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WTO members seal trillion-dollar IT trade deal

24 July 2015

Negotiators from 54 member countries of the World Trade Organisation (WTO) have finalised a deal to slash tariffs on a host of information technology and electronic products ranging from video games to medical equipment, in a big boost to manufacturers of these high-tech products.

The expanded Information Technology Agreement (ITA-II) pledged to eliminate tariffs on an additional list of roughly 200 products, which include new generation semi-conductors, GPS navigation equipment and medical equipment, including magnetic resonance imaging products and ultra-sonic scanning apparatus.

The agreement to update the WTO's 18-year-old Information Technology Agreement (ITA) adds products with an annual trade value of about $1 trillion to the list of goods covered by zero-tariff and duty-free trade, WTO stated in a release.

US trade representative Michael Froman said more than $100 billion of US exports alone would be covered by the updated agreement and industry estimates showed the removal of tariffs could support up to 60,000 additional jobs.

"ITA's expansion is great news for the American workers and businesses that design, manufacture, and export state-of-the-art technology and information products, ranging from MRI machines to semiconductors to video game consoles," Froman said.

The list of products and the draft declaration which spells out how the Agreement would be implemented have been sent to capitals for review. Members have until Friday at noon Geneva time to give final approval.

''This is a big deal,'' said WTO Director-General Roberto AzevÍdo. ''The trade covered in this agreement is comparable to annual global trade in iron, steel, textiles and clothing combined. By taking this step, WTO members will help to provide a jump-start to the global economy and underline the WTO's role as the central global forum for trade negotiations.''

While not all WTO members participated in these negotiations, all will benefit from the outcome because the participants will scrap duties on imports of these products, WTO stated.

Applying duties in a uniform and non-discriminatory manner across the WTO membership is known as the most favoured nation principle, it added.

Technology companies like General Electric Co, Intel Corporation, Texas Instruments Inc, Microsoft Corp and Nintendo Co are among companies expected to benefit from the deal.

Additional duty-free products include computer software and software media, video game consoles, printer ink cartridges, GPS devices, medical devices such as MRI machines and next generation semiconductors, the Technology CEO Council said.

The ITA is solely a tariff cutting mechanism. While the declaration provides for the review of non-tariff barriers (NTBs), there are no binding commitments concerning NTBs. There are three basic principles that one must abide by to become an ITA participant:

  • All products listed in the Declaration must be covered;
  • All must be reduced to a 'zero tariff level'; and
  • All other duties and charges (ODCs) must be bound at zero.

There are no exceptions to product coverage. However for sensitive items, it is possible to have an extended implementation period.

The commitments undertaken under the ITA in the WTO are on an MFN basis, and therefore benefits accrue to all other WTO Members.

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