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Talks on Expanding Duty-Free Trade in Information Technology Goods Collapse

Tuesday, December 16, 2014
Sandler, Travis & Rosenberg Trade Report

Duty-free trade in more than 200 high-tech goods will have to wait after negotiations on expanding the World Trade Organization’s Information Technology Agreement collapsed last week. According to press reports, China refused a request from Korea and Taiwan to extend ITA coverage to liquid crystal displays used in televisions and computer monitors and then rejected an effort to add alternative products of commercial interest to those countries.

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 a year after Beijing signaled that it wanted dozens of sensitive goods off the list of those to be added to the ITA. China ended up largely backing down from that position in a recent agreement with the U.S., but that deal did not include LCDs and China was apparently not prepared to give any more ground when pressed further by other WTO members. Press sources noted that Korea and Taiwan are both major producers of LCDs but that China is working to develop its own industry to manufacture those products.

Formal talks are expected to resume sometime in 2015, and informal consultations could be held before then. WTO Director-General Roberto Azevêdo said that in the meantime WTO members should “remain actively and constructively engaged as we try to bridge the gaps in these negotiations.” U.S. WTO Ambassador Michael Punke added that participants “will need to go back to our capitals and reflect hard on next steps.”

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