13 August 2012
In response to a request from the US Trade Representative, the United States International Trade Commission (USITC) has launched two investigations in anticipation of negotiations on the potential expansion of the World Trade Organization’s (WTO) Information Technology Agreement (ITA).
The investigations are based on a list of certain information- and communications-technology (ICT) products that have been proposed to receive duty-free treatment under the expansion of the ITA.
The first report, expected to be completed in October 2012, will identify both ICT and non-ICT uses of the products in question, as well as any products that are import-sensitive in the United States. The ITC is seeking written comments from the public regarding the first report, with a deadline for submission of September 6, 2012. The second report, to follow in February 2013, will identify the significant producers and consumers of the proposed products and the tariffs involved with each product in various markets. The ITC will hold a public hearing on the second report on November 8, 2012, and the deadline for written submissions on this report is November 20, 2012.
The ITA currently provides duty-free tariff treatment to a wide range of electronics and other technology, including computers, semiconductors, software, telecommunications equipment and semiconductor manufacturing equipment. The list has not been changed since the ITA was signed in 1996, despite continuing innovation in the industry. Members of the ITA agreed in May 2012 to expand the agreement's product coverage. Formal negotiations are expected to begin in September 2012.
Congress has periodically delegated authority to the President to negotiate and 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, among other things, established the WTO).
Specifically, Section 111(b) of the 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.
The USTR requested comments from the public this past May on the possible expansion of the ITA (see Mayer Brown Legal Update “US Trade Representative Seeking Comments on Expansion of Information Technology Agreement – Negotiation Qualifies for Rarely Used Presidential Tariff Reduction Authority”).