ITA Trade Deal Evades WTO Amid China-South Korea Dispute

Negotiations on a trillion-dollar global agreement to abolish tariffs on information technology fell short after South Korea demanded that China eliminate duties on flat-panel displays, Bloomberg BNA reports.

Officials meeting in Geneva, the headquarters of the World Trade Organization, had spent about a week trying to narrow differences among the 54 countries participating in the talks. China refused to bow to the South Korean demand today.

“We brought the negotiations down to a few key issues that are up to the capitals to decide whether they can make it or not,” Angelos Pangratis, the European Union’s ambassador to the Geneva-based WTO, said in an interview. “Unfortunately we could not get the last step done.”

The talks represent an attempt to expand the Information Technology Agreement, a 1996 deal that eliminated tariffs on a range of products. The current talks aim to widen its scope, to cover products that didn’t exist or weren’t widely sold 17 years ago, such as complex computer semiconductors, GPS equipment and medical devices.

The U.S. and China scored a significant breakthrough in November, during a visit by President Barack Obama, when China agreed to drop duties on semiconductors. At the time, U.S. Trade Representative Michael Froman said that “the end of these important negotiations is coming into focus.”

Opportunity Missed

Deputy U.S. Trade Representative Michael Punke said in Geneva today that negotiators don’t currently have a “clear idea at this point about the specifics of moving forward.”

“This is potentially an enormous deal and we missed one opportunity this week to conclude it,” Punke said.

An expanded deal would mean potential sales for companies that design and manufacture these types of products. U.S.-based advanced computer-chip makers include Intel Corp. of Santa Clara, California; Texas Instruments Inc. of Dallas; and Qualcomm Inc. of San Diego. Microsoft Corp., based in Redmond, Washington, ranks among the world’s biggest makers of game consoles, while Hewlett-Packard Co. of Palo Alto, California, makes printing technology.

South Korea, home to television manufacturers Samsung Electronics Co. Ltd. and LG Electronics Inc., stuck to demands this week that China eliminate the flat-panel duties. Korea opposed a final accord after China rejected a counterproposal to include alternative products considered significant to the Korean technology marketplace.