WASHINGTON—The Information Technology Agreement (ITA), which eliminates tariffs on hundreds of information and communications technologies (ICT), has been one of the World Trade Organization’s most successful trade agreements—spurring adoption of ICT goods and services that in turn drive productivity and innovation across all sectors of an economy. And a new proposal to expand the ITA to cover 250 more product categories would add $784 billion to the global economy over 10 years—including $20 billion in the United States alone—according to a new report from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.
“The ITA has played a catalytic role in developing efficient global value chains and lowering prices for ICT goods that drive the digital economy,” said Stephen Ezell, vice president of global innovation policy at ITIF, who co-authored the report. “Expanding the ITA as proposed in this would generate tangible economic growth for nations that sign-on—and the tax revenues they generate from enhanced economic growth would more than makeup for the tariff revenues they forgo.”
Originally implemented in 1996, the ITA now counts82 countries as signatories, which together account for approximately 97 percent of global trade in ITA-covered goods. In 2015, over 50 countries came together to expand the ITA, adding another tranche of more than 200 innovative ICT goods including both ICT products commercialized after 1996plus some products and components that were not in the original agreement. The expansion represented the WTO’s first major tariff-cutting deal in 19 years, producing annual tariff savings of at least $13.8 billion globally. Countries that joined the 1996 ITA and its 2015 expansion have enjoyed statistically significant increases in their shares of total imports and exports.
The ITA has played a significant role in global production and trade growth, because ICT goods underpin the entire global digital economy, from semiconductors to servers, routers, computers, tablets, and smartphones. As ICT continues to evolve and support a much greater range of products, there is a global need for an ITA-3 to update the list of tariff-exempt goods with another 250 product codes (encompassing over 400 discrete ICT products) according to ITIF.
The report uses econometric modeling to examine the impact an expanded ITA would have on a sample set of 14 large and small countries that are among the most important in ICT goods production and trade—Brazil, China, Costa Rica, Indonesia, Japan, Kenya, Malaysia, Nigeria, Pakistan, South Korea, Taiwan, Thailand, United States, and Vietnam. Among ITIF’s findings:
- Pakistan, Kenya, Brazil, and Nigeria would enjoy the largest relative GDP growth with an additional 3.2 percent, 2.2 percent, and 1.6 percent, respectively, over 10 years.
- The ITA expansion could help grow U.S. GDP by over $200 billion over a decade while increasing exports of ICT products by $3.5 billion, boosting revenues of U.S. ICT firms by $12 billion, and supporting more than 78,000 new U.S. jobs.
- Brazil, China, Japan, Kenya, Pakistan, and the United States each could expect to generate more tax revenue because of the growth ITA expansion would spur than they would forgo in tariff revenue.
“A second expansion of the ITA would cover many of the most novel, cutting-edge ICT products, including the most up-to-date versions of these technologies,” said Luke Dascoli, an economic and technology policy research assistant at ITIF and co-author of the report. “These products are already delivering significant environmental, health, and production benefits, and including them in a new iteration of the ITA would bolster competitiveness and lead to greater domestic and global economic growth.”
Read the report.
