ITA 15th anniversary symposium

Last week we had an ITA intensive schedule. The week began with a Symposium celebrating the 15th anniversary of the ITA. At the opening session, Pascal Lamy praised the ITA and its 97% coverage of world trade in IT products. Lamy also stressed the need to review the ITA since many new products remain outside of the scope of the 1996 agreement. He also recognized the ITA’s role in the integration of countries into the global supply chains. Finally, Pascal Lamy introduced a publication, which looks back at the 15 years of the ITA and analyses its impact on trade opening and innovation and the opportunities it can provide for developing countries. The publication concludes with look ahead at the future of the ITA.

Overall, the narrative of the symposium was positive, looking back at the accomplishments achieved in the last 15 years. Countries like Costa Rica, Chinese Taipei, Thailand and Malaysia shared their positive experiences in the re-shaping of their respective economies by giving way to a higher concentration on IT-related trade, which has led to increases in development, investment, innovation and employment. Kenya, although not yet an ITA-member, shared its experience and its commitment to becoming the IT leader in Africa; currently Kenya leads the way in e-money transfers in the world.

The symposium also had significant participation from the industry all around the world. Throughout all of these presentations, there was an unequivocal call for an expansion on product coverage. Secondly, many participants stressed the importance of expanding the membership, highlighting the absence of key countries such as Mexico and Brazil. On this issue, it was mentioned that statistically, the level of growth in IT trade tends to be lower in non-ITA Members, as opposed to ITA Members. Finally, some participants called for a review on NTBs, but acknowledged that these could hamper the tariff negotiations.

The symposium offered some interesting highlights. It was mentioned that the benefits in competitiveness and jobs has been widely reflected in the developing world, although it has focused primarily in Asia. Also, in the last 15 years there has been an important shift in the players and products, but one of the important developments is the integration of more countries into the global supply chain, where sometimes they produce finished goods, like memory devices in Malaysia. According to Malaysia, e-commerce and IT-outsourcing are two of the main sectors with significant growth, and it stated that these sectors also grew in other countries such as Singapore, Chinese Taipei and India. Chinese Taipei stated that it has focused its strategy in incorporating its SMEs into the global supply chain, aiming to have a sustainable growth model.

The link between trade and innovation was acknowledged, but sadly, there are some cases where a high level of trade does not increase the level innovation, which can be reflected in a comparatively low number of patents, as is evident in the case of Mexico. Another area where developing countries are looking into and expect to grow in order to increase jobs and development is the increase in Domestic Direct Investment (DDI), which should come as a consequence of Foreign Direct Investment (FDI).

It was mentioned repeatedly that coverage can often be construed as including less products depending on the interpretation, and many of these problems are due to inconsistencies from diverging HS Code lists. This is why the HS Code lists should be harmonized, but presenters acknowledged that this technical exercise requires detailed technical work. Some presenters stated that the differences between technology and trade can be the underlining reason for the delays in the ITA review since the way of doing business, solving problems and mentalities widely differ between both disciplines. Mr. Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy (ECIPE), made an interesting remark stating that the current ITA coverage is closer to 65% instead of the 97% claimed. However, the process used to calculate the 65% figure was not revealed.

Mr. Pierre de Ruvo of the Worldwide System for Conformity Testing and Certification of Electrotechnical Equipment and Components (IECEE), stated that its organization includes 53 members and includes over 22,000 manufacturer’s testing facilities. He also stated that there has been a steady increase in the number of certificates issued since 2000, reaching over 70,000 in 2011. Microsoft stated that it loses around 2 billion USD, in both goods and services, due to the currently uncovered products. It is important to note Microsoft’s holistic approach to goods and services, since it does not distinguish between them.

India was vocal against the benefits it has experienced from the ITA so far. India stated that its manufacturing sector has been negatively affected in the last 15 years, and that there have not been substantial increases in the related services and software sectors. Also, India asked why most of the talk is focused on tariffs while apparently leaving NTBs aside.

The symposium closed with a brief evaluation on the positive accomplishments due to the ITA and an acknowledgement of the call for a comprehensive review of the ITA.