China drags out international talks on ICT tariffs

WTO talks on technology trade to continue until Friday as China stalls

International talks aimed at removing costly international tariffs on information technology will continue until Friday after China stalled negotiations again on Wednesday.

More than 50 countries, representing 97 percent of the global IT trade, are involved in the talks in Geneva, aimed at extending The World Trade Organisation's Information Technology Agreement (ITA). The talks were due to finish on Wednesday.

The ITA was established in 1996 to do away with import tariffs on certain ICT products in order to stimulate trade. However, many new devices are not covered by the ITA regime, hence the efforts to increase the list of items covered.

About 250 products are at the center of the negotiations. China, however, has objected to 67 of these. By comparison, the European Union seeks to exclude a handful of products from the scope of the ITA, including televisions, the U.S. seeks to exclude just one item -- fiber optic cable -- and Japan doesn't want anything excluded.

The items on China's so-called "sensitivity list" include some multicomponent semiconductors (MCOs), a type of complex chip found in a wide range of IT products, OLED panels found inside screens and monitors, as well as various types of computer monitors.

Sources close to the talks said it was difficult to understand the rationale behind China's position, as it is the world's biggest exporter of IT products. One official blamed tensions within China's negotiating team.

Lifting tariffs on technology products as proposed in the ITA would eliminate an estimated $11.5 billion in tariff costs globally in a year, according to Brussels-based think tank ECIPE.

Talks broke down in July over the same problems, but resumed last week after China said that it was prepared to compromise. In practice all that has changed is that China is prepared to accept eight of its "sensitive products" on the list, but with a phasing-out time for tariffs of seven-plus years.

A senior trade official at the talks said China could de-rail the whole process because under WTO rules any agreement to waive tariffs by other parties would have to be extended to China whether the Chinese reciprocated or not. This would result in them getting a free ride, something other parties would not accept.

"An expanded ITA will lead to increased global trade in digital products. As well as delivering major benefits on a global scale in terms of productivity, economic growth and the creation of new jobs, it will also benefit the users of technology in the form of lower prices and greater choice. We therefore urge China to show good faith and reduce sharply its long list of exclusions," said John Higgins, director general of DigitalEurope.

European Commission President José Manuel Barroso and European Council President Herman Van Rompuy will meet Chinese Prime Minister Li Keqiang in Beijing on Thursday and are expected to raise the issue. Meanwhile the clock is ticking as negotiators had hoped to unveil the updated agreement at next month's WTO ministerial meeting in Bali.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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Jennifer Baker

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