Expanded WTO Information Technology Agreement Is Set To Offer Significant Economic Benefits To Industry And Users Of Technology Products

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[author: Marcus Sohlberg]

There has recently been a breakthrough in the negotiations for an expanded Information Technology Agreement (ITA) at the World Trade Organization (WTO). On November 10, the United States and China reached a mutual understanding, after talks had been stalled for over a year, which could mean a formal agreement can be concluded among all 80 Members at an upcoming meeting in Geneva.

The ITA was a landmark agreement when concluded in 1996 between 14 signatories, because it was the first industry sectoral agreement in the WTO, and it liberalized trade in the sector by reducing all import duties to zero over a period ending in 2000 (and no other duties could be applied to these products). The agreement's estimated worth in 2013 was $1.6 trillion as it liberalized trade in particularly computers, semiconductors and related manufacturing equipment, telecommunication equipment, and data storage software.

The ITA is a plurilateral agreement, meaning that WTO Members are free to decide whether to accede to it as opposed to the multilateral agreements, which apply equally to the entire membership. One unique feature of the ITA compared to other WTO plurilateral agreements, such as the Government Procurement Agreement, is that the benefit of zero duties on covered technology products is extended to every WTO Member, whether or not it is a signatory to the agreement.

The number of members of the ITA has grown steadily over the years, and efforts have been underway since 2010 to update the agreement by expanding its product coverage. Taking into account the significant advances in technology since 1996 and the importance in trade today of global supply chains, where manufactured goods are largely produced with components sourced from more than one country, an upgraded ITA could provide significant economic benefits to the technology industry and users of technology products.

It has proven difficult, however, to find common ground on the proposal to add 200 new technology products, in particular because of continued disagreements between the United States and China with respect to certain sensitive products. That is why the recent understanding reached between the two countries has set the stage for the conclusion of an upgraded ITA.

Although the understanding is not public, the White House said in a fact sheet that the deal would support up to 60,000 additional U.S. jobs, "eliminate tariffs on roughly $1 trillion in annual global sales of information and communications technology products of which more than $100 billion now come from the United States," and "increase annual global GDP by an estimated $190 billion."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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