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First Tariff Cuts Under Expanded IT Agreement Set for July 1

Friday, April 22, 2016
Sandler, Travis & Rosenberg Trade Report

The first tariff cuts under the World Trade Organization’s expanded Information Technology Agreement are set to take effect July 1, covering around 65 percent of tariff lines accounting for approximately 88 percent of exports of covered goods. Most of the remaining tariffs will be phased out in annual stages through July 1, 2019, though some will not be fully eliminated for five or even seven years. Tariff elimination schedules vary by country and China will phase out its tariffs more slowly than others.

The expanded ITA covers 201 information and communications technology products with an annual global trade value of more than $1.3 trillion, including next-generation multi-component integrated circuits, medical equipment, GPS devices, tools for manufacturing printed circuits, video game consoles, portable interactive electronic education devices, printer ink cartridges, static converters and inductors, loudspeakers, computer software, video cameras, testing instruments and touch screens, which are currently subject to tariffs of up to 35 percent.

Only about a third of the WTO’s members signed the agreement, binding them to provide duty-free access to their markets for the affected goods for all 162 WTO members. At a meeting this week some of these signatories encouraged other members to join the agreement and open up their markets as well. European Union representatives opined that doing so would allow industry to reduce the costs of importing the hardware necessary to develop the IT sector, create jobs for young people, make other industries more efficient by using IT, and enable countries to become part of global value chains.

According to a WTO press release, seven members (the U.S., the EU, Japan, Korea, Canada, Norway and Australia) sought justification or clarification from India on its decision to raise import duties to ten percent for several products covered by the original ITA for which they said India’s duties should be bound at zero. These products include telecommunications switches, voice-over Internet protocol phones, optical transport equipment and network products. India replied that it has sent the matter back to New Delhi for further consideration.

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