MEMBER states of the World Trade Organization (WTO), including the Philippines, agreed last week to eliminate tariffs on 201 information technology products whose trade was valued at more than $1.3 trillion a year.
This landmark agreement was expected to significantly benefit major IT product exporters like the Philippines as it would support lower prices, create jobs and help boost economic growth globally, according to the WTO.
“Annual trade in these 201 products is valued at over $1.3 trillion per year and accounts for approximately 7 percent of total global trade today. This is larger than global trade in automotive products—or trade in textiles, clothing, iron and steel combined… Eliminating tariffs on trade of this magnitude will have a huge impact.,” WTO Director General Roberto Azevêdo said in a statement.
“This is the first major tariff-cutting deal at the WTO in 18 years. Coming so soon on the heels of the historic Bali Package, which members agreed in 2013, it shows that the multilateral trading system can deliver. The WTO has now negotiated two deals in the space of two years which deliver real, economically significant results. I hope that this success will inspire members in other areas of our negotiations,” Azevêdo added.
The agreement will effectively expand the product coverage of the existing Information Technology Agreement (ITA), which is being supported by the Philippines. This move could further boost the country’s position in the global value chains of IT companies, Trade Undersecretary Adrian S. Cristobal Jr. said in an earlier interview with the Inquirer.
“The Philippines is part of the ITA and the country has benefited a lot from the agreement. With the government working closely with the IT industry, the Philippines has become the 13th largest exporter and 17th largest importer of IT products based on WTO data. The Philippine IT industry has successfully become an integral component of global IT value chains,” Cristobal explained.
Among the products covered in the new agreement are new-generation semiconductors, GPS navigation systems, medical products (including magnetic resonance imaging machines), machine tools for manufacturing printed circuits, telecommunications satellites and touch screens, the WTO said.
Under the terms of the agreement, the majority of tariffs will be eliminated on these products within three years, with reductions beginning in 2016. By the end of October 2015, each of the participating members will submit to the other participants a draft schedule spelling out how the terms of the agreement would be met.