The WTO Information Technology Agreement (ITA) is an undertaking to liberalise global trade in IT products. The Agreement entered into force on 1 July 1997 with 29 original signatories, including Australia. The Agreement now comprises 75 participants which cover 97 percent of global trade in IT products. In joining the ITA, participants commit to eliminating tariffs on all products covered under the Agreement, including computers and peripheral equipment, electrical components such as semiconductors, computer software, telecommunications equipment and analytical instruments among other products. The tariff commitments undertaken in the Agreement are made on a most-favoured nation (MFN) basis, meaning participants must extend their commitments to all WTO Members. The Agreement also provides for a work programme to review non-tariff barriers (NTBs) which impact upon trade in IT products.
A group of ITA participants have been attempting to expand the product scope since 2012. Members participating in the expansion have recently concluded negotiations which will remove tariffs on an additional 201 IT products. This is the first major tariff-cutting deal at the WTO in 18 years. Among the products covered in the expansion are new-generation semi-conductors, GPS navigation systems, machine tools for manufacturing printed circuits, telecommunications satellites and touch screens. For the first time, the ITA will also cover a range of consumer electronics, including headphones, loud speakers and amplifiers, as well as video game consoles and GPS devices. Medical devices such as Magnetic Resonance Imaging (MRI) machines, electro cardiograph (ECG) machines and bionic ear implants will also be covered.
Participating members have agreed to remove the majority of the tariffs on these products within three years, with reductions likely beginning in mid-2016, subject to domestic approval processes. Participating members will now work to progress their implementation plans in time for the WTO's 10th Ministerial Conference which will be held in Nairobi in December 2015.
Elimination of tariffs on these IT products will support lower prices — including in many other sectors that use IT products as inputs — and it will assist to create jobs and help to boost global GDP growth. The WTO has estimated that annual trade in these 201 products is valued at over USD$1.3 trillion per year, and accounts for approximately 7% of total global trade today.
Australia imports around AUD$21 billion worth of goods covered under the expanded agreement, and exports around AUD$4.2 billion. Eliminating tariffs on these goods in Australia and globally will benefit Australian consumers through lower end prices. Upstream technology industries such as software design, as well as downstream industries such as IT service providers will also benefit from cost reductions which will provide opportunities for Australia’s export industries.
What is the Information Technology Agreement?
The Information Technology Agreement (ITA) is an undertaking by participating WTO Members to liberalise global trade in IT products. In joining the ITA, participants commit to eliminating tariffs on IT products including computers and peripheral equipment, electrical components, computer software, telecommunications equipment and analytical instruments. The tariff commitments undertaken must be offered to all, that is, on a most-favoured nation (MFN) basis. Today the Agreement comprises 75 participants covering 97 percent of global trade in IT products.
What will the expanded Information Technology Agreement deliver?
In 2012 a group of WTO Members agreed to launch negotiations to expand and update the product coverage of the ITA to take account of advances in technology made since 1996. Products such as GPS devices, video consoles, a range of audio visual equipment and medical devices such as Magnetic Resonance Imaging (MRI) machines were not included in the original ITA. The new negotiations represented an opportunity to lower the costs of these heavily-traded technologies.
Fifty four participants were included in negotiations to expand the coverage of the ITA, representing 90 per cent of trade in the products under discussion.
Among the products covered in the expansion are new-generation semi-conductors, GPS navigation systems, machine tools for manufacturing printed circuits, telecommunications satellites and touch screens. Consumer electronics, including headphones, loud speakers and amplifiers, as well as video game consoles and GPS devices are also included, along with medical devices such as Magnetic Resonance Imaging (MRI) machines, electro cardiograph (ECG) machines and bionic ear implants.
What are the benefits to Australia of an expanded Information Technology Agreement?
The global reduction of costs on new technology products resulting from an expanded ITA will be of significant benefit to Australian business and consumers.
Consumers will benefit through lower prices on IT products. The elimination of tariffs on items such as video game consoles, headphones, GPS devices and amplifiers will reduce final costs, and allow business to supply to consumers at a lower price point.
Business, and Australian exporters, will also benefit from an expanded ITA. From mining to manufacturing, agriculture to food processing, banking services and hospitality, all Australian sectors in today’s economy rely on high technology inputs to carry out their day to day operations. The reduction of costs on the business enabling technologies covered by the ITA will drive greater cost efficiency in the work of all Australian business.
Our exporters will benefit from a reduction in global tariffs on technology products. Australian businesses export around $4 billion in products covered under a potential new ITA. Our globally competitive medical devices industry will benefit from the increased coverage of medical devices under the new ITA – including high technology implants and imaging technologies. Our services exporters will also benefit from a reduction in costs and administrative burdens when moving their supporting technologies around the globe
How quickly could we see tariffs cut on products under the expanded ITA?
Participating WTO Members have agreed to aim for implementation of the tariff cuts by mid-2016. Members will need to undertake domestic approval and technical tariff scheduling prior to implementation.