Information Technology Agreement (ITA)

On the 13th September 2013, Russia became the 78th member of the Information Technology Agreement (ITA).

The ITA is a World Trade Organisation (WTO) plurilateral agreement that aims to reduce tariff barriers on some computer, telecommunication and IT products. The Information Technology Agreement (ITA) was originally signed in December 1996 supported by senior politicians such as the President of the USA Bill Clinton.  The ITA meant that customs duties are removed, by all contracting countries, from specified areas of the Harmonised System (HS) Code namely those covering products required to expand the global use of Information Technology, in other words computers (or to use the HS term Automatic Data Processing Machines -ADP) plus telecommunications equipment; semiconductors; computer software; semiconductor manufacturing equipment; and computer-based analytical instruments. One of the reasons this Agreement was important was because if tariffs remained on IT products it would lead to discrimination for poorer countries. Without tariffs the cost of IT products is reduced making these products and their global benefits more accessible.

Often hailed as the biggest tariff-busting deal since the GATT Uruguay Round itself, the plurilateral Ministerial Declaration on Trade in Information Technology is considered a landmark agreement for several reasons. It was the first time that a large group of developed and developing countries agreed to fully liberalise trade in a sector (worth US$ 500 billion annually at the time it was signed). It also proved that the WTO could serve as a forum to open markets without launching an official round of multilateral trade negotiations. Goods on which the ITA zero-duty has been applied will be indicated in the national tariff against the HS Code. It applies to many products within Chapters 84 and 85.

Almost as soon as it was signed a committee was set up in 1997 to consider expansions to the coverage of the Agreement; the talks were suspended in 1998.  Consultations between delegations on the review of product coverage continue. Unfortunately the implementation of the ITA does have some difficulties.  . Divergent decisions in classification and the coverage has been a continual problem and, for example, following complaints from, amongst others, the USA and Japan, the EU had to expand its coverage on Multi-function Machines (MFMs), set top boxes and flat panel displays.

ITA-II: The number of participant countries has grown from the original 15 to 70, representing about 97% of world trade in information technology products.  WTO member states are said to be encouraging  their leaders to sign phase two (ITA II) of the Ministerial Declaration on Trade in Information Technology Products, during the WTO Ministerial Conference in Bali, Indonesia, in December 2013. 

ITA II would see that list of products increased from 217 to include an even broader range of items that could be exported to countries with a zero tariff to be paid.   This includes extending the coverage of the Agreement into related areas such as televisions; MP3 players; game controllers; web cameras; global positioning system equipment; thermoplastics and prisms. The inclusion of a few consumer electronic items and certain security related products is one of the main reasons why it has not been possible for the members of ITA to come to a consensus yet.

In addition to expanding the base of IT products with zero tariffs, WTO member states are expected to discuss at the WTO Bali Conference in December 2013 non-tariff barriers (NTBs) relating to other IT items.  This will be very important for anyone working in these industries. 

 

Written 19th September 2013 by Sandra Strong FIEX (CITA) Managing Partner Strong & Herd LLP

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