EU, US agree terms of IT pact benefitting them

SINGAPORE 12 DECEMBER: The United States and the European Union announced that they had successfully concluded their talks on the terms of a trade liberalization accord on Information Technology products, which would result in zero tariffs by year 2000. The pact will become effective from 15 March 1997, provided it is joined by countries responsible for at least 90% of world trade in this sector. Both the US and the EC were now applying pressure on the Asian emerging economies and other significant players.

At a press conference, the EC trade commissioner, Sir Leon Brittan said that developing countries would have some flexibility in terms of achieving the zero tariffs by year 2000.
Brittan said, the pact would not include consumer electronics and audio material products (items that developing countries, and emerging economies of Asia too, export), but brushed aside questions about such exclusion with the statement that all those involved in the talks knew of this from the beginning.

And the provisions in the pact on reaching zero-tariffs will have a provision about `impairment' (giving cause for dispute settlement process to be activated), to ensure that concessions on tariffs are not thwarted through non-tariff barriers. The IT pact, and the hoo haw here about the deal, and the attempts of developing country trade officials to suggest that they want to "contribute to this", is indicative of the way the WTO system of trade liberalization actually functions.

Nearly fifty years of the GATT and now, the WTO trading system, has involved trade liberalization in industrial products, of technological and high technology products, but not labour intensive ones. For example, non-tariff discriminatory quotas in textiles and clothing will be phased out only in 2005 (and the chances they will come back in a different guise, may be labour standards). These, and others like leather and footwear and many agricultural products face high tariffs, tariff escalation and so on, and there is no talk or move to remove them.

The ebullient, extrovert WTO Director-General, occasionally talks of them, while he is pushing the EC and US trade agendas. But the majors have ensured there is no meaningful reference to them in the Draft Declaration. Brittan, at the press conference, as also Mr. Robert D. Kyle (Special Assistant to the US President at the National Economic Council/National Security Council) in a talk with the NGOs, presented this as a major pact to boost world trade and economy, and as an important tool for development, by helping countries to access information, which he said was the key input for development, education, culture and so on.

Both Brittan and Kyle were asked about the drive by them, at the SMC, to reduce the tariffs on IT products exported by them, even as they were trying to increase the costs of the information that could be accessed through parallel negotiations now going on at Geneva, under the auspices of the World Intellectual Property Organization. The WIPO negotiations seek to extend the copyright over material on the Internet.

NGO experts here, at meetings, have said that the US and EC proposals would make it a violation of copyright when even browsing on the WEB, and accessing and downloading and using information on data bases (of information in public domain), and extend copyright to material posted in open conferences and discussion fora, even if copyright is not specifically claimed.

Brittan would not even address this question at the press conference which, it was announced, would be confined purely to the IT products accord. Kyle was asked by an NGO, to reconcile the US claims about the IT pact resulting in cheaper IT products for consumers everywhere, and how the US would reconcile it with the TRIPs agreement, which restricted and raised the costs of some information, and the WIPO discussions in Geneva which will raise the costs of any information that could be accessed through computers, modems and so on.

Kyle said that only a strong IPR protection stimulated innovation, and this was the key to development, not copying the information. Kyle was also asked about the status of the move to give the least developed countries, zero tariff access to the industrial markets. Kyle said, the US favoured technical assistance to the Least Developed Countries (LDCs), with the emerging economies also contributing to the costs of this!

An Europe-based international environment NGO told Kyle that the WTO was not a technical assistance agency, but a rule-based negotiating fora to negotiate market access, lowering tariffs on Most-Favoured-Nation (MFN) basis, and for preferences that may violate MFN, but could secure a waiver. Kyle's response did not really address this, participants later said.

Kyle was also asked about the study processes being pushed on investment and said, a move from examination to negotiations was "certainly a possibility", but that was no reason to exclude a study. It was not clear whether he was referring to the stance of some developing countries who are willing to have a study on investment, but specifically exclude negotiations, or to the US position that it would not agree to negotiate the investment issue at the WTO. (SUNS3891)

The above first appeared in the SUNS of which Chakravarthi Raghavan is the Chief Editor.