U.S. Presses Trade Partners for Tariff Pact

On the opening day of a global trade conference, the United States demanded Monday that an agreement to eliminate most tariffs on the world’s $1-trillion information technology industry be concluded by Friday. Otherwise, U.S. officials warned, the chance for a deal might slip away.

“We must reach an agreement this week,” Acting U.S. Trade Representative Charlene Barshefsky declared in a speech to the first ministerial meeting of the 128-member World Trade Organization, which was founded two years ago. “Remaining issues are ripe for decision. We have an historic opportunity to eliminate tariffs on these products. We must seize it.”

The U.S. determination to reach an information technology agreement by the end of the five-day meeting appears virtually absolute, motivated in part by fear that if no agreement is reached here, the momentum for a deal could collapse. The proposal now circulating among WTO members calls for tariffs to be cut to zero on most information technology products, such as computer hardware and software, semiconductors and telecommunications equipment, by 2000.

Washington is willing, however, for the agreement to be concluded by only about 35 countries--maybe fewer--so long as they are the ones that account for the great bulk of trade in information technology products. Such trade is now valued at $500 billion per year--including about $80 billion in U.S. exports--and is growing fast.

Especially tough bargaining is underway between the United States and the European Union over exactly which categories of products to include in the deal. Among those the United States wants to leave out--at the behest of such domestic makers as Corning and Xerox--are optical fiber cables and photocopiers.

But Washington wants to include movies and music CDs under “software” despite European objections, according to European Union spokesman Peter Guilford. The possibility of a breakdown over issues such as these appears to be the biggest remaining threat to a deal.

Deputy U.S. Trade Representative Jeffrey M. Lang said that if an agreement is reached by Friday, it would be highly specific but involve a limited number of countries.

“It means countries would modify their tariff schedules in accordance with the product list that would be attached to a ministerial declaration,” Lang said. “The deal would only cover probably--I don’t know, 35 countries maybe, [or] 25 countries. But it probably will also cover 90% of the trade. We want to cover a large percentage of the global trade in information technology products. I don’t know exactly how many countries that means, but it’s not 128.”

In her speech, Barshefsky said an information technology agreement “would be the first concrete demonstration of the WTO’s ability to move forward in concert with the changing world around us.”

“By creating a tariff-free environment for trade in information technology products, we can help lower consumer costs, make our businesses more competitive and give our entire economies the benefits that flow from access to greater information,” she said.

Such an agreement could in turn help build momentum for the WTO’s goals of reaching agreements on liberalizing market access and investment in telecommunications services, and liberalization of financial services.

Barshefsky called on ministers to make progress in these talks, too, during the week. The WTO has set a goal of concluding the telecommunications negotiations by Feb. 15, and Barshefsky said the United States hopes to see a financial services agreement by the end of next year.

Successful negotiations in these three fields--information technology, telecommunications services and financial services--would lay the groundwork for a far more globalized world economy than exists today.

While these three issues are the top U.S. priorities for the week’s meetings, a wide range of other proposals are also on the group’s agenda. These include whether the WTO should address issues of labor standards and the environment, a proposed investment liberalization pact, possible steps to encourage progress in negotiations over China’s application to join the WTO, and whether to launch a new round of wide-ranging trade talks in a few years.