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Landmark Deal Reached to Expand Information Technology Agreement

Monday, July 27, 2015
Sandler, Travis & Rosenberg Trade Report

Fifty-four World Trade Organization members reached a long-awaited agreement on July 24 to expand the Information Technology Agreement to provide duty-free treatment to over 200 additional tariff provisions and products. The agreement will be implemented on a most-favored-nation basis, which means that all 161 WTO members will enjoy duty-free access in the markets of those members who are eliminating tariffs on these products. According to WTO Director-General Roberto Azevêdo, annual trade in the products that will be added to the ITA is valued at over $1.3 trillion and accounts for about seven percent of global trade, an amount larger than global trade in automotive products or trade in textiles, apparel, iron and steel combined.

The WTO indicates that the agreement also contains a commitment to work to tackle non-tariff barriers in the information technology sector and keep the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments.

The ITA was concluded in 1996 and currently provides for duty-free trade of approximately 180 high-tech goods between 81 signatory countries, accounting for about $2 trillion in annual global exports. An expanded ITA will include a host of additional products, 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, LEDs, touch screens, children’s electronic learning devices, 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 European Union, China and South Korea made a number of concessions in the most recent negotiating round in order to reach a deal.

According to the WTO, the majority of tariffs on the products being added to the ITA will be eliminated within three years, with reductions beginning in 2016. By the end of Oct. 2015 each of the participating members will submit to the other participants a draft schedule detailing how the terms of the agreement would be met. Participants will spend the coming months preparing and verifying these schedules. The objective is to conclude the details necessary for implementation at the 10th Ministerial Conference in Nairobi in December.

Sandler, Travis & Rosenberg will conduct a webinar on Tuesday, Aug. 11 to discuss the key provisions and impact of this landmark agreement, and what role the trade may play in its implementation. Click here for more information or to register.

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