Towards an extension of the Information Technology Agreement?

By Anthony Bochon

On 13 December 1996, the Information Technology Agreement (“ITA”) was signed by 14 WTO members, including the European Community whose then 15 member States counted as WTO member. Today, it has 52 signatories, representing 80 WTO members, including the 28 European Union member states, and Liechtenstein which has jointly signed the agreement with Switzerland.

The aim of the ITA was to eliminate all custom duties on information technology products by the year 2000. The products concerned were, including most of their spare parts, computers, telecommunication equipment, semiconductors, software and scientific instruments. Most of the key consumer electronic products were excluded from the annex to the ITA. The establishment of the list of products concerned was subject to intense discussion between the participants to the negotiations until two months before the signature of the ITA. This meant that the negotiators had little time to discuss the procedural aspects of the custom duties decrease to zero. During the negotiations, the European Union was quite reluctant to include some semi-conductors, while the United States wanted to exclude some fiber-optic cables and photocopiers. The ITA basically reflected the interests of the United Stated, the European Union and Japan, while other Asian states failed to protect their domestic production of key consumer products on which the signatories remained free to impose duties.

The particularity of this agreement was that not only its signatories but also other WTO members which were not party to the agreement could benefit of this exemption of custom duties. The ITA represented the first successful attempt to adopt sectoral agreements at the WTO level. For more than 17 years, the ITA committee has been monitoring non-tariff barriers to trade that impact. Today, the signatories to the ITA represent 97% of the world trade of information technology products. Since 1996, the number of these products has dramatically increased and the imposition of duties on the products that did not even exist in 1996 remains a contentious issue, especially between China and the United States.

Negotiations have however started in 2012 to include about 200 additional products to the ITA, notably the new generation medical, communication and data devices. Despite an US-China breakthrough [in November 2014], the negotiators have however admitted on 12 December 2014 that they have failed to agree on an amendment to the ITA. Officials have recognized that the final draft did not satisfy the interests of some negotiators who were still bringing adjustments to it on the last negotiation day. Between the lines, it was understood that the big four information technology producing members, the United States, the European Union, Japan and China, have been unable to overcome their long-lasting differences.

The question is now whether some WTO members will prefer to enter into bilateral agreements rather than to try to revive negotiations to multilateral agreements that have ended in with an impossible compromise.