ITA Expansion Enters Critical Phase

John Neuffer photo

Dateline GENEVA:  This is the ninth time this year negotiating teams from around the world have converged on the World Trade Organization (WTO) to expand product coverage of the Information Technology Agreement (ITA).  It’s by far the most important round of talks and the last one before the WTO ministers meet in Bali, Indonesia in early December, which has long been the target for completing an agreement.  If the negotiating teams here can’t hammer out a commercially significant outcome now, there is little or no chance of declaring this undertaking a victory for global trade at the WTO Ministerial.

Coming into this week, there is cause for optimism as a number of countries have improved their “sensitivities lists.”  These lists call for either removal of products from the negotiating table, staged movement of certain tariff lines to zero rates over time, or limited coverage of product lines, also known as ex-outs.

Costa Rica delivered in a big way.  Just this summer, it had identified dozens of sensitivities.  The Costa Ricans showed up this week with only eight products on their sensitivities list out of the hundreds of product lines on the negotiating table.  Similarly, Israel has cut its list to a mere 10 product lines.

The most recent Thai list shows some nice improvement as well.  Recall, on the eve of the October round of talks, Thailand provided a sensitivities list showing significantly greater ambition.  For the talks this week, Thailand did not make nearly as big a move, but it did show greater flexibility with important audio equipment lines.

Last but not least on the plus side is the European Union (EU), which has demonstrated some good leadership as host of the talks this week.  The EU list count stayed the same at 10 and while it is still calling for removal of digital displays from the negotiations, there was a welcome qualitative improvement.  Half of the EU’s revised list migrated from “removals” or “ex-outs” to the much more manageable category of staged elimination of tariffs.

However, significant hurdles to success remain. China stands out in bold relief as the major obstacle.  Even though Beijing cleaned up its sensitivities list previous to the October round, its list is still super-sized and the Chinese have not yet provided a revised version for this round of talks. If China does not show more flexibility and fails to adopt a more forward-leaning approach, we’re simply not going to get across the finish line this year.  This would be unfortunate and counter-intuitive since China will be a huge beneficiary of a strong expansion of the ITA.

Others have disappointed as well.  Malaysia, which earlier in the year exhibited strong leadership to advance this initiative, submitted a revised list on Friday that could only be interpreted as a step backwards. That list now spells out removals for many more product lines than anticipated, including many where Malaysia had indicated it could accept staging.

In addition, though the new Thai list saw some improvement, that government’s chief negotiator was not able to make the trip to Geneva this week. This will create challenges since the Thai list still needs lots of work.

Finally, Turkey and a couple Central American countries saw little or no improvement to their sensitivities lists, which include dozens and dozens of products they want removed.

Bottom line, to get to a strong outcome, these sensitivities lists need to be whittled down as much as possible during this round so we can keep the master list of products under consideration for expansion large and commercially significant.  That’s the overriding aim in these negotiations.

All told, some players are clearly making end-game moves while others continue to remain less inclined to do so.  The question this week is this:  Will those who have clung to narrow, short-term, often protectionist interests find the political will to embrace the broad benefits of an ambitious ITA expansion, which is projected to increase global GDP by nearly $200 billion annually and generate job creation for hundreds of thousands of workers around the world?  We will find out in the next week or so.

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