WTO tariff deal has tech firms abuzz

Technology manufacturers, including Samsung, could see a spring in their step from the axing of tariffs on some 250 IT products.
Technology manufacturers, including Samsung, could see a spring in their step from the axing of tariffs on some 250 IT products.PHOTO: BLOOMBERG

It involves IT products worth $1.37 trillion of global commerce

NEW YORK • Trade negotiators tentatively have agreed to eliminate tariffs on an array of technology products valued at US$1 trillion (S$1.37 trillion) worth of global commerce in what would be the first significant tariff-cutting deal at the World Trade Organisation (WTO) in 18 years.

Participants said the 80 nations struck a tentative deal last Saturday to expand to about 250 the IT products on which tariffs would be dropped. The United States, China, Japan and others had been meeting at a European Union mission in Geneva and aimed to finalise the so-called Information Technology Agreement (ITA). Negotiators, who met from July 14 to 18, expect their respective governments will sign off on the deal by Friday.

US Trade Representative Michael Froman called the deal a "major breakthrough" in talks while WTO director-general Roberto Azevedo tweeted that there was a "basis for an agreement". "Very optimistic that we'll have a final successful deal by the end of (this) week," Mr Azevedo said on Twitter.

Members had taken on the question of various tariffs, notably on LCD screens, which were contested by Taiwan and China, and an EU request concerning car radios. South Korean negotiators withdrew their opposition to an extended agreement, and members agreed to consider a draft list of covered products.

Tariffs on semiconductors, magnetic resonance imaging machines, global positioning system devices, printer ink cartridges, video game consoles and other products would be cut to zero under the deal, according to the US trade office.

The product list could pave the way for a final deal that would contribute as much as US$190 billion to global gross domestic product and support 60,000 US jobs.

"This will open overseas markets for some of America's most competitive companies and workers," Mr Froman said in a statement.

The expanded product list will now undergo consideration from trade ministers at their various capitals. Technology manufacturers such as Intel, Samsung, Sandisk and Texas Instruments stand to benefit from the elimination of tariffs on some 250 products.

The 80 WTO countries that participate in the ITA talks account for about 97 per cent of global trade in IT products. The ITA requires participants to eliminate import tariffs on technology products on a most-favoured-nation basis, meaning that any duty-free terms are applied to all WTO members.

In September, ITA negotiators will start talks on schedules of concessions for tariff reductions, also known as staging. That allows countries to gradually phase in the tariff reductions for certain products deemed too sensitive for the ITA's various signatories.

Negotiators will also hold technical discussions with the goal of completing the agreement by the time of the WTO ministerial conference set for Dec 15-18 in Nairobi, Kenya.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on July 21, 2015, with the headline 'WTO tariff deal has tech firms abuzz'. Print Edition | Subscribe