PURPOSE: to conclude, on behalf of the European Union,
an agreement in the form of a Declaration on the expansion of Trade
in Information Technology Products (ITA).
PROPOSED ACT: Council Decision.
ROLE OF THE EUROPEAN PARLIAMENT: Council may adopt the
act only if Parliament has given its consent to the
act.
BACKGROUND: the "Ministerial Declaration on Trade in
Information Technology Products", known as the Information
Technology Agreement (ITA), was concluded by 29 WTO Member States
at the Singapore Ministerial Conference in 1996. The ITA entered
into force in the European Union in 1997.Today, the ITA counts 82
participants, or half of WTO Members, and covers 97% of trade in
this sector.
The ITA requires that each participant eliminates and
binds customs duties at zero on a Most Favoured Nation basis for
all information technology (IT) products covered. The ITA covers
about 200 tariff lines, including computers, telephones, but also
inputs, components and machinery for the production of IT
goods.
The ITA Ministerial Declaration establishes that
participants shall meet periodically under the auspices of the
Council on Trade in Goods to review the product coverage specified
in the Attachments, with a view to agreeing, by consensus, whether
in the light of technological developments, experience in applying
the tariff concessions, or changes to the HS nomenclature, the
Attachments should be modified to incorporate additional
products.
In May 2012, several countries proposed to expand the
product coverage of the ITA. On 24 July 2015, the text of the
"Declaration on the Expansion of Trade on Information Technology
Products" was agreed, with a view to bind and eliminate customs
duties on an additional list of 201 IT products. Annual trade
in these 201 products is valued at over USD 1.3 trillion per year,
and accounts for approximately 10% of total global trade
today.
The participants agreed on the staging commitments for
each product listed in document G/MA/W/117. The agreement in the
form of a Declaration on the Expansion of the ITA (and the
schedules containing the staging commitments of the participants)
was adopted by the Ministers of the participant countries on 16
December 2015.
IMPACT ASSESSMENT: an economic assessment was made by
an external company before the negotiations started. With the final
results of the negotiations now known, the Commission has made
its own in-house assessment, of which the following three
elements are the most important findings:
- EUR 74-150 billion of EU exports are covered by the agreement;
- EU exporters will save EUR 0.8-2.1 billion in duty
payments upon their extra EU exports;
- as the products under negotiation are crucial
intermediates in many EU exports significant value chain effects
can be expected. A general equilibrium simulation points to
overall exports of goods that may increase by about 0.7% to 1.4% of
their baseline value. In terms of current extra EU exports of
goods, this amounts to EUR 12-24 billion.
CONTENT: under this draft Decision, the Council is
called upon to approve, on behalf of the European Union, the
Declaration on the Expansion of Trade in Information Technology
Products (ITA), together with the schedules submitted by other
participants in the negotiations and which are contained in the WTO
document G/MA/W/117.
The objective of the ITA expansion is to eliminate
duties on IT goods not included in the original ITA.
BUDGETARY IMPLICATIONS: in total the European Union
is expected to lose EUR 1.5 billion in duties on IT goods.
However, this loss will be spread out over a total of 7 years. Most
low duties will be eliminated at entry into force, representing 25%
of duty value. After 3 years more than 60% of duty will have been
phased out, while 30% will only be eliminated after 7
years.