US notices deal to eliminate tariffs on high-tech exports

The United States and more than 50 countries on Wednesday notched a long-anticipated expansion of an agreement that will eventually phase out more than 200 tariffs on high-tech exports.

The landmark deal on the Information Technology Agreement (ITA), the first major tariff-eliminating deal at the World Trade Organization in 18 years, could support upward of 60,000 U.S. jobs. 

{mosads}The deal, brokered during trade talks in Nairobi, represents a hard-fought trade victory for the Obama administration after several years of talks to modernize the agreement. 

“It’s great news for the American workers and businesses that design, manufacture and export state-of-the-art technology and information products, ranging from high-tech healthcare devices to advanced semiconductors to software media,” said U.S. Trade Representative Michael Froman.

“It also importantly demonstrates that the WTO can deliver results with pragmatic approaches and helps build momentum for our ongoing talks in Nairobi,” Froman said. 

John Neuffer, president and CEO of the Semiconductor Industry Association, said that while the “negotiations have experienced their share of suspensions and false peaks, today’s outcome locks in the deal for good.”

Neuffer said the week has been a rollercoaster ride as negotiators waited for China to submit its revised tariff schedule for formal approval.

Getting China onboard gave the agreement the critical mass it needed to move forward. The deal can only go into force if it captures approximately 90 percent of trade in the high-tech goods included in the agreement. 

The final sticking point was a last-minute demand by China to add language to address concerns about continuing trade on products that dip below critical mass.

National Foreign Trade Council Vice President for Global Trade Issues Jake Colvin commended Froman and China’s commerce minister, Gao Hucheng, for reaching consensus on an agreement to move the ITA forward.

“Completion of the ITA would mark a much-needed success for the WTO, and we hope that today’s positive step enables trade ministers to finalize negotiations during the Nairobi ministerial this week,” Colvin said. 

Neuffer suggested that the completion of an ITA deal stands to provide greater momentum to the Environmental Goods Agreement and the ongoing Trade in Services Agreement talks.

Stephen Ezell, vice president for global innovation policy for the Information Technology and Innovation Foundation, said the final deal is long past due.

“Completion of this agreement is not just a win for exporters. It is also a win for the millions of potential new users around the world who can now access high-tech products at lower costs,” Ezell said. 

“Technology use is the key driver of productivity and growth in the global economy, so this is a victory for all involved,” he said. 

U.S. Chamber of Commerce Executive Vice President and head of International Affairs Myron Brilliant said the agreement “will provide good cheer for American companies and the workers they employ.”

“This huge tax cut is good news for consumers and should spur growth in one of the world economy’s most dynamic sectors,” he said.

In July, the nations reached agreement on the ITA expansion list of 201 products and now will move to eliminate tariffs on those goods.

The WTO estimates that the expansion will eliminate tariffs on approximately $1.3 trillion in annual global exports of information and communications technology products with an expected annual increase of $190 billion in global growth.

Products covered by the agreement include medical equipment such as MRI machines, GPS devices, video game consoles, computer software, video cameras and next-generation semiconductors.

Under ITA expansion, more than $180 billion in annual U.S. technology exports won’t face tariffs in key markets around the globe, according to the WTO.

The original agreement concluded in 1996 but hadn’t been updated despite sweeping technological changes over the years.

In 2012, President Obama urged the United States to negotiate an expansion.