July 30, 2015

WTO Members Agree to Cut Tariffs on IT Products

By Kathleen M. Murphy and Mollie D. Sitkowski

On Friday, July 24, 2015, the World Trade Organization (WTO) announced that more than 50 of its member countries had agreed to cut tariffs on hundreds of information technology (IT) products, including semiconductors, MRI machines, GPS devices, telecommunications satellites and solid-state hard drives. The 201 products featured in the deal account for tariffs in excess of $1.3 trillion and account for roughly 7 percent of global trade.

The agreed list of products and draft declaration expand the scope of the 1996 Information Technology Agreement (ITA); therefore, this new agreement is known as the “ITA 2.” The ITA 2 was formally circulated to WTO members at the WTO General Council meeting on July 28th, and the negotiators will spend the next several months working out details and a timetable for tariff elimination. The negotiators hope to present the ITA 2 for the 10th Ministerial Conference in December 2015.

If all goes according to plan within the next few months, the ITA 2 and the tariff cuts could enter into force as early as July 1, 2016. However, five of the 54 countries – Taiwan, Colombia, Turkey, Mauritius, and Thailand – initially failed to sign the agreement, leaving the ITA 2 short of the 90 percent of WTO members needed to make it binding on all 161 WTO member countries. Taiwan and Thailand confirmed the ITA 2 on July 28, and it is expected the remaining countries will agree by the Ministerial Conference in December.

For more information on the types of products that will be impacted by the ITA 2 or on duty-reduction programs in general, please contact Kathleen Murphy, Mollie Sitkowski or any other member of Drinker Biddle’s Customs and International Trade team.

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