The latest technology, but at an affordable price! Trade in information and communications technology (ICT)

Modern technologies facilitate a convenient, efficient and future-oriented life in households, public life, offices or production processes. A rapid dissemination of new and innovative solutions should not be taken for granted. Often customs barriers make products expensive for local businesses and private households. The solution sounds simple: tariff reductions. But that demands a committed, compromise-seeking approach by the international community. The World Trade Organization (WTO) achieved an important breakthrough at the end of 2015 with the conclusion of a new agreement on ICT.

Today information and communications technology is among the most rapidly growing sectors of world trade. According to the WTO, these goods account for about 10 percent of global exports. The first Information Technology Agreement (ITA) was concluded at the 1996 WTO Ministerial Conference in Singapore, by a group of 29 member states including the then 15 EU members. The parties of the ITA abolished import tariffs on ICT products worth more than $500 billion annually. By 2013, the WTO calculated that the trade value of these ICT products had risen to $1.6 billion.

The ITA covers a broad spectrum of high-tech products such computers, telecommunications equipment, semiconductors, software, and many of the associated components.

Fewer tariffs, cheaper products

 Abolishing tariffs makes modern technology globally available at lower cost, and expands its application. The widening circle of ITA signatories, which has now grown to 81 states, not only allows them to trade the agreed high-tech products among themselves without tariffs: all the other WTO members also profit from the arrangement.

Already in July 2015, 54 WTO members agreed in principle to abolish tariffs on 201 ICT products. The expanded list includes new semiconductors, GPS navigation equipment, medical devices like ultrasound scanners, and printer accessories such as ink cartridges. Televisions and various optical components are not covered. Besides the EU member states, the United States, China, Japan, South Korea, and Taiwan were among the participants. The deal, including details on tariff reductions, was sealed during the WTO Ministerial Conference in Nairobi in mid-December 2015. The expanded ITA-II will cover 90 percent of global ICT trade, even though one of the countries originally involved, Turkey, has yet to sign. The first tariff reductions are due to come into effect in July 2016. If ratification proceeds as planned the last tariff eliminations would be due in July 2019. The states participating in ITA-II also grant the same benefits to non-participating WTO members. The WTO expects the deal to generate annual tariff reductions of $13.8 billion. The agreement also provides for closer cooperation to resolve problems in non-tariff areas (non-tariff trade barriers such as excessive bureaucracy).

BDI positions

BDI welcomes the conclusion of the expanded ICT agreement. The tariff reductions should be implemented as planned. Concrete provisions to remove and avoid non-tariff trade barriers should follow as soon as possible. The circle of ITA members should also be expanded, especially all the major emerging economies such as Brazil (ITA), Russia (ITA-II) and India (ITA-II) should be included. Due to rapid advances in ICT, the product list must also be regularly updated and expanded.

ITA-Expansion: The share of countries in the export of products covered in the agreement, 2011-2013 (%)

EU (28) without EU-internal trade and re-exports from Hongkong, China.

Source: WTO-Secretariat (based on UN Comtrade Data).