Outcome of chip talks on a knife edge

Date: 19/11/1998

By Peter Chapman

HOPES of a wide-ranging new World Trade Organisation deal to slash tariffs on a raft of infor-mation technology products are hanging in the balance this week, as member countries try to agree on the range of items to be included ahead of a final meeting later this week.

Earlier talks on adding more countries and new products to the Information Technology Agreement (ITA) collapsed in June after some delegations - notably Malaysia, Hong Kong and Singapore - insisted on including in the package some of the consumer electronics goods they produced such as loudspeakers and TV tubes.

This was bitterly opposed by many other negotiating teams, particularly those of the European Commission and India, which argued the talks should focus on removing IT tariffs.

Chairman Martin Harvey managed to keep hopes of a deal alive when he relaunched negotiations late last month, despite the dispute over the scope of the measures and fears that the Asian economic crisis had tempered enthusiasm for any tariff cuts at all.

Since then, delegations have been holding bilateral discussions to try to agree on the lists of items they would like covered by the rehashed ITA.

A WTO official said several negotiators were optimistic that, despite their differences, a worthwhile agreement building on last year's deal could still be struck. Malaysia has indicated that it might now be prepared to accept a package without the loudspeakers and TV tubes it originally wanted included.

In the run-up to tomorrow's (20 November) deadline for a deal, none of the parties was willing to give away its strategy for the week of behind-the-scenes horse-trading.

But the WTO official claimed that other countries, including Japan, the US and Switzerland, had indicated that they were confident agreement could be reached, suggesting that they might be willing to compromise. However, India still argues that the only products used solely for IT purposes should be covered in ITA II.

The Commission has insisted throughout the negotiations that it will not sign a deal covering ordinary electronic consumer products. But one negotiator said the Commission was also hopeful that an acceptable deal could be struck when countries meet for the last time tomorrow.

The first ITA, 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 would together account for 93&percent; of the world trade in IT products.