SIA is Beating the Drum on ITA Expansion in Geneva
by John Neuffer, President and CEO, Semiconductor Industry Association (SIA)
While the weather forecast this week in Geneva calls for lots of clouds and rain, the mood of the sizable global industry delegation here to talk about expanding the WTO’s Information Technology Agreement (ITA) for a second time is downright sunny. It’s always great to be back in this town working on an affirmative effort to expand trade and bolster the institution of the WTO. Recall, the ITA was originally launched in 1997 to eliminate tariffs on a broad swath of tech products, from cell phones to computers. And the list of products covered by the agreement was expanded in 2015 and is called ITA-2.
As part of our work out here this week, we are excited to co-host a panel with the Semiconductor and Electronics Industries in the Philippines (SEIPI) on the benefits of another ambitious expansion of the agreement (ITA-3) at this year’s WTO Public Forum, the WTO’s largest public outreach activity that is meeting face-to-face for the first time in three years. The SIA-SEIPI session will explore the critical role of an ITA-3 in bridging the digital divide, helping address climate change, bringing more developing countries into global technology supply chains, promoting remote healthcare solutions, and making supply chains more resilient.
On the sidelines of the Public Forum, our delegation will also hold briefings with members of the WTO ITA Committee and the ITA Expansion Committee to discuss how an ITA-3 would benefit both developed and developing countries alike. We will also be visiting several diplomatic missions in Geneva to build momentum for the initiative. A key message for us this week is our call to the WTO members to get negotiations for an ITA-3 underway by the WTO’s 13th Ministerial Conference (MC13) in about a year and a half.
While all ITA members would yield significant benefits from being part of an expanded agreement, developing countries stand to gain a great deal. The Information Technology & Innovation Foundation (ITIF) projects that 10 years of ITA-3 accession would grow developing countries’ tech capital stocks on average by an impressive 60%. In addition, as technology industries look to diversify their supply chains, ITIF finds countries not currently in the ITA (such as Pakistan, Kenya, Nigeria, and Brazil) would experience healthy annual GDP growth even just one year after joining ITA-3, providing new opportunities for their technology workforces. More generally, by joining the ITA, a country creates a “commitment effect” that signals its interest in providing a robust and supportive trading environment for businesses looking to expand their position in the global market.
It is also important to note the significant benefits of ITA-3 to the production of intermediate goods, which represent approximately half of world trade in goods. A zero-in/zero-out tariff environment can help developing countries attract production and investment for a wide range of goods. Over time, these countries will more easily move up the value chain generally and more fully integrate into the global Information and Communication Technology (ICT) supply chain.
The evidence is clear. The OECD found that from 2005 to 2015, ITA-member nations enjoyed a nearly one-third greater participation in ICT value chains than non-ITA members. Moreover, developing economies’ share of ITA exports rose from 26% in 1996 to 63% in 2015, exceeding growth in their share of total world exports, which was 27% and 43%, respectively.
And then let’s not forget the benefits the ITA delivers for all nations vis-a-vis its impact on helping everyone develop more diversified global supply chains and mitigate against future supply chain shocks. One important lesson revealed by the pandemic (and the global chip shortage) is that we need to ensure critical technologies are moving around the world as seamlessly as possible to make us all more resilient and better-positioned to tackle the next big crisis. Many products covered by ITA-1 and ITA-2 acted as lifelines for the world struggling to keep people healthy, employed, and connected during the pandemic.
Nearly 50 industry associations from Bangladesh to Bahrain, representing millions of workers around the world, have signed a global industry statement committing to “work closely with our governments to launch a new round of ITA negotiations by MC13 that will expand trade, stimulate growth, increase jobs, spur innovation, and enhance supply chain resilience.” So, let’s get on with it.