Despite the low expectations for the World Trade Organization’s (WTO) ministerial conference in Nairobi, Kenya, the US and WTO members made major progress last week and ended tariffs on $1.3 trillion in information-technology products. The Information Technology Agreement (ITA) is the first major global tariff-reducing deal in 19 years, and 53 countries including China signed this historic expansion of global trade. Through eliminating tariffs on products that represent 10% of world trade, the ITA expects to boost global GDP by $190 million. The program implementation will be a staged process for 201 information technology exports, taking seven years to complete.
The deal is a huge win for the WTO, consumers and the producers of communications and information technology products. This updated tariffs removal policy will help more than $180 billion of US technology exports and add an estimated 60,000 jobs domestically. GPS navigation systems, computers, and other hi-tech goods will now cost less for consumers. Lowered costs for machine tools and expanded coverage for next-generation semiconductors, medical products, printed circuits and satellites from the deal will benefit companies like General Electric, Intel Corporation, Texas Instruments, Microsoft, and Nintendo. After it adjusted 2015 forecasts from 3.3% growth to 2.8%, the WTO hopes this agreement will curb the fourth consecutive year of world trade growth rate that is slower than 3% GDP.
The passage of the deal relieved earlier woes from the week that the conference would not accomplish anything after two dozen ministers from the body’s 162 members skipped the opening of the talks. Many felt this would hamper discussions in Nairobi, and the WTO would fail to reach a consensus on necessary changes. While the ITA may be the only significant agreement to come out this year’s WTO biennial meeting, it was long overdue and confirms the WTO’s notorious slow-moving reputation. The deal is the first update in 18 years to the ITA and put significant pressure on the organization. The signing of this agreement eased stress from the WTO’s sluggish response in adapting to trade shifts that opened the doors for the new free-trade negotiations to function alongside WTO policies from major players like the US, China, EU, Australia, New Zealand, and the Pacific Rim Nations.