Jul 3, 1998
MAJORS DON'T WANT CONSUMER ELECTRONICS IN ITA-2
Geneva, 1 July (Chakravarthi Raghavan) -- The plurilateral group of countries negotiating for an "ITA-2" -- to add the list of products to be covered by a "zero tariff" trade in information technology products has been unable to conclude an accord by its 30 June deadline, trade officials reported Wednesday.
A major sticking point is over expanding the product coverage to include "consumer electronics" products.
The next meeting of the 44-member ITA committee, which is overseeing the plurilateral agreement on Information Technology products, negotiated at Singapore and which came into force on 1 July 1997.
Malaysia, Thailand, Hong Kong, Singapore and Australia are among the members wanting the product coverage to be extended to consumer electronics, which the United States and the European Communities, as also some others like India are opposing.
Malaysia has reportedly said that it would block a consensus for an ITA-2 if consumer electronics products are not included. Thailand is reported to have said that while it may not block a consensus, it would not join an ITA-2 in the absence of coverage of consumer electronics.
The IT Committee is to meet again on 16-17 July. Decisions in the committee, as in other WTO bodies, is by consensus (which is defined in WTO as a member present not formally objecting).
If a consensus is not formally blocked, the majors would probably find a way of getting around those not joining (and thus falling short of the 90% trade coverage needed).
More generally, many of the developing countries have also expressed their difficulties, at a time of financial and economic crisis, recession and loss of government revenues to undertake further trade liberalisation measures.
The ITA accord has been seen as one of the principal achievements of the World Trade Organization's first ministerial conference at Singapore in December 1996 -- an issue that till the Singapore meeting convened had been peripheral. But the IT product issue along with the attempts to bring new issues dominated that meeting.
The accord set a participation requirement of countries accounting for 90% of that trade, and when it became effective on 15 March 1997 had a participation of countries accounting for 92.4% of the trade.
The participation of Malaysia was viewed then as crucial. If it had not joined then, and had at that time insisted on inclusion of consumer electronics, there would have been no pact. And if it blocks a consensus now, it is generally believed there would be no ITA-2 now either.
Said to cover some $600 billions or 10% of world trade, the accord for zero tariffs provided for tariff cuts in four stages, beginning 1 July 1997 and ending 1 January 2000, with a few of the developing countries getting extended time till 2005.
ITA participants established a Committee on Expansion of Trade in Information Technology Products to monitor the implementation of the accord and approve expansion of product coverage, and approve requests from other WTO members to join the accord.
Negotiated among the Quad countries (Canada, EC, Japan and the United States), but principally between the EC and US, it was then joined by several others (almost in a scramble to get on board), and ended up as a plurilateral agreement with a membership of forty-four.
Some of the developing countries joining at that time explained privately that they wanted to be members in order to be able to influence the expansion of product coverage.
Though its zero-tariff benefits are to accrue on an MFN basis to all WTO members, and in theory WTO members can attend the meeting of the ITA committee, like all WTO bodies and despite the claims of 'transparency combined by efficiency', most decisions are in informal meetings (from which non-members are excluded).
At the informal meetings of the ITA committee, a number of the South-East Asian countries, as also Hong Kong and Australia have been pressing for expansion of the coverage of products to take in consumer electronics. But a number of others like India have not also agreed, though the opposition of the US and EC are more crucial.
In many developing countries consumer electronics is a sizeable industrial sector -- with many importing parts and assembling and exporting them. In several big developing countries, there is a sizeable domestic market, supplied by small and medium-scale enterprises, using labour-intensive assembly operations using imported or domestically fabricated parts.