Dateline Geneva: The initiative to expand product coverage of the Information Technology Agreement (ITA) took an important step forward this week, increasing the chances of getting an ambitious outcome this year. If successful, this would represent the most commercially significant tariff reduction undertaking achieved by the World Trade Organization (WTO) in the 17 years since the ITA was born.
There have been some media reports that not much progress has been made. To be sure, we’ve heard a lot of talk about technical aspects of implementation and the number of products that won full consensus for inclusion in the final agreement was limited.
But that’s missing the point on what happened this week. Rather, this round of talks was primarily devoted to getting everyone to the poolside again after the three-month suspension; and to prepare to hold hands and make the last big plunge of deal-making necessary to achieve a strong outcome before the WTO ministerial meeting in Bali in early December.
Why the optimism? Trade negotiations are as much about psychology as anything else, and the psychological ground game has shifted. After meetings with dozens of negotiating teams, our industry coalition detected a palpable sense that a good deal is within reach this year and that the negotiators increasingly understand the moment is upon them to make those final concessions.
Some of that shift was captured in the “conclusions” document distributed at yesterday’s Ambassadors’ meeting, where heads of mission involved in the talks agreed to have their negotiating teams go back to their capitals and “review their respective lists of sensitivities to facilitate solutions” and “avoid adding further sensitivities and focus on reducing their lists.”
Also spelled out in that document was a commitment to “engage more intensively” and an agreement to meet again the week of November 11 “in order to finalise negotiations and if necessary also during the following week.”
There will be an important inflection point before that. By November 4, all parties agreed to submit their revised sensitivities lists.
We are not blind to the serious obstacles on the road to success. The Chinese sensitivities list improved since the talks were suspended three months ago, but that list is still calling for the exclusion of too many important industry priorities and needs a lot of work. There are other lists as well that require significant improvement.
The question of “staging”, or implementation, is also potentially destabilizing. Staging is shorthand for the timeframe under which tariffs drop to zero over a prescribed number of years, rather than upon the agreement’s entry into force. It’s a tool usually reserved for highly sensitive products, often to buffer domestic industry from the sudden shock of tariff elimination. Some of the negotiating teams have been pressing for unreasonably long staging periods. Extended staging makes no sense for the tech industry given that product innovation and development lifecycles are often measured in months, not years.
The original ITA set down a framework that allows for most tariffs to be eliminated in three years. In the expansion talks, negotiators agreed to the possibility of five-year periods for some sensitive products on a case-by-case basis. Only in “exceptional circumstances” would staging be allowed for longer periods. In the June round of talks, nearly everyone agree to adopt this approach, including China. This needs to be the law of the land for ITA expansion.
While we very much welcome the shift in focus towards concluding the talks, we need a strong outcome if we are going to get a deal this year.
Not a single new product line has been added to the ITA in 17 years. We cannot wait another 17 years to remedy this dysfunction. The band-aid of a weak outcome won’t do. Moreover, anything short of an ambitious result would signal once again that the WTO remains on the sidelines when it comes to liberalizing trade around the world. Our sector is global and we prefer multilateral solutions. A big win with ITA expansion this year would give a huge boost to the WTO and generate important momentum for other ambitious multilateral endeavors, such of the Trade in Services Agreement, or TISA.
The tech industry will be in Geneva again next month to do what we can to secure the impressive win for global trade that ITA expansion can deliver. Now we just need to get all the negotiators to hold tight, take a deep breath, and make that last big plunge into the purifying waters of trade liberalization.