Expansion of ITA Would Benefit Chinese and Global Economies
WASHINGTON (April 14, 2014) – The Information Technology Agreement (ITA), which reduces tariffs on a range of information and communications technology (ICT) goods, has been one of the most commercially successful trade agreements ever undertaken, helping to boost worldwide ICT trade from $1.2 trillion in 1996, when the agreement took effect, to over $5 trillion in 2014. It has also been a key factor in the growth of the Chinese economy. Since 1996, China’s ICT exports have grown 30 percent annually, reaching $554 billion in 2012, making the nation the world’s largest exporter of ICT goods.
Unfortunately, despite these benefits, the Chinese government has thus far balked at a robust expansion of the ITA, which would comprehensively update the agreement to include a host of new electronic products and components that are currently subject to a range of tariffs which reduce global ICT diffusion and inhibit free trade. How ITA Expansion Benefits the Chinese and Global Economies, a report by the Information Technology and Innovation Foundation (ITIF), argues that the Chinese government should rethink its current policies and embrace an expanded ITA, particularly given the positive impacts an updated agreement would have on Chinese innovation and trade.
“It is clear that all partner nations, including China, have benefited greatly from membership in the ITA,” notes Stephen Ezell, Senior Analyst with ITIF and author of the report. “However, numerous products and components are not covered under the current agreement and the pact must be expanded to address the IT transformation that has occurred over the last 18 years. Otherwise, we risk reducing global ICT trade and the economic growth and innovation that goes with it.”
The report examines how ICTs have become a central driver of economic growth and articulates how ITA expansion will further benefit the global economy and increase trade in ICT products. It also addresses several misgivings Chinese officials have expressed regarding ITA expansion—notably that expansion may threaten nascent indigenous Chinese manufacturing industries and may result in lost tariff income—explaining why these concerns are outweighed by the long term benefits a robust ITA expansion provides.
“ITA expansion can be a win-win for all partner nations and we urge the Chinese government to reassess its current decision making, return to the bargaining table and conclude a comprehensive ITA expansion,” Ezell adds.
The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.