Bridges Weekly Trade News Digest • Volume 12 • Number 37 • 6th November 2008

EU Outlines Ideas for Review of IT Agreement

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Volume 12 Number 37 PDF • 0.14 MB

“The ITA remains a milestone duty-free agreement, but it risks being left behind after 12 years of technological development ,” Peter Mandelson, the former EU trade commissioner, said before he left his post in September. “We need an ITA for the 21st century that will continue to benefit our consumers and businesses.”

Signed in 1996, the ITA applies to trade in IT products among 71 WTO Members, covering approximately 97 percent of global trade in the sector and some 180 IT goods.

Under the proposal, negotiations on potential amendments to the 12-year-old agreement would ‘immediately’ commence. Brussels has said that delegates should consider doing away with and preventing the formation of new non-tariff barriers, reviewing the agreement’s coverage, establishing a framework to ensure the ITA is kept up to date, and including major producers of IT products that are still outside the agreement’s jurisdiction.

EU representatives told delegates at the meeting that ‘ideally’ a revised agreement would be sought by the end of 2009, hopefully in parallel with the conclusion of the WTO’s still-languishing Doha Round of negotiations.

But many members, including Japan, Taiwan and the US, are cautious about jumping into what they have called ‘premature’ negotiations on ITA revision. In particular, the countries had questions about the timing of the negotiations, potential overlap with the industrial goods talks, as well as possible intersection with dispute settlement cases. Singapore, on behalf of the Association of South East Asian Nations, was among those that sought more information on the matter and as such presented the EU with a list of questions.

Others, including China and Costa Rica, were more critical of the proposal, questioning the need for any revision to the agreement. These countries suggested that the problem is not the agreement, but rather some Members’ interpretation of it and their willingness to further liberalise trade in the IT sector.

The EU has long lobbied for a review of the ITA. In particular, Brussels claims that the agreement does not necessarily extend to products that have developed multiple functions through technological advances (see BRIDGES Weekly, 18 September 2008, http://ictsd.net/i/news/bridgesweekly/29499/). On this issue Brussels has said that many of these products have become common household items, not just business commodities in need of specific benefits.

Instead Brussels has argued for periodic reviews of the ITA and the products it covers. But historically the US has objected to renegotiation of the ITA, saying that the technological developments of the products covered in the agreement were foreseeable and thus should automatically fall under the ITA’s jurisdiction.

Indeed, Japan and the US, later joined by Taiwan, filed a complaint at the WTO in June against EU tariffs on certain high-tech products, which they argued should be duty-free in accordance with the ITA (see BRIDGES Weekly, 4 June 2008, http://ictsd.net/i/news/bridgesweekly/12303/). A revision of the ITA could pre-empt this potentially costly WTO dispute.

ICTSD reporting; “Brussels seeks to update 12-year-old trading pact to catch up with hi-tech innovation,” 15 September 2008, THE GUARDIAN.