ITA Expansion Gains Momentum
Last week was a busy one at the World Trade Organization (WTO) in Geneva, Switzerland. The signs are very encouraging that the member countries of the WTO are back on track to move the WTO’s trade liberalization agenda forward – from the new International Services Agreement (ISA) to the ongoing negotiations to expand the existing WTO Information Technology Agreement (ITA).
I was in Geneva as part of a U.S. industry delegation to show our support for the product expansion of the ITA, which would update one of the most commercially significant trade agreements for the information and communication technology (ICT) industry. The Telecommunications Industry Association (TIA) was part of a U.S. industry delegation with the Consumer Electronic Association (CEA), the Entertainment Software Association (ESA), the Information Technology Industry Council (ITI), the Motion Picture Association of America (MPAA), the Semiconductor Equipment & Material International (SEMI), and the Semiconductor Industry Association (SIA), along with a number of company representatives from the ICT industry. We had a set of productive meetings with around 20 WTO delegations in Geneva. The large U.S. industry delegation, as well as industry delegations from Chinese Taipei (Taiwan) and Japan, underscored just how important the work to expand the ITA in Geneva is to lowering the cost to trade ICT products, which will in turn, increase the diffusion of these vital products around the world.
The ITA, which was agreed to in 1996, was a seminal agreement for the ICT industry and for the WTO members participating in the agreement. The ITA lowered the cost and increased the diffusion of high-tech products through the elimination of import tariffs on a wide variety of ICT products. I believe the Trade Ministers back in 1996 got it right when they recognized “the key role of trade in information technology products in the development of information industries and in the dynamic expansion of the world economy” in the 1996 Ministerial Declaration on Trade in Information Technology Products.
The ITA was a ground-breaking step towards reaching the goal of developing ICT industries around the world and, most significantly, stimulating the economic growth that access to innovative and cost effective ICT products creates through a cascading set of benefits to the universe of manufacturing and services industries that require these products – from telecommunications services to the computer-controlled machines that help to build automobiles and the flat panel displays used for video conferences, computers, or to display information. If you pick an industry, whether in the manufacturing sector or services sector, ICT products are fundamental to the manufacture of that product or the delivery of that service.
The fact is that 1996 was a long time ago in the world of high-tech products; it has been over 15 years since the original list of ICT products covered by the ITA was created. With the constant innovation in the ICT industry, the advent of new business models, and the key role that global supply chains play, now is the time to update this agreement to bring it into the 21st century. While in Geneva, our industry delegation delivered a few key messages during our meetings with various delegations.
The first message was that the members of the ITA need to build on the growing momentum to conclude the negotiations for an expanded list of ITA products this summer. As an effort to expand upon an existing trade agreement, this goal is imminently achievable and would demonstrate that the WTO is open for business – that it can conclude a deal, one that will provide real economic benefits and jobs here in America and around the world. Of course, an expanded list of ITA products will need to be commercially meaningful, which will require a list that is expansive in its coverage.
A robust ITA product list will account for the innovations that have occurred over the past 16 years – these are innovations not just in ICT products, but also in how business is conducted – and to ensure that the ITA will be on the cutting-edge of trade in ICT products for the next decade. Finally, I would note the increasingly sophisticated global supply chains that have evolved in the ICT industry over the past 16 years. It is virtually impossible to source every single input component for a finished ICT product in one country, so it makes sense that countries looking to expand their ICT manufacturing sector should look to lower the input costs for manufacturing – simply put, lower cost of production results in lower final costs and a more competitively priced product. An expanded ITA would do this by lowering the cost on a myriad of “ICT inputs” that are necessary to build ICT products.
My takeaways from the meetings last week in Geneva are that the work to expand the ITA is on track and that agreement on an expanded ITA product list that is commercially significant is possible by the end of the summer. I would also like to thank the WTO delegations for taking the time to meet with the U.S. industry delegation during their busy schedule last week – the fact that these groups took time to meet with us demonstrates that they too are fully engaged in the work to update and expand the ITA product list. With work to expand the ITA product list well-underway, the beginning discussions for the ISA now happening, and other activities like the trade facilitation negotiations going on, it is an exciting time in Geneva.
For more information please contact Eric Holloway, the Director for International & Government Affairs at TIA. He can be reached at email@example.com