BEIJING: The United States and China have “reached an understanding” on an agreement to reduce tariffs on information technology trade, the White House said on Tuesday, in what Washington called a boost to World Trade Organization (WTO) efforts to slash trade duties.
Washington hopes the move would “contribute to a rapid conclusion” of negotiations in Geneva on the WTO’s first major tariff-cutting deal in 17 years, President Barack Obama told leaders gathered for an Asia-Pacific summit in Beijing, a White House statement said.
The Information Technology Agreement (ITA) took effect in 1997, but talks on expanding its scope had been suspended since November last year owing to differences between Washington and Beijing, according to the White House.
It said a US-China agreement was seen as a necessary step.
“It was APEC’s work that led to the Information Technology Agreement, which we are now negotiating to expand,” Obama told fellow leaders at the annual summit of the Asia-Pacific Economic Cooperation forum in Beijing.
“So, it is fitting that we are here with our APEC colleagues to share the news that the United States and China have reached an understanding that we hope will contribute to a rapid conclusion of the broader negotiations in Geneva,” he said, according to the White House.
US Trade Representative Michael Froman described the understanding as a “breakthrough” reached on Monday night, which he said cuts tariffs on high-tech goods among 54 economies.
“To give you some idea of the importance of this agreement, the last time the WTO agreed to eliminate tariffs on IT products was in 1996 when most of the GPS technology, much of the medical equipment, software, and high-tech gadgetry that we rely on in our daily lives didn’t even exist,” he told reporters.
“In fact, since that time, global trade in these types of high-tech products have reached $4 trillion annually, and despite that explosion of trade, the coverage of the ITA [information technology agreement]products have never been expanded.”
Members of the Geneva-based WTO set trade rules among themselves in an attempt to ensure a level playing field, and spur growth by opening markets and removing trade barriers including subsidies, excessive taxes and regulations.
But the 160-member group, established in 1995 as the successor to the General Agreement on Tariffs and Trade, has faced serious obstacles over the years in achieving deals amid bickering among members over issues including agricultural subsidies.
The WTO finally reached its first global deal last December in talks on the Indonesian island of Bali, but finalization of that accord has been held up over continuing disputes.
Froman said the IT understanding between Washington and Beijing is a boost to trade relations between the world’s two biggest economies and also illustrates the important role their bilateral relationship plays in global commerce.
“This is encouraging news not just for the US-China trade relationship, it shows that the US and China work together to both advance our bilateral economic agenda, but also to support the multilateral trading system,” he added.