Imports

of trade costs by the time finished products enter the United States. 35
Trade agreements that eliminate tariffs on intermediate goods used in global supply
chains would thus be highly beneficial to American producers and consumers. These
include, for example, the pending expansion of product coverage under the Information
Technology Agreement (ITA), which is being negotiated by Members of the World
Trade Organization (WTO). The ITA was negotiated in 1996 and has not been updated
since, even though the pace of development of new information and communication
technologies (ICT) since then has been dizzying. As Ed Gerwin of Third Way noted,
“[s]imply put, the ITA is a 2G agreement in a 4G world.” 36 Consequently, tariffs (both in
the United States and abroad) apply to a host of ICT products that are often inputs in
production of other ICT products, as well as final consumer products. Advocates of
updating the ITA want it to cover all flat panel displays, including television, a wide array
of audio and visual equipment like speakers and headphones, Bluetooth devices, GPS
systems, smart meters, the latest semiconductor chips, and other advanced materials,
parts and components used to make today’s ICT products. Many of these products
simply did not exist when the ITA was first negotiated. Expansion of the ITA will add in
products that were exempted from the ITA in 1996, including TVs, video players and
gaming consoles, as well as batteries, cables, chargers, headphones, speakers and
transmitters. Clearly, expansion of the ITA would be a huge win for American consumers.
It would also be a win for U.S. ICT manufacturers who would be able to buy lower-cost
inputs. Lower costs to both purchasers will increase demand for these technologies and
spur further innovation and the growth that goes with it.
Another international negotiation, also under consideration at the WTO, that would
benefit U.S. producers and consumers would create a multilateral Trade Facilitation
Agreement. Many countries, both developed and developing, maintain customs and
administrative procedures that can delay or otherwise burden imports, delays and
burdens that add cost to the imported products. The problem is particularly acute for
products that rely on “just in time” production, i.e., speedy movement through customs. A
Trade Facilitation Agreement that would simplify and automate customs procedures,
provide for advance and transparent rulings and clear fees and documentation
35
See, for example, Michael J. Farrentino, “Using Supply Chain Analysis to Examine the Costs of
Non-Tariff Measures (NTMs) and the Benefits of Trade Facilitation,” U.S. International Trade Commission,
Office of Economics Working Paper, No. 2012-01A, January 2012.
36
Ed Gerwin, “Q&A on the ITA: Five Questions on the Information Technology Agreement,” Third
Way Digest, January 2013, p. 3.