Bloomberg News

Talks to Expand Technology Trade Pact Collapse Amid China Demand

July 17, 2013

Negotiations among dozens of nations aimed at eliminating duties on some electronic devices collapsed after China proposed excluding many items from the talks.

“The United States is extremely disappointed that it became necessary to suspend negotiations,” U.S. Trade Representative Michael Froman said yesterday in a statement on the Information Technology Agreement. “A diverse group of members participating in the negotiations determined that China’s current position makes progress impossible at this stage.”

China and the U.S., the world’s two largest economies, are among members of the Geneva-based World Trade Organization seeking to expand the agreement, signed in 1996 before the introduction of smartphones, tablet computers and a range of other electronics goods. The accord being negotiated would update the list of goods that receive duty-free treatment.

The talks in Geneva failed as President Barack Obama’s administration confronts China with accusations that it’s behind a campaign to hack into U.S. agencies and corporations to steal trade secrets and potentially disrupt power grids and telecommunications networks. The accusations were delivered at a July 8 meeting of a U.S.-China cybersecurity group, according to an official who attended the session who asked to remain unidentified.

A spokesman from the Chinese Embassy in Washington didn’t immediately return a call yesterday seeking comment on Froman’s statement.

Removal Request

China this week urged removal of 106 products from a list of 260 goods that would receive duty-free treatment, John Neuffer, senior vice president for global policy at the Information Technology Industry Council, said in a July 15 blog post. Neuffer is in Geneva for the talks. The council represents companies including Apple Inc. (AAPL:US) of Cupertino and Facebook Inc. (FB:US) of Menlo Park in California.

“China is the world’s largest exporter of IT products and will benefit enormously from this tariff elimination initiative,” Neuffer said yesterday in a blog post. “It should not be allowed to continue to keep a wide swath of tariffs in place that make it difficult for innovative, affordable tech products from the United States and around the world to enter the Chinese market.”

The 1996 agreement, which covered about $2 trillion in global exports, applies to goods including some computers and telecommunications equipment, according to a June 2012 report by Bloomberg Government senior global business and trade analyst Ken Monahan. It excludes some goods such as MP3 players and video-game consoles such as Microsoft Corp.’s Xbox 360, it said.

“Concluding a deal this year is at risk, and it’s unclear what the next steps are at this point,” due to the collapse of the talks, Monahan said in an interview yesterday. There’s no longer clarity about what will be on the expanded list, he said.

“We are hopeful that China will carefully consider the concerns it heard this week from many of its negotiating partners, and revise its position in a way that will allow the prompt resumption of the negotiations,” Froman said.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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