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Taiwan Estimated to Save US$800M Tariff From ITA Expansion Deal

Jul 27, 2015 | By CENS

news-photoTaiwan's information-technology industry is expected to save US$800 million in export tariff from ITA.
The Ministry of Economic Affairs (MOEA) predicts Taiwan to save around US$800 million in export tariff when the Information Technology Agreement (ITA) expansion deal is finalized among 80 World Trade Organization (WTO) members including Taiwan on July 24.

The ITA stipulates participants to completely eliminate duties on IT products covered by the agreement, with developing country participants having been granted grace periods for some products.

The agreement is based on the Ministerial Declaration on Trade in Information Technology Products concluded by 29 participants at the Singapore Ministerial Conference in December 1996. The number of participants has grown to 80, representing about 97 percent of global trade in information technology products.

On 18 July, 2015, negotiators from 54 WTO members came close to agreement on an accord which would expand the agreement and eliminate tariffs on an additional list of roughly 200 products valued at about US$1 trillion in annual trade. The products covered by the extension include new generation semiconductors, GPS navigation equipment, toner cartridges, game consoles, and medical equipment including magnetic resonance imaging products and ultra-sonic scanning apparatus. Efforts to expand the coverage of this agreement were launched in 2012.

MOEA officials point out that although liquid crystal display (LCD) panels, an industry in which Taiwan is the world's No.2 player, are not included in the list, the expanded list is still instrumental to Taiwan's IT industry in consideration of the island's significant position in the global IT industry.

Lee Chun, deputy director of the Taiwan WTO and RTA Center under the Taiwan-based think tank Chung-hua Institute for Economic Research, says the ITA expansion deal is helpful to Taiwan when its talks on free trade agreement (FTA) with other countries are not progressing as smoothly as expected in consideration that the tariff to be saved by Taiwan from the agreement can partly offset the prices on its IT products in countries without duty-exemption via FTA.

The list of products and the draft declaration which spells out the implementation of the agreement have been sent to members' capital cities for review. Members have until noon on July 24 Geneva time to give final approval.

WTO Director-General Roberto Azevêdo points out that the ITA is a big deal because the trade covered in this agreement is comparable to the combined annual global trade in iron, steel, textiles and clothing. By further expanding the duty-free list, WTO members will help to jumpstart the global economy and underline the WTO's role as the central global forum for trade negotiations.

According to MOEA officials, the ITA is the first tariff-cutting agreement for the WTO in 18 years.

The WTO estimates global trade of information-technology products at US$4 trillion a year and the agreement covers around a quarter of the trade value. Also, the agreement is estimated to contribute as much as US$190 billion to the global gross domestic product (GDP) annually.


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