History

Major exporters of information technology convened at the 1996 Singapore Ministerial, wanting to build on the success of Uruguay Round zero-for-zero sectoral initiatives agreed to as part of the market access.

As a result of these discussions, 29 Member countries signed the Singapore Ministerial Declaration, which committed the signatories to eliminating tariffs and all other duties and charges on a negotiated list of information technology products. Signatory countries also agreed to the following principles:

• Incorporate all tariff commitments covered by the Agreement into national tariff schedules.
• Meet periodically under the auspices of the Council on Trade in Goods to consult on non-tariff barriers and review the product coverage of the Agreement with a view to agreeing by consensus whether the product coverage should be modified in any way due to technological developments or changes to the HS nomenclature.
• Reach a negotiated target of 90 percent of global trade (representing total imports and exports of signatory countries) at which time the Agreement will enter into force.
• Strive to achieve a common classification for covered products within existing HS nomenclature.
• Consult with other Participants as requested.
• Promote the Agreement and encourage other Members and acceding countries to participate.

At the time the Agreement was signed in 1996, the level of global trade represented by the 29 participants only reached 83 percent. In the months following the Singapore Ministerial, eleven additional Members pledged to participate in the Agreement, bringing the number of signatories to 40 Members and the level of covered global trade to 90 percent, thus activating the ITA.

Since that time, an additional 23 Members have chosen to participate in the ITA, bringing the level of covered global trade to more than 95 percent. The Agreement has had a significant impact on global trade in this important sector, as countries increasingly transfer technology and globalize supply chains. Since the Uruguay Round, cumulative global exports of products covered by the Information Technology Agreement have increased, on average, more than 100 percent between 1994 and 2003 (as compared to a cumulative increase of 75 percent in all global exports). This trade stimulation brought about by the ITA was a significant contribution to the increase in export growth.

Critical Mass

The ITA represents the first time the concept of “critical mass” was utilized in constructing a sectoral initiative. Other zero for zero agreements in the Uruguay Round consisted of interested Members agreeing on a list of covered products without first setting a target level of participation at the outset of negotiations. Use of the critical mass approach better ensures that the benefits of trade liberalization accrue to key traders in the sector and helps to minimize the “free rider” issue.

Implementation

Participants agreed to the following implementation schedule for all ITA products not already bound at zero.

Due to the fact that both developed and developing countries chose to participate in the ITA, participants agreed to allow longer implementation periods for developing countries implementing tariff cuts.

The Singapore Declaration provides that "unless otherwise agreed by the participants" each participant would follow the staged reductions listed above. Since the implementation of the ITA, other WTO Members have chosen to participate in the ITA and developing country Members have requested and been granted extended staging by the ITA Committee.

Conclusion

The ITA is a good example of a successful sectoral agreement benefiting a large group of countries, and incorporating the concept of critical mass. The Doha Round provides an avenue for Members to expand the participation in and product coverage of the ITA.