54 WTO members have reached an agreement to cut tariffs on the trade of around 200 IT products and can now begin work at national level to implement the Information Technology Agreement (ITA).

The WTO values annual trade in these products at over US$1.3tn a year, accounting for approximately 7% of total global trade today. “Eliminating tariffs on trade of this magnitude will have a huge impact. It will support lower prices — including in many other sectors that use IT products as inputs — it will create jobs and it will help to boost GDP growth around the world,” says WTO director general Roberto Azevedo. According to him, the benefits of the agreement should be felt on a global scale, as even countries that won’t implement it will benefit from zero-tariff and duty-free trading with the countries that do.

“The conclusion of the WTO’s Information Technology Agreement (ITA) is significant for trade – and trade financiers. By eliminating duties that currently range up to 35% in some countries for some products, the ITA expansion can provide a meaningful reduction in the cost to trade. This is especially important in electronics where production is often based on global value chains utilising imported components,” Vinay Mendonca, global head of business management, global trade and receivables finance at HSBC, tells GTR.

Among the products covered in this agreement are new-generation semi-conductors, GPS navigation systems, medical products including magnetic resonance imaging (MRI) machines, machine tools for manufacturing printed circuits, telecommunications satellites and touch screens. “These sectors have already been leveraging open account solutions such as supply chain and receivable financing which will continue to grow sharply as the benefits of the ITA flow through,” adds Mendonca.

This is the first major tariff-cutting deal taking place at the WTO in 18 years. The ITA was first signed in 1996, but as technology developed, it became clear that the list of products needed updating. Negotiations to expand the agreement coverage have been ongoing since 2012. Under the new agreement, members have committed to tackle non-tariff barriers in the IT sectors, and to keep reviewing the agreement to reflect further technological development. The participating members include China, the European Union, Japan, India and the US.