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Clear Skies for Expansion of the Information Technology Agreement?

DATELINE BEIJING – Following the closing of polluting industries around Beijing and strict traffic limitations, the promise of clear skies in this chronically smoggy capital runs high in the lead up to the November 10-11 summit of the leaders of the Asia-Pacific Economic Cooperation (APEC) economies. In addition to possible progress on the Trans-Pacific Partnership, the question looming largest for those wanting a major trade deliverable to emerge from the APEC meeting here is whether China will clear the way for a breakthrough in the yearlong deadlock that has delayed concluding an agreement to expand product coverage of the Information Technology Agreement (ITA).

Indeed, the planets may be aligned for progress on the ITA in the coming days, as the potential benefits for China that would flow from a breakthrough are myriad and significant.

For starters, Chinese industry stands to reap huge benefits from ITA expansion.  As the world’s biggest exporter of tech products, Chinese firms would save billions in reduced tariffs on their overseas sales each year from ITA expansion.  Moreover, due to increased demand around the world for tech products generated by tariff elimination, China exports of these products would grow by billions as well.

At a trade conference in Shanghai on Monday cosponsored by the Shanghai WTO Affairs Consultation Center and the U.S.-China Business Council, the Chinese stakeholders in attendance were unambiguous in their view that ITA expansion would be a positive for the Chinese economy. Not only will expanded product coverage improve China’s ability to sell to the world, it will also make the Chinese economy more competitive because of better access to innovative, more affordable products from other markets.

On the global stage as well, China has the chance to be the catalyst for giving a much-needed boost to the World Trade Organization (WTO). As WTO Director-General Roberto Azevêdo has recently said, the Geneva-based WTO is in crisis over the failure of a major multilateral trade facilitation agreement to proceed because of intransigence by India. By facilitating a breakthrough on the ITA (a WTO agreement), China’s leadership would help bring about a solid win for that beleaguered trade body. It would also give energy to other plurilateral trade agreements currently under negotiation in Geneva in the areas of environmental goods and services.

Finally, as host to the APEC leaders’ meeting this year, ITA expansion is an opportunity for China to deliver a strong economic and trade outcome to the region. Thailand, Malaysia, Singapore, Taiwan, the Philippines, and others in the neighborhood are heavily reliant on tech trade and are big supporters of ITA expansion. APEC played an important role in helping to establish the ITA in the mid-1990s. Now China holds the key to use APEC again to the benefit of the ITA – and the region.

One hopes the muscular pollution abatement measures put in place by China’s leadership this week will keep the skies blue in this sprawling city during the APEC leaders’ meeting. Similarly, there are high expectations that China can seize this APEC moment to clear a path forward that will allow all the negotiating parties involved in ITA expansion to return to Geneva to conclude this landmark trade deal this year. 

China is rightfully making much of its accession on the world stage as a “great power.” Stepping up on ITA expansion is an opportunity for China to show in a very concrete way that it’s willing to do great things for the greater good as well.

Public Policy Tags: Trade & Investment