A group of 53 World Trade Organization (WTO) members, including the Philippines, finalized the agreement to expand the product coverage of the Information Technology Agreement (ITA). The agreement, reached on 17 December 2015 at the 10th WTO Ministerial Conference in Nairobi, Kenya, now covers the elimination of tariffs for new generation semi-conductors, Global Positioning System or GPS navigation equipment, and medical equipment, such as magnetic resonance imaging products and ultra-sonic scanning apparatus.
"The ITA expansion represents a huge step forward for innovation and economic growth the world over. It will deliver huge benefits to the Philippines in terms of improved productivity and market access, particularly for the electronics and semiconductor industry. The agreement makes our country more attractive to potential foreign direct investments (FDIs) particularly from key ICT players such as US, Japan, and EU,” said Department of Trade and Industry (DTI) Secretary Gregory Domingo.
Annual trade on the 201 products covered by the Agreement is worth over USD1.3 trillion per year, and accounts for approximately 10% of total global trade today. Under the terms of the agreement, the 53 WTO member-participants agreed to reduce tariffs on covered goods beginning 1 July 2016, with around 65% of these tariff lines eliminated by end of 2016. By 2019, 89% of tariff lines will be eliminated. Zero tariffs on all products will be achieved by 2022.
“In the Philippines, this means that substantial gains will redound to other sectors that use IT products as inputs, such as technology start-ups, manufacturing companies and the business processing and outsourcing (BPO) industry. The lower prices will improve access to technology that will facilitate education and accelerate innovation," said Trade Undersecretary Adrian S. Cristobal.
The Philippines is the 14th largest exporter of Information, Communication, and Technology (ICT) products in the world. Philippine ICT exports are valued at approximately USD14 billion, accounting for more than 20% of total export of goods.
"The deal was hard fought, as it took over 3 years of intense negotiations, but the Philippines’ ITA team worked hard because it is a critical agreement for our country. The team ensured that we avail of flexibilities of extended staging of tariff reductions. The next step is to work with our industries to take advantage of the expanded ITA,” Cristobal added.
The ITA was finalized during the 1996 WTO Ministerial Conference in Hong Kong. The Philippines became a signatory of the Agreement in 1997 together with 81 WTO members. In 2012, members recognized that technological innovation had advanced to such an extent that many new categories of IT products were not covered by the existing agreement. Negotiations began in 2012 to expand the coverage of the Agreement. WTO Director-General Roberto Azevêdo said that all 162 members will enjoy duty-free market access in the markets of those members who are eliminating tariffs on these products.