It’s a Deal: ITA Negotiations on Track to Conclude on Friday

by John Neuffer, President and CEO

GENEVA – As negotiations to expand the product scope of the Information Technology Agreement (ITA) got under way this morning, Geneva was cloaked in dreary, gray skies. But by this afternoon, the clouds had swept past, a brilliant sun emerged, and the ambassadors from the members of World Trade Organization (WTO) involved in the talks struck a deal on the product list that will likely send ITA expansion across the finish line in a few days.  As the ambassadors emerged from their meetings, they each had in hand a list of roughly 200 tariff lines of tech products they will now pass back to their capitals for final approval by noon on Friday, July 24.

At a critical point in the talks today when it was unclear if consensus on the product list could be reached because of differences of views on what appeared to be a small matter, WTO Director-General Azevedo weighed in to suggest the situation was akin to being in a car lot and the negotiators were quibbling over whether the purchase should include a tank of gas. He then suggested that a smaller group break out and find a middle ground, which it did after two tense hours. Azevedo should be credited with doing a masterful job of moving these talks forward.

Today’s deal marks a major step forward for innovation and commerce globally. It’s also a hard-fought win for the semiconductor industry and the tech sector in general. The product list circulated today will eliminate tariffs on roughly $1 trillion in yearly sales of semiconductors and a vast array of other tech products. It would also spur global GDP by roughly $190 billion annually. That list includes next-generation semiconductors known as MCOs and a wide assortment of products that incorporate semiconductors, such as MRI machines, GPS devices, solid state drives, video game consoles, loud speakers, video cameras, and sophisticated testing equipment.

Accompanying the product list is a draft declaration that lays down timelines for completing work to phase-in tariff elimination for those products that don’t go to zero-duty immediately, submitting revised tariff schedules to the WTO, and wrapping up the formal process to verify those schedules. All this technical work is to be completed before the WTO Ministerial Conference in mid-December in Nairobi. In addition, the declaration specifies July 1, 2016 as the date of entry into force — when all signatories would actually begin eliminating tariffs on the tech products in the agreement.

The declaration also includes a so-called “review clause” that commits the parties to return to Geneva in 2018 to consider including additional products to the ITA – a useful provision given that it will have taken nearly two decades to update the ITA on this go around, assuming we get a successful conclusion in the next few days.

Over the past week, SIA has been joined here in Geneva by a number of industry representatives from the tech sector and several other associations, including AdvaMed, the Consumer Electronics Association (CEA), the Information Technology Industry Council (ITI), and the Liquid Crystal Polymers Coalition. DIGITALEUROPE, Japan Business Machine and Information System Industries Association (JBMIA), the Japan Electronics and Information Technology Industries Association (JEITA), and the European Semiconductor Industry Association (ESIA) have also been here.

In all of U.S. industry’s meetings with the various parties to the negotiation this week, the one common thread in our discussions was that these talks have gone on too long and the time for delay is over. As the leaders in the various capitals consider whether to place their final stamp of approval on the three years of labor their negotiating teams have put into the deal that emerged today, let’s hope they appreciate the importance a successful expansion of the ITA will mean to global trade, economic growth, innovation, and the credibility of the WTO, which very much needs to demonstrate it’s back in the business of forging market-opening trade agreements.

We are optimistic they’ll do just that and the WTO will have made history by concluding its biggest tariff-elimination trade deal in 19 years. The last big deal was when the ITA was first agreed in 1996, three years after e-mail got its name.