Economic growth is the single biggest issue in this presidential campaign. It’s also the single biggest issue around the world. Today, ITI urged President Obama and Prime Minister Cameron, who continues his visit to the U.S., to use their leadership roles to kick-start negotiations on an expanded Information Technology Agreement (ITA). ITI president and CEO Dean Garfield makes the case:
Pretend you are the American president, trying to figure out how to kick-start the U.S. economy to dig out of the worst economic recession since the Great Depression.
Or pretend you are the British prime minister, facing concerns at home of a double-dip recession and a shrinking GDP.
Put yourself in their shoes, and someone comes in and offers a way to boost the global GDP by $190 billion annually and create tens of thousands of new jobs without any new tax or government program.
You'd take it, in a heartbeat.
Now stop pretending. We can build that economic muscle by simply expanding the Information Technology Agreement (ITA).
Since it was negotiated in 1996, the ITA has served as a milestone trade pact. It has been a powerful instrument to eliminate tariffs on core information and communications technologies that are fundamental to today's economy. And it has fundamentally advanced U.S. competitiveness by promoting trade in a sector where U.S. companies and workers lead the world. Indeed, since the ITA's negotiation, total trade in ITA-covered products has grown from $1.2 trillion to $4 trillion.
Yet, even with this record of success, the ITA is ready for an upgrade, especially given the breathtaking speed of innovation and technology products. It is time to expand the list of products and, at the same time, accelerate economic growth and job creation. If we take this step, the Information Technology and Innovation Foundation estimates we would see U.S. exports of high-tech products increase by $2.8 billion, the creation of approximately 60,000 new U.S. jobs, and a boost in global GDP of $190 billion annually. That is momentum that our economy desperately needs.
President Obama and British Prime Minister Cameron, in their discussions this week in Washington, should make it clear the leadership role their countries must play to negotiate an expanded ITA. Their leadership can help to kick-start the talks and, more importantly, the jobs that will follow the negotiations.
For several months, the United States, the European Union, and many others have talked about opening talks to expand ITA product coverage. But, to date, it's been only talk. It's time to take this achievable step to spark significant economic expansion at home and around the world.
The ITA came into being because smart trade negotiators in the 1990's adopted an elegant approach, which was to keep things simple and focused on tariff reductions in a discrete and important sector. If there is one lesson we can take away from the Doha Round of multilateral trade negotiations, which have gone stale after years of talk, it is that we need to start looking at more achievable alternatives to promoting trade. The plan should be simple: take a very good trade agreement and make it stronger.
Look at one product - semiconductors. Today, more than 80 percent of the semiconductors manufactured in the United States go to customers outside the American market. The semiconductor industry has been America`s largest exporter when data are averaged for the last five years.
An expanded ITA could move to zero-tariffs an entirely new and innovative class of chips, called multi-component semiconductors, currently not covered by the agreement. And that is just a start. Think of the changes we have experienced since 1996 and the other products that are not included in the ITA because they simply didn't exist when the deal was negotiated. HD video cameras. GPS systems. 3-D home entertainment systems. We can shackle these next-generation products with 20th century tariffs, or we can free them to drive job growth and opportunities at home and around the world.
If policy leaders are sincere about trying to do everything possible to accelerate economic growth and prosperity, they should aggressively press to expand the ITA's product coverage. By knocking down barriers to trade, we create greater opportunities for American businesses and workers.
As the President and the Prime Minister focus together on the critical issues that our nations face in partnership, creating an economy built to last will be at the top of their list. An expanded ITA must be part of that economic foundation.