The Philippines at the Forefront of Landmark IT Trade Deal

The World Trade Organization (WTO) has eliminated the tariffs on a total of 201 products being manufactured under the information technology sector. The abolishment follows an accord reached by 54 WTO members last July 18, and was confirmed in a meeting held last July 24 at the WTO headquarters in Geneva, Switzerland.

Officials of the Department of Trade and Industry hailed the accord, which they said will greatly benefit the Philippines, Trade of IT products have been pegged at a hefty US$1.3 trillion, according to DTI Undersecretary Adrian Cristobal. “Philippine trade of these products in 2013 amounted to US$ 26Billion, with exports reaching more than US$14 billion,” he said.

Among the products covered under this accord are new generation semiconductors, static converters, video games, and parts of automated electronic component machines of which the Philippines happens to be part of the regional and global production chains.

The Philippine electronics sector stands to benefit from this Agreement in terms of increase in market access on their export products due to elimination of tariffs on targeted export markets such as USA, Japan, EU, Korea, and Chinese Taipei, says Cristobal.

“Moreover, almost all imported raw materials and intermediate inputs and capital equipment requirements can be imported duty free. Once the ITA expansion is entered into force, it will provide the Philippines with access to over 90 percent of global IT trade. Furthermore, it will create jobs through increase in FDIs and will help to boost GDP growth for our country,” he added.

Under the terms of the agreement, the tariffs will be eliminated on these products within three years, with reductions beginning in 2016. By the end of October 2015, each of the participating members will submit to the other participants a draft schedule which spells out how the terms of the agreement would be met. Participants will spend the coming months preparing and verifying these schedules. The objective is to conclude this technical work in time for the Nairobi Ministerial Conference in December.

The agreement also contains a commitment to work on non-tariff barriers in the IT sector, and to keep the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments.

The agreement this month is an expansion of the 1996 Information Technology Agreement, which involves 81 members. The Philippines became a party of the IT Agreement in 1997. 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 accord. (DTI)