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ITA Expansion Negotiations Near Completion

Tuesday, July 21, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative is reporting a “major breakthrough” in the negotiations to expand the Information Technology Agreement that “opens the door for the swift conclusion of the first major tariff-cutting deal at the World Trade Organization (WTO) in 18 years.” USTR states that an earlier bilateral breakthrough between President Obama and President Xi in November 2014 had paved the way to this result.

The ITA was concluded in 1996 and currently provides for duty-free trade of about 180 high-tech goods between 75 signatory countries, accounting for about $2 trillion in annual global exports. An expanded ITA would include about another $1 trillion worth of sales of more than 200 additional tariff lines, including medical equipment, GPS devices, video game consoles, printer ink cartridges, video cameras, static converters and inductors, loudspeakers, software media (e.g., solid state drives), next generation semiconductors, point-of-sale cards to download software and games, and various information and communications technology testing instruments.

The ITA expansion talks had been stalled for over a year after Beijing signaled that it wanted dozens of sensitive goods off the list of those to be added to the ITA. However, negotiators from the U.S., the EU, China and South Korea made a number of concessions in the most recent negotiating round in order to reach a deal. Negotiators have produced a declaration text and a final product list that is being circulated to all participants for final review and confirmation. The World Trade Organization indicates that members have until July 24 at noon Geneva time to give final approval.  

According to the WTO, when the product list and draft declaration are approved WTO negotiators will spend several months hammering out the technical details and the timetable for tariff elimination. The objective would be for all elements to be completed in time for ministers of those members who are involved in this initiative to conclude the ITA expansion agreement at the 10th Ministerial Conference in Nairobi in December. 

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