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Taiwan to Waive Duties on 201 Products in Information Technology Agreement

Jul 31, 2015 | By Ken Liu

The Ministry of Economic Affairs (MOEA) announced that it had confirmed with the World Trade Organization (WTO) that Taiwan agrees to eliminate customs tariffs on the 201 widely-traded information technology products covered by the Information Technology Agreement (ITA) without including liquid crystal display (LCD) panel.

The 201 products include new-generation semiconductors, GPS navigation systems, tools for manufacturing printed circuits, telecommunication satellites, polarizers, home entertainment systems, LED backlight modules, and touch screens, all of which are among the 136 products with the production capacity of Taiwanese suppliers. 

The MOEA points out that the 201 products account for around US$90 billion of Taiwan's exports and approximately US$62.7 billion of the island's imports every year. Once implemented among 80 WTO members, the ITA will save Taiwan's IT industry US$1.14 billion in export tariff but cost Taiwan around US$320 million in tariff income a year, giving the island a net benefit of around US$820 million.

Senior MOEA officials point out that the signatories of the agreement will begin to negotiate the schedule of duty reduction on these products this autumn, to basically plan to cut the duties in four stages over three years beginning 2016.

The agreement excludes LCD, an industry in which Taiwan is the world's No.2 player, although Taiwan's WTO delegation had fervently tried to convince all parties in the talks to include it.

MOEA officials point out the exclusion is understandable by the island's LCD makers, but they have asked the ministry to keep pursuing the goal to exempt this product from duties in bilateral or multilateral talks of other economic integration events.

The manufacturers have met with Taiwan's WTO delegation and said they understand the failure to include the LCD industry in the duty-free agreement under backdrop of global reality. They hope the government will come up with more effective measures to help them develop markets in developing economies like mainland China, India and Indonesia, in which they are energetically drumming up orders.

MOEA officials say they are striving to convince mainland China to include the LCD sector into the agenda of future talks on signing the goods free-trade agreement, which aims to cut duties on a spate of merchandise traded between the two sides.

The ITA 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. Efforts to expand the coverage of this agreement were launched in 2012.
The WTO estimates global trade of IT 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.

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

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, with the tariffs to be saved by Taiwan from the agreement to partly offset the prices on its IT products sold to countries without duty-exemption via FTA.

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.

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