The agreement now covers certain touch screens, new-generation semiconductors, GPS navigation systems, tools used in the manufacturing of printed circuits, telecommunication satellites and medical equipment.

The World Trade Organization (WTO) has finally completed the highly anticipated Information Technology Agreement (ITA) expansion, representing the first tariff-eliminating deal at the WTO in 18 years.

The ITA was originally concluded in December 1996 and provides for the elimination of duties on information technology products that are covered by the ITA. Despite vast changes to information technology products and global expansion of the industry, the ITA’s list of covered products has not been updated since 1997.

Beginning in June 2012, 54 WTO members participated in 17 rounds of ITA product coverage expansion negotiations. On 24 July 2015, nearly all participants, including the US, agreed to reduce and ultimately eliminate tariffs on 201 additional information technology products.

The WTO recently published a Declaration outlining the planned expansion of covered products, including two attachments listing the additional products as well as other agreed upon actions and the significant dates of the planned implementation. (See WTO publication WT/L/956, from 28 July 2015.) Implementation is expected by December 2015.

Agreement benefits

Global trade in the additional 201 covered products is valued at more than US$1.3 trillion annually and currently equals approximately 7% of total global trade. All WTO members may accept the Declaration.

Even members who do not accept the deal may benefit from the increased global efficiency and competitiveness, as the tariff reduction and ultimate elimination will apply on a Most Favored Nation (MFN) basis.

Covered products

The Declaration includes two attachments. Attachment A lists the Harmonized System 2007 subheadings or parts thereof that are covered by the Declaration. Attachment B lists specific products that are covered by the Declaration, wherever they are classified in the Harmonized System 2007.

All parties of the expanded agreement will remove global tariffs for the added products, which include certain touch screens, new-generation semiconductors, global positioning system (GPS) navigation systems, tools used in the manufacturing of printed circuits, telecommunication satellites and medical equipment.

Planned implementation

Parties must submit draft schedules by 30 October 2015 detailing how the country will eliminate tariffs on the covered products. Parties will implement the changes once all of the approved country-specific schedules represent approximately 90% of global trade in the covered products, which is expected to occur by December 2015.

Customs duties will be eliminated in four equal duty rate reductions, with complete tariff elimination effective by 1 July 2019. The four deadlines are as follows: 1 July 2016, 1 July 2017, 1 July 2018 and 1 July 2019. Elimination of other duties and charges must be completed by 1 July 2016.

Oct 7, 2015
Source: TaxInsights