Negotiators fail to reach deal on expanded high-tech agreement

Negotiators on Friday failed to reach a final agreement on a global deal that would sharply reduce tariffs on a vast array of high-tech products. 

Michael Punke, deputy U.S. Trade Representative, expressed disappointment that the 54 nations involved in expanding the Information Technology Agreement (ITA) came up short after hitting their self-imposed deadline on Friday night. 

ADVERTISEMENT

"We missed a big opportunity," Punke said. 

“All of us will need to go back to our capitals and reflect hard on next steps."

Chances for a long-delayed agreement were bolstered last month to take the deal with the World Trade Organization after a U.S.-China breakthrough.

During a trip to Beijing, President Obama and Chinese President Xi Jinping agreed to advance the trade deal, which had been delayed for a year.

The move was hailed by a broad range of U.S. high-tech firms, which make products such as semiconductors and medical devices. 

“The United States worked tirelessly all week in Geneva, Washington, and in various capitals to build plurilateral consensus on a final agreement that is consistent with the U.S.-China breakthrough," Punke said.

But despite concessions from several nations, China continued to resist South Korea and Taiwan demands to cut tariffs on some products such as flat-screens, according to trade sources. 

Punke said that through consultations over the last few weeks, "it became clear that certain members had important interests that were not fully captured" in the U.S.-China agreement.  

"Those members came a long way toward accepting 99 percent of that agreement, but asked that small adjustments be made in order to be able to accept the deal," he said. 

A deal would reduce tariffs of 25 or 30 percent to zero on products such as medical devices, certain software and video game consoles.

Business groups expressed disappointment with the result. 

"Manufacturers urge negotiators to come back to the table as early as possible in the new year to agree to a strong product list in order to unlock much needed growth opportunities for manufacturers and their workers," said Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers.

The agreement hasn't been updated since it was first inked 17 years ago amid rapid changes in technology. 

Brian Toohey, president and CEO of the Semiconductor Industry Association (SIA), said “it is our hope that parties will recognize the concessions made by others, embrace the immense benefits that an ITA deal will bring, and not let this incredible opportunity pass by."

A deal to expand the ITA would have eliminated tariffs on roughly $1 trillion in yearly sales of tech product, and it would reduce to zero more than 200 tariff lines.

“Despite the lack of a positive outcome this week, many negotiating parties, including the U.S. negotiators, deserve praise for their flexibility and unrelenting commitment toward reaching a deal that would benefit industries and consumers around the world," Toohey said.

He noted that many nations "made significant and difficult concessions" in efforts to reach a deal.

U.S. trade officials also praised several nations — Costa Rica, Malaysia, Israel, Guatemala, and Korea — for their flexibility in the talks.

Since negotiations started two years ago to expand the ITA's product scope, talks have grown to account for roughly 90 percent of global trade in products under negotiation.

"An expanded ITA would have represented the first significant multilateral tariff-elimination deal in years and been a boon for the global economy," said Stephen Ezell, senior analyst with the The Information Technology & Innovation Foundation.

Since the ITA went into force in 1997, global trade covered by the agreement has more than tripled, rising to more than $4 trillion in annual trade.