On July 24, members of the World Trade Organization (WTO) announced that they had reached a tentative deal to expand duty-free treatment under the Information Technology Agreement (“ITA”). The ITA, originally reached in 1996, is now set to cut tariffs on 201 additional products, including multi-component integrated circuits, GPS navigation systems, medical devices, software media, machine tools for manufacturing printed circuits, telecommunications satellites, and touch screens. Per WTO Director-General Roberto Azevêdo, “[a]nnual trade in these 201 products is valued at over $1.3 trillion per year, and accounts for approximately 7% of total global trade today.”
As King & Spalding has reported, accession to the ITA is optional. However, the United States has signed on to the agreement alongside top IT-producing countries such as China, Japan, and Korea. After some resistance, Thailand and Chinese Taipei have joined as well. Importantly, while participation in the agreement is optional, its implementation will benefit all WTO members, as exports from any member will receive duty-free treatment in the participating nations under the WTO’s most-favored nation principles.
The agreement calls for the elimination of tariffs in covered countries by 2019 to be implemented through four equal annual reductions beginning in 2016. According to the Office of the U.S. Trade Representative, the savings from tariff elimination will be significant. For example, tariffs on multi-component integrated circuits are currently as high as 25 percent. Similarly, magnetic resonance imaging (“MRI”) machines and computed tomography (“CT”) scanners are currently subject to tariffs of up to 8 percent in the covered countries.
Each participating member nation will submit its plans for implementation by October 30, 2015. The plans will be reviewed by the participating nations with a view toward having all technical work completed in time for the WTO’s Tenth Ministerial Conference, which will take place this December in Nairobi.
The WTO has released a list of goods slated to be covered by the agreement, which can be accessed here.