ITA Expansion – Will China Seriously Engage?

ITA Expansion – Will China Seriously Engage?

By Eric Holloway

As part of a large U.S. industry delegation representing a broad array of ICT manufacturers, TIA is in Geneva, Switzerland this week to cheer on the trade negotiators who are working hard to conclude the negotiations to expand the product coverage of the WTO’s Information Technology Agreement (ITA).  The ITA remains one of the most commercially important WTO trade agreements – by eliminating tariffs on a broad range of ICT products, the ITA lowers the cost and improves access to these products, which are vital to the economic competitiveness of all economies around the world.

The real work this week will consist of technical discussions among the trade negotiators on the “removal” or “staging” of products deemed to be sensitive for economies within the core group actively involved in the expansion of the ITA.  To ensure a commercially significant expansion of product coverage under the ITA, U.S. industry will be urging all economies to prioritize the use of staging, rather than the out-right removal of products from an expanded ITA product list.  While industry would like to see economies immediately go to zero percent tariffs once the ITA expansion negotiations are complete, we recognize that for some products, limited staging may be needed to lower tariffs to zero. 

While there are high expectations here in Geneva that the work to expand the ITA can be concluded this week, we are hearing some troubling news that could slow the tremendous progress made since the start of these negotiations over a year ago.

One notable exception is China, which has yet to revise its significant list of sensitive products, totaling almost 150 of the approximately 260 products that are now being discussed for inclusion in an expanded list of ITA products.  To provide some additional context, the economy with the next largest list of product sensitivities is less than half of China’s list.  Equally problematic is the fact that China’s sensitive products list calls for the removal of 106 products as opposed to the use of staging.  The removal of such a large number of products would assure an underwhelming outcome for this vitally important tariff-cutting agreement.

China’s lack of a revised list and the signals that China is not prepared to show flexibility as it revises its list are concerning for all involved in these negotiations.  As a leading global manufacturer of ICT products, it’s puzzling to many why China has not taken on a more active leadership role in bringing these negotiations to a successful conclusion. 

There are a few noteworthy examples of economies that have taken steps to meaningfully advance the negotiations this week.  In particular, Costa Rica has set an important example for all the economies involved in the negotiations by significantly reducing the number of products on its revised list of sensitivities.  Costa Rica’s actions demonstrate a real desire to successfully conclude the negotiations through active engagement and flexibility in its product list.

The stage is set this week for the trade negotiators to conclude the work to finalize an expanded product list for the ITA – a task that will update the original agreement from 1996 to reflect the changes in technology that have taken place since then and to enhance the economic benefits that ICT bring to the world.  Virtually everyone has come ready to make this a reality.  The major outstanding question is whether or not China is coming to Geneva for the same goal.

For more information, please contact Eric Holloway, Director for International & Government Affairs at TIA. He can be reached at EHolloway@tiaonline.org.