Print PDF

Export Group Recommendations on Expansion of Technology Agreement, MENA Trade

Monday, November 21, 2011
Sandler, Travis & Rosenberg Trade Report

The President’s Export Council sent to President Obama last week two separate letters calling for an expansion of the Information Technology Agreement and making various recommendations for increasing trade and investment with the Middle East and North Africa.

Information Technology Agreement. The PEC pointed out that between 1996, when the ITA was signed, and 2008 total ITA product trade increased more than 10% annually, from $1.2 trillion to $4.0 trillion. However, because the agreement has never been updated to include new products, “older, less productive technologies benefit from duty-free treatment while innovative products face global import barriers.” An expanded ITA could remove tariffs on an additional $800 billion in global trade, including more than $122 billion in U.S. trade.

The PEC therefore recommends that the Obama administration launch negotiations to expand the product coverage of the ITA, focusing on information communication and technology products or parts and components predominantly used in ICT, consistent with the parameters of the original ITA. Negotiators should focus solely on tariff reductions, the Council said, and an updated agreement should be sufficiently broad or include automatic mechanisms to ensure that new products will be covered as the ICT industry continues to evolve. The PEC also wants to widen the membership of the ITA, which currently covers only 73 of the 153 members of the World Trade Organization and does not include “large emerging markets such as Mexico and Brazil.” In the future, the letter said, ITA membership should be required as a condition of WTO accession.

The scope of the ITA was the subject of a dispute between the U.S. and the European Union at the WTO, which ruled against tariffs the EU had imposed on certain information technology products originally covered by the ITA after arguing that their subsequent incorporation of different technologies left them outside the scope of the agreement. During the course of that dispute the EU proposed to update and expand the ITA to include goods that had entered the market since the agreement was concluded and to establish mechanisms to keep the ITA up to date in the future. While the U.S. rejected that proposal at the time, earlier this year the Office of the U.S. Trade Representative solicited comments on the idea. In the meantime, the U.S. and others are pursuing WTO proceedings to determine if the EU has in fact complied with the earlier decision against its tariffs.

Middle East and North Africa. Separately, the PEC expressed support for increasing U.S. commercial engagement with the Middle East and North Africa, an initiative announced by the Obama administration in May. In advancing this effort the Council urged the administration to target the following key areas.

• Investment – expand efforts to remove barriers such as impediments to wholly foreign ownership and agency requirements for licensing to sell/distribute

• Regulatory convergence – promote and expand existing efforts to create regional regulatory approaches, including regional institutions that can develop programs for industry consultation and engagement on the development of regulations as well as regional systems to allow for electronic posting of regulations, requirements, etc.

• Standards – work to increase the adoption of a flexible approach to accepting one or more sets of existing high-level standards and endeavor to reduce non-science based regulations and restrictions, particularly in agriculture

• Customs – increase efforts to develop more open and transparent customs administration, including Internet posting, consultation efforts and harmonization of customs applications across regional entities

• Governance – standards for transparency and anti-corruption and a focused strategy on illicit trade in the region should be developed with national governments and regional actors

• Tariffs – focus on liberalizing tariffs at the border and liberal rules of origin

• Government procurement – greater transparency in tendering, procurement and management

• Services – emphasize improvements in laws and regulations affecting the freedom of data flows, information and communication technology, and transparency

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines