WTO members fail to reach deal on ITA expansion

The latest round of talks at the WTO to eliminate tariffs on a range of information technology products could not yield an agreement, reports Kanaga Raja.

GENEVA: A group of countries negotiating the expansion of product coverage under the Information Technology Agreement (ITA) failed to strike a deal at the WTO on 12 December.

The ITA, first negotiated among WTO members said to account for 90% of global trade in this sector and concluded in December 1996, brought about an agreement for tariffs to be reduced to zero by the participants in that accord, who then inscribed this concession in their schedules of commitments, thus multilateralizing it on an MFN basis.

According to information posted on the WTO website, the participants in the negotiations for expansion of the ITA are: Albania, Australia, Canada, China, Colombia, Costa Rica, Dominican Republic, El Salvador, the European Union (comprising 28 member states), Guatemala, Hong Kong-China, Iceland, Israel, Japan, Korea, Malaysia, Mauritius, Montenegro, New Zealand, Norway, the Philippines, Singapore, Switzerland, Chinese Taipei, Thailand, Turkey and the United States.

After a suspension of more than three months, the negotiations on the expansion of the ITA resumed in the third week of October 2013 but broke down in late November of the same year over China’s request to exclude a number of IT products from trade liberalization.

The talks picked up again in early December 2014 following a breakthrough between the US and China on the expansion of the ITA at the sidelines of the APEC summit in Beijing in November.

However, the latest round of the negotiations, currently being coordinated by the EU, broke down again on 12 December over the inclusion of some key high-tech items in the product coverage.

The breakdown was due to a stalemate between China and South Korea, with China refusing to go beyond items it had agreed with the US recently while South Korea insisted on the inclusion of, amongst others, LCD panels in the draft list of some 200 additional products that would have their tariffs reduced to zero.

Chinese Taipei, which had also wanted some items to be included in the list, reportedly supported South Korea, according to media reports.

“Missed opportunity”

In a statement issued on 12 December, US Ambassador to the WTO Michael Punke said that the US was gratified that the US-China breakthrough in November “allowed us all to get back to the table and that so much of the US-China breakthrough agreement has been embraced by our plurilateral process.”

The US trade envoy recognized “the significant flexibility” shown by a number of participants, mentioning in particular the flexibility shown by Costa Rica, Malaysia, Israel, Guatemala and Korea.

“Through the consultations over the last few weeks, it became clear that certain Members had important interests that were not fully captured by the bilateral agreement. And those members came a long way toward accepting 99% of that agreement, but asked that small adjustments be made in order to be able to accept the deal,” said Punke.

“Like everyone in the room, we are disappointed not to be celebrating a deal this week. We missed a big opportunity. All of us will need to go back to our capitals and reflect hard on next steps,” he said.

Speaking to journalists after the 12 December meeting, EU Ambassador Angelos Pangratis said that there had been “a lot of progress in many areas”. “We covered a lot of the distance that needed to be covered”, with a lot of flexibility by many participants, he said.

“We brought down the negotiations to a few key issues that are up to capitals to decide whether they can make it or not ... So, we basically decided to leave a little bit more time,” he added.

In a short statement issued on 12 December, WTO Director-General Roberto Azevedo said: “The participants have significantly reduced the gaps on expanding the coverage of the ITA in recent days but unfortunately it has not been possible to finalize the negotiations this week. I urge members to remain actively and constructively engaged as we try to bridge the gaps in these negotiations.” (SUNS7938)                             

Third World Economics, Issue No. 583, 16-31 Dec 2014, pp6-7