Hopes of IT tariff cuts revived in last-ditch push for WTO deal

Date: 14/01/1999

By Peter Chapman

HOPES of an accord to slash tariffs on information technology products have been revived after countries taking part in negotiations agreed to resume talks with a new chairman early next month.

World Trade Organisation officials say members have declared themselves willing to make one final effort to extend the scope of the Information Technology Agreement (ITA) on 11 February before they turn their attention to the Millennium Round of global trade negotiations.

The first ITA deal, signed by 39 countries including the EU's 15 member states, proposed phasing-out customs duties on a wide range of IT products by the year 2000. The latest talks aim to add more products and widen the scope of this deal to 44 countries which together would account for 93% of the world trade in IT products.

The efforts to broker a tariff-cutting deal form part of discussions aimed at eliminating non-tariff trade blocks on IT equipment sales.

Trade diplomats from the 44 WTO members - including the European Commission, which represents the EU's 15 member states - are also trying to remove differences in the way countries classify IT products to improve the working of the existing ITA agreement.

The chances of reaching a new accord, to be known as ITA II, had appeared slim after members failed to meet a November deadline for narrowing down the range of products to be included in the agreement.

But even though Martin Harvey, chairman of the talks, has returned to his native New Zealand, the 44 negotiating teams have agreed to extend the talks under Costa Rica's Ronald Saborio Soto.

"There is some interest among the group of 44 countries in continuing with the negotiations," said one WTO computer trade expert. "There are only 44 countries. It is more of a plurilateral agreement than a general one signed by all 133 members and that means they can be more flexible."

He warned, however, that the latest attempt to breathe life into the talks would have to be wrapped up before the WTO agenda hots up towards the end of the year.

"There is a big agenda later this year launching the latest round of discussions in agriculture and services," he said. "Some members would not like that to be entangled in the move to clinch the ITA II."

Earlier efforts to add both countries and products to the original ITA accord collapsed in June after some delegations (notably Malaysia, Hong Kong and Singapore) insisted on including domestically-produced consumer electronic goods such as loudspeakers and television tubes in the package.

This was bitterly opposed by many other negotiating teams - particularly the European Commission and India - which argued that the talks should concentrate on removing IT tariffs.

Former chairman Harvey managed to keep the show on the road when he restarted negotiations in October despite the dispute over the scope of the deal and fears that the Asian economic crisis had tempered enthusiasm for any tariff cuts at all. The relaunch followed indications by Malaysia that it might be prepared to accept a deal which left out the loudspeakers and TV tubes.

A compromise list of products to be covered by the deal was drawn up in November and this won support from 35 of the 44 participants, including the IT industry heavyweights: the EU, the US, Japan, Korea, Singapore and Taiwan.

However, Malaysia still leads a league of nations which are uncomfortable with the list and feel that additional consumer goods should be added.

Meanwhile, India continues to oppose the inclusion of certain 'security-related products' which it believes cannot be classed as information technology.

An Indian official said there was "no consensus" on the list and that it could not agree to it unless "fundamental changes" were made.