmark expansion of the Information Technology Agreement (ITA) that will phase out hundreds of tariffs on information technology. This is the first major tariff-elimination deal at the WTO in 18 years.
The WTO estimates that ITA expansion will eliminate tariffs on approximately $1.3 trillion in annual global exports of information and communications technology products. Industry analysts predict that the expanded agreement will increase annual global GDP by some $190 billion.
The ITA was concluded in its original form in 1996 and remained unchanged for nearly two decades, despite tremendous growth in global trade in technology products. Negotiations to expand the ITA were launched at the WTO in 2012.
In July 2015, the parties reached agreement on the ITA expansion list of 201 products, including new-generation semiconductors, GPS navigation systems, medical devices, machine tools for manufacturing printed circuits, telecommunications satellites, loudspeakers and touch screens. 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.
Tariffs on products covered by the expansion either will be eliminated on July 1, 2016, or will be phased out in annual cuts over a period of 3, 5, or 7 years. Thus, even goods for which the tariff does not reach zero until later on will see an immediate reduction in tariff starting on July 1, 2016. The pace of the tariff phase-outs was the final piece of the negotiation and will be made public soon.
Under US law, the president has authority to implement the ITA expansion without congressional action. Once the president has followed specified procedures for notifying Congress, he can unilaterally lower the tariffs as 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 exports by all WTO member countries.
The elimination of duties under the ITA has helped to generate substantial growth in the trading of information technology products. Industry sources estimate that global trade in products currently covered under the ITA grew from $1.2 trillion in 1996 to $4.0 trillion annually.
The WTO members who make up the expanded ITA are: Albania, Australia, Canada, China, Costa Rica, the European Union, Guatemala, Hong Kong, Iceland, Israel, Japan, Korea, Malaysia, Montenegro, New Zealand, Norway, Philippines, Singapore, Switzerland, Taiwan, Thailand and the US.