Deal Created to Pave Way for Tariff Cutting Agreement
In a deal that can pave the way for a first major tariff cutting agreement, China and the United States reached a breakthrough on eliminating duties on products that concern information technology for the World Trade Organization in 17 years.
The said breakthrough paved the way for talks that allowed swift conclusion for expanding the Information Technology Agreement that will further reduce global tariffs on products ranging from video games, GPS devices, game consoles, medical equipment and next generation semiconductors. This is good news to the U.S.-China relationship as it shows that the two countries are willing to work together to advance in their bilateral economic agenda and support multilateral trading.
The breakthrough is also a winning situation for the WTO as they were the one negotiating efforts after efforts in making the deal work. This deal will make the Information Technology Agreement to be the major tariff cutting deal with the WTO in 17 years. the Information Technology Agreement that went to effect in 1997, covers US$ 4 trillion in annual trade when based on the U.S. Government Participants who committed to eliminate tariffs on items such as computers, telecommunication equipment, computer software and advanced technology products. The expanded agreement eliminates the tariffs to US$ 1 trillion of global sales in IT products.
As new products are released since the ITA was concluded 20 years ago, by expanding the coverage was needed along with talks to update the WTO pact on technology trade broke down in 2013 due to disagreements of the coverage of listed products that would be covered by the agreement.