The United States has been pushing hard for an agreement to remove tariffs by 2000 on the trillion-dollar information technology industry at the first ministerial meeting of the 125-nation WTO in Singapore next week.
US acting trade representative Charlene Barshefsky wants an Information Technology Agreement (ITA) to open markets for computers, micro-chips and telecommunications industries, arguing they will be the
infrastructure of the 21st century, as important as roads and bridges were to the 19th century.
But some developing nations, particularly in Asia, are not convinced free trade in these products would benefit them and say any deal must be extended to cover lower technology consumer goods such as TVs, which they produce.Diplomats say a broad definition of the term will have to
be accepted if developing countries are not to veto an ITA deal.
The West may have to be flexible on definitions to get any chance for a deal, said Mari Pangestu, head of the economics department at the Centre for Strategic and International Studies in Jakarta, Indonesia.
Momentum for an ITA received a substantial boost two weeks ago in Manila at the summit of the Asia-Pacific Economic Cooperation (Apec) forum where leaders of the 18-member grouping called on the WTO to substantially eliminate tariffs.
That wording was adopted to placate countries such as Malaysia, which had called for flexibility on products and timing in any ITA.
Diplomats say Washington now recognises the view of the Malaysians and that other developing nations may be implacable, and is busily working towards softening the position of the European Union, which opposes a broad definition of IT because it is afraid of a flood of cheap imports of consumer goods.
Barshefksys recent comments that an EU plan to exclude audio or video software from ITA was a non-starter showed where US pressure was being applied, they said.
The key area for flexibility is products, said a Southeast Asian diplomat, who declined to be identified. If opposition to an extension of the agreement to consumer products can be overcome, a deal may be possible. Economists say trade mathematics favour a broad definition. Of the $500 billion to $1 trillion worth of global IT products trade last year only 15-20 per cent were sold by Southeast Asia. Some of these products were high technology items, such as semi-conductors from Singapore and Malaysia.
But many were at the lower end of the spectrum in less valuable computer hardware. Many developing nations are still only producing consumer electronics.
The developing countries have a very good point since many of them are locked into lower-end technology, said Desmond Supple, emerging markets economist at the IDEA research house in Singapore.
Diplomats say an IT deal still looks far from agreement but argue the WTO may come up with a formula which allows all sides to be happy, such as a deadline in the future for agreement. An ITA would be the best option, but they may not be able to come up with a concrete deal, said Pangestu. Second best would be a deadline then the US, and Singapore in the chair, could be happy.
