Benefits and Success of The Information Technology Agreement

1. Benefits and Success ofThe Information Technology Agreement Joe Tasker Sr. Vice President and General Counsel Information Technology Association of America Presentation to the WTO ITA Committee Geneva, Januray 18, 2007

2. In Summary . . . The Information Technology Agreement • About more than tariff elimination • The importance of ICT Infrastructure • ITA Enables Infrastructure Growth at the lowest cost, globally • WTO members understood its importance from the Beginning • ITA was Designed to – and did – solve outstanding problems with convergence of technology and • ITA can Take current convergence issues into account • The WTO ITA Committee plays a critical role

3. The Information Technology Agreement The ITA was intended to promote the development of the Physical Infrastructure of the emerging global digital economy at the lowest possible cost

4. “E Commerce”Is the New Economy In the world of business, industry and finance: • Corporate procurement of supplies,parts and components/supply chain control • Software Development • Business Processes (Accounting, tax preparation) • Financial Services transactions • Bill presentation and payment (trade finance) • Management consulting worldwide • Corporate networks for employee information and collaboration • Customer relationsmanagement • Transportation and distribution arrangement • Business based research and development

5. “E Commerce”Is the New Economy In the world of consumers and education: • Electronic mail • Finding information about goods/services • Purchasing goods/services • Reading/downloading news • College courses and specific skills training • Playing/downloading games and music • Downloading software (for free or fee) • Using banking services • Health care bill paying and diagnostic services • Job search • Interacting with Public authorities (“E-Government”) • Scientific research of all kinds and University based R&D

6. “E Commerce”Is the New Economy Developing Countries Benefit As Well: • Fishermen and Farmers on their cell phones in South Asia • Textile weavers in developing areas with web sites offering sales to the world • Software development in Africa, South America and Asia • Tech Support and Back Office “Offshoring” to South Asia and China and other areas • Reviews by architects in Asia of building code-compliance for NYC skyscrapers

7. “E Commerce”Is the New Economy The Digital Economy Today is • An infrastructure investment • A multi-industry productivity booster • An enabler of new technical and business innovation across all sectors • A tool of economic and social development • It is becoming the new “real” economy

8. The ITA Promotes the New Economy In other words, the ITA . . . • Is not just about ICT industrial competitiveness; • Is about benefits to the economy across all sectors from productivity and efficiency gains from IT implementation • Is about equally broad and significant social, cultural and development impacts

9. The Guiding Principle of ITA Analysis Broad and Inclusive Product Coverage The Guiding Principle for Implementing, Now and Looking Forward, Low-Cost Infrastructure through the ITA

10. Original Intent of the ITA We will contribute to the expansion of world trade by fully implementing our Uruguay Round commitments . . . In view of the importance of the information society, we are launching a specific exercise in order to attempt to conclude an information technology agreement. (emphasis added) From the “New Transatlantic Agenda”, agreed to by the United States and the European Union in December 1995: In view of . . . progress achieved in establishing the information society, the Council . . . welcomed the initiative of the Commission in presenting . . . proposals for developing the policy framework of the information society. . . including promot[ing] . . . . negotiations on the Information Technology Agreement (ITA) From a resolution of the Council of Ministers on new policy priorities regarding the information society (October 1996)

11. Original Intent of the ITA The Information Technology Agreement . . . means that the creation of the information superhighway will be encouraged and promoted, not taxed. USTR Charlene Barshefsky Statement at Conclusion of the Singapore Ministerial (December 1996) : This agreement will accelerate the development of the Global Information Infrastructure, opening new and better ways for people in every nation to share information and conduct commerce. In addition to reducing barriers to high tech trade, this agreement will accelerate economic growth and the development of local high tech industries in the developing world. From a Microsoft Press Release/Statement of December 12, 1996, when the ITA was announced in Singapore:

12. Principles on which the ITA is Based • Participating WTO Members Wanted Better Development of Information Infrastructure, not a “balance of concessions” • A WTO Trade Policy Instrument: MFN + dispute settlement apply • Product Coverage Designed to Take Technology Convergence Into Account: • Designed with Customs Classification/Convergence Difficulties in mind • Solved Outstanding Convergence Issues • Provides a Framework for Solving Today’s Potential Divergence between Classification and ITA Coverage

13. Addressing Technology Convergence • Attachment A based on HS Codes • Attachment B offers Descriptions • Descriptions override HS Codes to Assure Coverage of Converging technologies • As examples, look at Solutions to Convergence Problems embodied in the ITA

14. Convergence Problems Confronted in the ITA • Are Automatic Data Processing Machines (computers) that process • Telephony signals • Television signals • Other analog or digitally processed audio or video signals • ADP machines or Audio/Video players? • Is Software on media for reproduction of • Instructions, Data • Sound, Image • By means of a computer • Still “software”? • Is LAN Equipment “ADP” or “Telecommunications”?

15. Convergence Solutions Found in ITA • Automatic Data Processing Machines (computers) that process • Telephony signals • Television signals • Other analog or digitally processed audio or video signals • Are covered – Attachment B • Software on media for reproduction of • Instructions, Data • Sound, Image • User interactivity • By means of a computer • Coverage is clear in Attachment A • Telecommunications and LAN equipment both duty free in ITA

16. The Key Role of the ITA Committee • The Framework for Future Relevance • Descriptions in Attachment B Drive Continuing Coverage • The ITA Committee can seek classification harmonization among WTO members to improve the Agreement

17. Information Technology Agreement Thank you Joe Tasker Senior Vice President and General Counsel Information Technology Association of America (703) 284-5331 jtasker@itaa.org www.itaa.org

18. Information Technology Agreement BACK UP SLIDES Extended quotations on the Original intentions of ITA drafters

19. Original Intent of the ITA We will contribute to the expansion of world trade by fully implementing our Uruguay Round commitments, work for the completion of the unfinished business by the agreed timetables and encourage a successful and substantive outcome for the Singapore WTO Ministerial Meeting in December 1996. In this context we will explore the possibility of agreeing on a mutually satisfactory package of tariff reductions on industrial products, and we will consider which, if any, Uruguay Round obligations on tariffs can be implemented on an accelerated basis. In view of the importance of the information society, we are launching a specific exercise in order to attempt to conclude an information technology agreement. (emphasis added) (emphasis added) From the “New Transatlantic Agenda”, agreed to by the United States and the European Union in December 1995

20. Original Intent of the ITA In view of the recent developments and the progress achieved in establishing the information society, the Council stressed the need for an up-to-date action plan and welcomed the initiative of the Commission in presenting reflection documents and proposals for developing the policy framework of the information society. . . . . . . The Council urged the Member States to encourage the development of innovative small and medium-sized companies in the area of information and communication technologies, improve public services such as education through the use of information society tools, and to ensure the transposition at national level of the telecommunications reform package. It requested Member States and the Commission to secure close cooperation between the different programmes and activities in the area of information and communication technologies, to promote negotiations on the Information Technology Agreement (ITA), and to look into the problem of the distribution of illegal material over electronic networks. The Council further called on the Commission to follow up the consultation on the new priorities of the information society, to analyze potential barriers to the development of new on-line services, to make the regulations governing them more transparent and to intensify international cooperation. From a resolution of the European Union Council of Ministers on new policy priorities regarding the information society (October 1996)

21. Original Intent of the ITA The Information Technology Agreement . . . means that the creation of the information superhighway will be encouraged and promoted, not taxed. USTR Charlene Barshefsky Statement at Conclusion of the Singapore Ministerial (December 1996)

22. Original Intent of the ITA   Executive Summary: The aim of this European Initiative is to encourage the vigorous growth of electronic commerce in Europe. A fast-moving sector, electronic commerce will have a considerable impact on Europe's competitiveness in global markets. . . . "Born global", electronic commerce encompasses a wide spectrum of activities, some well established, most of them very new. Driven by the Internet revolution, electronic commerce is dramatically expanding and undergoing radical changes. It includes indirect electronic commerce (electronic ordering of tangible goods), as well as direct electronic commerce (online delivery of intangibles). . . High telecommunication tariffs have long been a major stumbling-block for electronic commerce in Europe. However, the implementation of the package of telecommunications liberalisation measures is already leading to lower prices and to more flexible pricing schemes. The take-up of electronic commerce is significantly higher in the most competitive markets. The WTO Agreement on Basic Telecommunications will contribute directly to the emergence of a global marketplace in electronic commerce. Similarly, recent international agreements to eliminate tariff (ITA) and non-tariff barriers (MRA) should rapidly bring down the cost of key information technology products, encourage the take up of electronic commerce, and reinforce European competitiveness. . . . (emphasis added) European Initiative on Electronic Commerce (communication to the Parliament, the Council etc. 1997)

23. Original Intent of the ITA Maximising the benefits of the liberalisation of IT markets 26. Recent international agreements to eliminate tariff and non-tariff barriers on products in the area of information and communication technologies should rapidly bring down costs in particular of the basic tools (computers, software, networking, CD-ROMs) and directly stimulate the take up of electronic commerce. The Ministerial Declaration on Trade in Information Technology Products agreed in December 1996 provides for the expansion of world trade in information technology. . . . Welcomed by European IT and ICT industries, [the] agreement[ ] will strengthen the entire electronic commerce sector, directly benefiting European businesses and consumers. The Commission will work towards the full implementation . . . and ensure that respective commitments, concerning in particular tariff schedules, will be met. European Initiative on Electronic Commerce (communication to the Parliament, the Council etc. 1997)

24. Original Intent of the ITA The ITA agreed at Singapore and now in force was supported by the EU since its inception. The first tariff cuts have now taken place. Thanks to the ITA, industry will be assured of unrestricted access to IT equipment - not only for those who use electronic components to manufacture but also those in non IT industries or the service sector which, to remain competitive, need access to state-of-the-art informatics systems and software and globally competitive prices. The IT industry can accelerate its evolution towards global production on a more rational basis knowing that tariffs (which act as internal taxes) are eliminated. Looking beyond the results already achieved, the EU hopes that other countries will join the ITA. The EU is also contributing actively to the review of the Agreement's product coverage and other issues, as foreseen in the Annex to the Singapore declaration on Trade in Information Technology Products. European Union Press Release November 12, 1997, posted on the WTO web site

25. Original Intent of the ITA Information technologies have become a key factor to economic development and growth: They contribute to increased productivity; they contribute to the development of trade by making exchanges quicker and easier. What are our next priorities? The EU intention is to promote the framework that will contribute to the use of IT equipment and the development of e-commerce. 1-First, I assume we all agree that the development of e-commerce means access to reasonably priced IT equipment and services necessary for electronic transactions. . . . We should build on the success of the Information Technology Agreement, signed in 1996 at the Singapore conference and endorsed by 55 countries. Comments of Commissioner for Trade at the European Commission, Pascal Lamy, to a Seminar on the E-Economy, March 1, 2001

26. Original Intent of the ITA This agreement will accelerate the development of the Global Information Infrastructure, opening new and better ways for people in every nation to share information and conduct commerce. In addition to reducing barriers to high tech trade, this agreement will accelerate economic growth and the development of local high tech industries in the developing world. From a Microsoft Press Release/Statement of December 12, 1996, when the ITA was announced in Singapore: