Deal to Expand Information Technology Agreement Will Strengthen Semiconductor Industry, Keeps Costs Down for Consumers

by Semiconductor Industry Association

AGREEMENT WILL EXTEND TARIFF-FREE COVERAGE OF THE LATEST SEMICONDUCTOR PRODUCTS AND TECHNOLOGIES

WASHINGTON—Nov. 11, 2014—The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, today applauded a long-sought deal between the U.S. and China to expand the Information Technology Agreement (ITA), a key trade pact that promotes fair and open trade by providing for duty-free treatment of certain information and communications technology (ICT) products, including semiconductors. Following negotiations on the sideline of the Asia-Pacific Economic Cooperation (APEC) Leaders’ meeting in Beijing, President Obama announced a bilateral agreement on the product scope of an expanded ITA that includes next generation semiconductors, static converters and inductors, and an array of technology products including medical devices, GPS devices, software media, ICT testing instruments, and others. This breakthrough bilateral agreement will enable all negotiators to return to Geneva to finalize a pluri-lateral ITA deal, with full talks targeted for December.

“The ITA has played a central role in helping the U.S. semiconductor industry drive innovation, create jobs, lower consumer prices and connect communities throughout the world,” said Brian Toohey, president and CEO, Semiconductor Industry Association. “Today’s agreement between the U.S. and China to expand the ITA is a hard-fought victory for the U.S. semiconductor industry and a big win for the U.S. economy and consumers around the world. We look forward to all ITA countries finalizing a deal as soon as possible.”

An expanded ITA – with an estimated value of over $1.4 trillion of annual world trade – represents one of the most valuable agreements for the global high tech industry in nearly two decades. It provides the first opportunity to include newly developed products resulting from the dynamic technological developments in the information technology sector since 1996, when the ITA was originally concluded.

U.S. negotiators sought expanded coverage for new and innovative semiconductor products, including multi-component semiconductors (MCOs). MCOs comprise a growing share of the global semiconductor market, and will be key to continued growth and innovation in a vast range of downstream products, services, and sectors, providing the basis for much needed economic growth and jobs. Inclusion of MCOs in an expanded ITA would save the industry $150 to $300 million in global annual tariffs. U.S. semiconductor companies stand to benefit significantly from expanding the ITA, given that semiconductors are one of America’s top exports.

As the trend toward “smart” products continues, demand for advanced semiconductor products like MCOs has been growing consistently in the past few years and will continue to do so in the future. According to industry experts and SIA estimates, global sales of MCOs are estimated to grow by 10 percent annually over the next 5 years.

“Expanding the ITA to keep pace with the latest technologies will fuel foreign and domestic semiconductor design and manufacturing investments, reduce costs for consumers, promote exports, and strengthen overall semiconductor sector development and growth,” said Toohey. “SIA would like to extend sincere thanks to President Obama and the U.S. negotiating team for achieving this strong and successful outcome for American businesses and consumers.”

The full announcement of the bilateral agreement can be found on USTR’s website at http://www.ustr.gov/about-us/press-office/fact-sheets/2014/November/Supporting-Economic-Growth-Home-Abroad-Eliminating-Trade-Barriers-on-IT-Products.

About SIA

The Semiconductor Industry Association (SIA) is the voice of the U.S. semiconductor industry, one of America’s top export industries and a key driver of America’s economic strength, national security and global competitiveness. Semiconductors – microchips that control all modern electronics – enable the systems and products that we use to work, communicate, travel, entertain, harness energy, treat illness, and make new scientific discoveries. The semiconductor industry directly employs nearly a quarter of a million people in the United States. In 2013, U.S. semiconductor company sales totaled $155 billion, and semiconductors make the global trillion dollar electronics industry possible. Founded in 1977 by five microelectronics pioneers, SIA unites companies that account for 80 percent of America’s semiconductor production. Through this coalition, SIA seeks to strengthen U.S. leadership of semiconductor design and manufacturing by working with Congress, the Administration and other key industry stakeholders to encourage policies and regulations that fuel innovation, propel business and drive international competition.