May 20, 2014
by Bien Perez, South China Morning Post

Proponents for expanding tariff cuts under the Information Technology Agreement (ITA) saw a glimmer of progress after Asia-Pacific Economic Cooperation trade ministers who gathered in China over the weekend expressed their support in pushing forward negotiations.

More than 80 industry groups from around the world last week urged participants to the 20th meeting of Apec ministers responsible for trade, which started last Saturday in Qingdao, to help restart the stalled ITA talks to remove tariffs on more information and communications technology products.

In a joint statement released at the end of their meeting on Sunday, the Apec ministers said they welcomed "creative ways to move forward" so that ITA talks can reach "a commercially significant and balanced conclusion in the shortest timeframe possible".

Talks in Geneva were suspended on November 21 after China, the world's biggest exporter and importer of hi-tech goods, refused to pare down the number of products it wanted excluded from an expanded ITA, a tariff-cutting scheme initiated under the World Trade Organisation in 1996.

"We had hoped for a breakthrough on ITA expansion negotiations this weekend, but we did not get that," said John Neuffer, the senior vice-president for global policy at the Information Technology Industry Council, a United States-based advocacy group.

"The discussions with China in Qingdao, however, may provide a path forward that would finally allow negotiators to move towards concluding this important agreement quickly."

The ITA has 79 signatories, accounting for about 97 per cent of global trade in information and communications technology products.

Although global innovation has flourished over the past 18 years, the scope of ITA products has not been expanded since the pact was established.

Familiar consumer electronics products - from smartphones, media tablets and video-game consoles to DVD and Blu-ray players - and even an entirely new class of chips called multi-component semiconductors are not covered by the existing agreement.

Negotiations last year tabled about 250 products in addition to the 190 duty-free items originally covered by the ITA. China offered a deal-breaking "sensitivities" list of about 140 products, of which 57 items were for exclusion and the rest for longer tariff phase-out periods.

Neuffer said that "China's foot-dragging on ITA expansion" was caused by "narrow, short-term, protectionist interests", which are "preventing the more visionary figures in China's leadership" to more fully integrate the country into the global economy.

US think tank Information Technology & Innovation Foundation estimated a broader ITA coverage would provide tariff savings worth US$8 billion annually for Chinese exporters of information and communications technology products.

The think tank said the expanded ITA would increase global demand for those products, which would boost China's exports of such goods by US $12 billion annually.

This article appeared in the South China Morning Post print edition as Apec ministers offer hope over trade tariff deal.