Boosting Exports, Jobs, and Economic Growth by Expanding the ITA

Stephen Ezell March 15, 2012
March 15, 2012
It’s time to expand the ITA to boost exports, jobs, innovation, productivity, and economic growth in the U.S. and around the world.

Download Chinese translation of report (通过扩展信息技术协议,从而 促进出口额、工作岗位和经济 的增长)

Much has changed since the Information Technology Agreement (ITA) first took effect, yet the product scope of the ITA has not been expanded since the agreement was launched in 1996. Even then, the initial ITA agreement did not cover a number of core ICT products such as DRAMs (dynamic random access memory chips) nor dozens of every-day consumer electronic products, including many types of audio-visual equipment such as audio speakers, DVD players, and video cameras. Moreover, technology has since spawned the creation of hundreds of innovative new information technology products, everything from GPS systems and flat panel displays to video game consoles like Microsoft’s xBox or Sony’s Playstation, and remote home and patient monitoring devices as well as an entirely new class of semiconductor chips called multi-component (MCO) semiconductors, many of which are not covered under the ITA’s tariff-eliminating regime.

For all these reasons, it’s time to embark on an expansion of the products covered by the ITA, which would yield substantial benefits by removing tariffs on a significant array of ICT products not currently covered by the agreement. In fact, an expanded ITA could remove tariffs on at least an additional $800 billion in ICT trade globally, a 20 percent increase over the $4 trillion now covered annually. Moreover, ITIF estimates that ITA expansion would increase U.S. exports of ICT products by $2.8 billion, boost revenues of U.S. ICT firms by $10 billion, and support creation of approximately 60,000 new U.S. jobs throughout the economy. This paper makes the case for ITA expansion by first documenting the central role ICT plays in economic growth and then explaining why ITA expansion is good both for the United States and for the rest of the world, developing countries in particular.