Last reviewed 5 August 2015

Custom duties on more than 200 hi-tech products will be eliminated under a new global agreement, writes Eric Davies.

Estimated to be worth €1 trillion, the deal to extend the 1996 Information Technology Agreement (ITA) will cover nearly 90% of world trade in the products concerned.

The agreement will, it is claimed, benefit both businesses and consumers by removing customs duties on a wide range of goods, including new-generation semi-conductors, GPS navigation systems, medical products, machine tools for manufacturing printed circuits, telecommunications satellites, and touch screens.

Huge impact

Negotiated by 54 members of the World Trade Organization (WTO), the ITA extension is the first major tariff-cutting deal at the WTO in 18 years.

Estimated to be larger than the global trade in automotive products, or the trade in textiles, clothing, iron and steel combined, the hi-tech agreement will have a huge impact, predicted WTO Director-General Roberto Azevêdo.

“It will support lower prices for consumers (in many sectors that use IT products as inputs), create jobs, and help to boost GDP growth around the world,” he said. All 161 WTO members will benefit from the agreement, as they will all enjoy duty-free market access in the markets of those members who are eliminating tariffs on the products concerned.

Products covered

According to the EU, the addition of 201 products to the Information Technology Agreement will not only improve market access for many of Europe's high tech companies, but also encourage innovation by simplifying access to state-of-the-art technology.

The new list covers consumer and other finished products such as: GPS devices; DVD players; multifunctional printing and copying machines; digital car radios; medical scanners; microscopes and telescopes; and telecommunication satellites.

Parts and components are also covered, including those used in the production of IT goods and semiconductors; multicomponent integrated circuits (MCOs); and instruments for aeronautical and space navigation.

Machinery for production of IT goods and semiconductors, and machine tools for the manufacture of printed circuits or semiconductors and other IT products are also covered.

The deal does not cover specified electronic products subject to duties in the EU, such as certain monitors, projectors, non-digital car radios and televisions.

Key role of EU

The current Information Technology Agreement has 81 members, all of whom have eliminated customs duties on a range of IT products and their components.

Negotiations on an EU proposal to review and expand the ITA started in 2012 with 33 participants.

Having initiated the discussions, the EU played a key role in brokering compromises. Announcing the agreement, EU Trade Commissioner Cecilia Malmström described it as “a great deal for consumers, and for companies big and small".

Smaller firms will be particular beneficiaries of the deal, said the Commissioner, as they have been hit especially hard by excessive tariffs.

Among the 54 WTO members who have signed up to the revised ITA are the EU and its 28 Member States, Australia, Canada, China, Hong Kong, Japan, Singapore, Switzerland, and the USA.

Timescale

By the end of this October, each of the WTO members participating in the deal will submit to the other participants a draft schedule setting out how they will meet the terms of the agreement.

Reductions on tariffs will start in 2016, with the majority of tariffs on the products concerned being eliminated within three years.

In order to give industry time to adapt to a zero-tariff regime, longer phase-out periods will be negotiated for sensitive products.

The list of products covered by the revised ITA will be monitored, with a view to further expanding coverage if necessary.

Information about the ITA is available from the WTO website.