China Kicks ITA Expansion Negotiations to Nairobi

by John Neuffer, President and CEO

After achieving significant progress this week to put the finishing touches on the three-year effort to expand the Information Technology Agreement (ITA), officials in Geneva were hoping the last big piece of the puzzle would fall into place today to get the negotiations completed before the WTO Ministerial Conference convenes in Nairobi next week.

That last piece would have been China submitting to the WTO a revised national tariff schedule of the products covered by the agreement and lifting its reservations on the schedules of a number of other parties to the negotiation. That was not to be. China did not budge an inch.

Trade ministers from around the world will now start getting on planes to make their way to Nairobi with the biggest, most likely deliverable for that troubled WTO trade powwow hanging in the balance.

Nearly all of us also want to see a revised schedule from Beijing that includes more ambitious tariff phase-out periods (staging) for the products covered by the agreement. As the world’s titan of tech trade, China’s staging requests are remarkably super-sized. China wants a whopping 81 of its tariff lines of the 201 lines covered in the agreement to receive extended phase-out periods of five or seven years.

For most of the fall, the ITA parties have been negotiating the staging periods. Those talks have advanced in fits and starts. Earlier in the fall, Malaysia and the Philippines came forward with very ambitious staging offers while a number of countries such as Japan, Norway and Singapore committed to moving all 201 lines to zero tariff upon entry in force on July 1, 2016.

Then this week, Thailand made a huge move by reducing from 104 to 16 the number of tariff lines it’s requesting for 7-year staging. Taiwan also improved its offer somewhat by moving 35 lines from 3-year staging to zero upon entry into force. Korea made a similar helpful move at the end of last week.

One wonders what China is up to. Just last week, it pressed forward with a number of onerous demands that ensured the Environmental Goods Agreement negotiations could not submit a product list to the WTO ministerial in Nairobi.  And now China has positioned itself as the only significant obstacle standing in the way of getting ITA expansion wrapped up next week. China, of course, will be an enormous, if not the biggest, beneficiary of both agreements.

Oddly, China’s chief representative to the WTO in Geneva has not been attending the ITA ambassadors meetings for the past couple of weeks, and now it’s being reported in the press that China’s trade minister may not even make the trip to Nairobi.

Despite all of this, we remain hopeful ITA expansion will get done early next week. If things drag deeper into the week, this precious initiative risks being thrown into the less-than-savory stew of the Doha Development Round discussions or misused as a negotiating chip against unrelated issues. This is a very strong agreement that will add an estimated $190 billion to the global GDP, it will get myriad innovative tech products into the hand of consumers at more affordable prices, and it will be a major victory for the WTO, which has been struggling to prove its relevance when it comes to opening markets.

We’ll be in Nairobi next week to let you know how things shake out.