U.S., China reach agreement on cutting tariffs on tech products

China trade
A worker walks past containers waiting to be transported in a port in Qingdao, China.
(AFP/Getty Images)

U.S. and China negotiators agreed to eliminate tariffs on technology products such as calculators, semiconductors, medical equipment and cash registers in a wide-ranging deal that backers say could generate up to $1 trillion in additional trade yearly.

The two countries’ deal would expand the scope of the Information Technology Agreement, a global trade pact that covers 70 countries. The ITA already covers 97% of all trade in information technology products worldwide, according to the World Trade Organization.

China is the world’s largest importer and exporter of these products, but disagreements between the U.S. and China had stalled efforts to expand the ITA’s scope and prevented fuller discussions among all signatories.

President Obama unveiled the deal Tuesday during the Asia-Pacific Economic Cooperation summit in Beijing after talks had stagnated for more than a year. Since coming into force in 1997, the ITA has expanded to cover more than $4 trillion in annual trade, according to the U.S. government.


The Motion Picture Assn. of America, an advocacy group for the film industry, welcomed the deal. Its chief executive, Chris Dodd, said Tuesday that the agreement “will encourage the growth of the U.S. and global motion picture industries” by eliminating tariffs that can reach 30%.

For the industry, the products affected by deal would include equipment and devices used by filmmakers and movie theaters.

“We encourage all ITA participants to seize the momentum created by this agreement to resume and rapidly conclude the negotiations,” Dodd said.

The deal is estimated to increase global economic output, or gross domestic product, by $190 billion annually and lower costs for manufacturing industries that rely on information and technology parts, the White House said.


Full discussions on ratification are expected to take place among WTO members in Geneva in December.

Under terms of the pact, more than 200 tariff categories would be reduced to zero, cutting duties on high-tech devices such as video game consoles and GPS devices.

Tariffs on loudspeakers, now as high as 30%, and on semiconductors and printer ink cartridges, both as high as 25%, also be would eliminated, according to the U.S. government.

How exactly a deal would be implemented — whether China will allow all tariffs to be reduced at once or piecemeal — will be decided in Geneva, U.S. Trade Representative Michael Froman said Tuesday in Beijing.

U.S. authorities said the agreement could support up to 60,000 new American jobs and eliminate tariffs on nearly $100 billion worth of made-in-America products.

The agreement also represents a constructive step in relations between the two governments, which have seen a rocky relationship over the last year.

Ties between Beijing and Washington have been strained by issues including cybersecurity and perceived regulatory unfairness in China. Those tensions have led many U.S. companies to adopt a more “moderated optimism” approach about doing business in China, said John Frisbie, president of the U.S.-China Business Council.

“Making a positive breakthrough on the ITA this week sets the tone for more ambitious agreements that are in discussion,” Frisbie said.


The agreement could lead the way to a bilateral investment treaty between the U.S. and China, which both parties have made a priority.

Silbert, a special correspondent, reported from Beijing, Faughnder from Los Angeles.

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