Information Technology

U.S., China to Eliminate Tariffs on Hi-tech Gear

12 November 2014

U.S. and China trade officials reached an agreement to drop tariffs on technology products by expanding the Information Technology Agreement that covers semiconductors, medical devices, GPS devices and other newer products. The deal is to be ratified in December by members of the World Trade Organization.

The agreement includes 200 different tariff categories and eliminates tariffs on next-generation semiconductors, which now are as high as 25 percent; and on magnetic resonance-imaging machines and GPS devices, both with current tariffs of up to 8 percent.

The agreement, while not final, would eliminate tariffs on electronics sales of roughly $1 trillion and could generate as many as 60,000 U.S. jobs, U.S. Trade Representative Michael Froman said, at the annual summit of the Asia-Pacific Economic Cooperation (APEC) forum in Beijing.

The U.S.-China deal will be presented to the 54 economies involved in the Information Technology Agreement (ITA).

Froman described the deal as a "breakthrough" since the last time the WTO agreed to eliminate tariffs on IT products was in 1996 when “most of the GPS technology, much of the medical equipment, software, and high-tech gadgetry that we rely on in our daily lives didn't even exist."

"Global trade in these types of high-tech products have reached $4 trillion annually, and despite that explosion of trade, the coverage of the ITA products have never been expanded," said Froman.

WTO negotiations in Geneva are expected to sign off on the agreement because here-to-fore Chinese opposition has been seen as the main obstacle, according to trade officials.

The ITA would be the first major tariff-cutting deal at the WTO in 17 years. The ITA was concluded by 29 participants in December 1996, and has grown to more than 70, representing about 97 per cent of world trade in information technology products. The Russian Federation signed on to the ITA in 2013.

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