The technology industry is looking to expand its range of products within the World Trade Organization’s zero-tariff framework.

This article is written by Norman P. Aquino, who is the Special Reports Editor.

“The technology sectors from numerous nations, such as the Philippines, are advocating for over 400 technology goods to be included in the World Trade Organization’s tariff list.”ff

Removing the framework is projected to contribute approximately $766 billion to the global economy in the span of 10 years.

According to Philippine Representative to the WTO Manuel Antonio J. Teehankee, the adoption of Information Technology Agreement 3 (ITA-3) could benefit the global semiconductor and supply chain industries. This agreement could also contribute to promoting global sustainability in various sectors. Teehankee shared this statement during a public forum held at the WTO headquarters last week.

During a forum attended by government officials and representatives from semiconductor companies around the world, he stated that the Philippines would see a 36% growth in electronic exports by 2022, totaling $49 billion. This would make up almost half of the country’s total exports.

The Philippine electronics sector, including semiconductors, generated three million direct and indirect jobs that year, Mr. Teehankee said. “I have instructions from the capital, and I am convinced [about ITA-3].”

39% of Vietnam’s total exports, 32% of Malaysia’s total exports, 29.2% of South Korea’s total exports, 25.5% of China’s total exports, and 16.1% of Thailand’s total exports come from exporting ICT merchandise.

On the other hand, the percentage of ICT goods exports is significantly lower for non-ITA countries. For example, it only makes up 2.5% of Cambodia’s goods exports, 0.7% of South Africa’s, and less than half a percent for Brazil, Chile, Pakistan, and Argentina.

In December 1996, the ITA was signed by twenty-nine countries at the Singapore Ministerial Conference. The signees pledged to eliminate tariffs completely.ff

The analysis focuses on eight main types of IT products, including semiconductors, computers, and telecommunication equipment.

During the December 2015 Nairobi Ministerial Conference, over 50 member nations finalized the expansion of the agreement, which now encompasses an additional 201 products with a combined value of over $1.3 trillion annually. The number of members has since increased to 82, accounting for approximately 97% of global IT trade, according to the WTO website.

temperature superconductors

The second expansion of the ITA may include items like 3D printers, industrial robots, drones for commercial purposes, medical devices for monitoring patients, lithium-ion batteries, solar cells, and high-temperature superconductors.defi

The agreement includes the inclusion of high-definition TVs.

According to a recent study by the Information Technology and Innovation Foundation (ITIF), if the 82 countries who originally signed the ITA were to also join the expanded ITA-3, the world economy could potentially increase by approximately $766 billion within a 10-year period.

According to Mr. Teehankee, the same pattern is observed in the information and communications technology services, aside from just the trading of goods. He shared this during an interview with BusinessWorld at the forum.

ffs] and it will have a knockdown effect on our IT-enabled service exports and a multiple knockdown eff

He stated that it has an impact on the environment and agriculture.

In 2022, the Philippines’ exports in IT-enabled services amounted to $32.5 billion and have consistently increased by an average of 10% per year, according to the speaker.

“The Philippine ambassador stated that the number is remarkable for developing countries such as the Philippines and our fellow ASEAN nations, as well as our community of developing countries, from an economic, developmental, and environmental perspective.”

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According to Mr. Teehankee, trading and employment opportunities are on the rise in the Philippines.

fficent solutions

In addition to powering everyday products, semiconductors also have a vital impact on combatting the issue of climate change on a global scale. A variety of sectors such as transportation, manufacturing, construction, and agriculture heavily depend on semiconductors to facilitate energy-efficient solutions.ffi

The production of efficient and environmentally friendly energy helps to decrease emissions.

‘TIME TO MOVE’

According to the speaker, the original ITA agreement in 1996 saw global IT product exports at $550 million, but under the expanded ITA-2 signed in 2015, this number has risen to $2.5 trillion in 2021.

Around 75% of IT product exports were focused in Asia, with several nations being involved in ITA-1 and ITA-2 and having signed free trade deals like ASEAN+ and the Regional Comprehensive Economic Partnership, according to Mr. Teehankee.

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In terms of sheer numbers, the United States would receive the most benefits.fi

The ITIF study found that ITA-3, with China coming in second, has the highest growth rate. Over a 10-year period, the expansion of ITA-3 is predicted to contribute $208 billion to the US GDP, resulting in a 0.82% increase in GDP growth compared to what would have been expected without the expansion.

Additionally, expanding ITA-3 would result in a $2.8 billion increase in US exports of ICT products, a $6.9 billion increase in revenues for US ICT companies, and the creation of nearly 60,000 jobs in the US.

The expansion of ITA-3 would lead to an increase of 0.52% in China’s economy, resulting in a growth of approximately $147 billion.

An expansion of ITA-3 could lead to increased economic growth, resulting in higher tax revenues for at least 12 countries and the European Union. These revenues would surpass tariff income.ff

According to the ITIF, the revenue gaps 10 years after joining ITA-3 would be significantly reduced by the addition of four more countries, filling over 50% of the lost revenues.

According to Mr. Teehankee, there are currently no projections for the Philippines’ earnings from ITA-3. He also mentioned that those involved in the process are currently determining which products should be covered in the agreement.

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“He stated, ‘This is a private sector-driven and demand-based initiative. It’s only the initial stage of discussions. Private sectors must urge their governments to take action.'”

The ITIF stated in their study that countries should act promptly if they are considering joining ITA-1, ITA-2, ITA-3, or all three. This is because larger economies are seeking to expand the sources and networks of their supplies in order to enhance supply chain durability, safety, and sustainability.

The statement stated that major technology and industrial corporations are reevaluating possible suppliers and production sites, which presents a chance for new suppliers and economies to enter the global value chains of technology.

grading trade environment

On the other hand, nations that choose not to be a part of ITA-1 and ITA-2 or fail to engage in ITA-3 are at risk of facing a trade environment that is deteriorating due to lack of technological advancements.fi

According to the think tank, the country’s economy has suffered due to poor efficiency and being left out of international technology networks.

According to the statement, not participating in the ITA also hinders an economy’s potential to participate in the growing market of industrial goods that utilize advanced technologies such as semiconductors.

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It is not possible for the diligent workforce to take part in e activities.ff
The article stated that individuals working in advanced global technology supply chains are likely to receive higher wages and require extensive technology training and skills.