An understanding between the United States and China at the Asia-Pacific Economic Cooperation (APEC) leaders’ summit in November has allowed formal negotiations among all parties to the Information Technology Agreement (ITA) to go forward. The renewed negotiations, which began on December 4 in Geneva, have drawn enthusiasm from interest groups seeking to benefit from tariff cuts on a broader scope of technology products, possibly including advanced semi-conductors, flat panel displays, medical devices, and testing equipment.
According to John Neuffer of the Information Technology Industry Council (ITI), “[ITI] will be in Geneva en masse pressing for a strong conclusion, along with several other U.S.-based associations.” A global group of 80 industry associations released a statement in advance of the Geneva talks calling for “all parties to this negotiation to exercise strong leadership, embrace the immediate and long-term benefits of ITA expansion, and limit product sensitivities so an ambitious result can be achieved.”
Sensitivities remain, however, and the negotiations in Geneva, set to conclude today, are only a starting point. Inside U.S. Trade reports that while the United States and China have reached an understanding regarding the ITA’s scope, China has yet to offer a proposal regarding tariff phase-outs. Regardless of the scope of the expanded agreement, extended phase-out periods would drastically reduce the near-term benefits of the ITA and render largely meaningless China’s offer on expanded product scope. An overly conservative proposal from China with regard to phase-outs could renew negotiating tensions and once again delay the ITA’s completion. The original ITA included phase-out periods of three, five, or seven years for products not immediately subject to tariff reductions.
There is also some remaining tension among other negotiating parties regarding the scope of the ITA. For example, South Korea and China are currently deadlocked over the inclusion of flat panel displays in the expanded agreement. While South Korea insists on their inclusion, China has refused, arguing that this would raise the ITA’s costs to an unacceptable level.