India cautions developing nations against IT agreement

Ahead of a key ministerial meeting of the World Trade Organization (WTO) this year, a government think tank has cautioned developing countries against giving into any pressure to join the Information Technology Agreement (ITA) as part of a plurilateral initiative on ecommerce that asks them to take binding commitments.

It also rejected the claim of developed countries that exports of IT services increased because of the global ITA.

“Overall, developing countries who have stayed away from the ITA/ITA-2 should not get swayed by the supposed benefits of participating in these agreements,” the New Delhi-based Centre for WTO Studies (CWS) said in a policy brief on the performance of computer, electronics and optical (CEO) products in the post-ITA phase.

The ITA came into force in July 1997 and now has 81 signatories, including India, who together account for about 97% of the world trade in IT products, including computers, telecom equipment, semiconductors and scientific instruments. India is required to eliminate tariffs on these products under the pact.

However, it is not a part of the ITA-2, which covers software and digital content, photographic or cinematographic products, touch screens, GPS navigation equipment, video-game consoles and portable interactive electronic education devices.

The relevance of ITA/ITA-2 is heightened as under the Joint Statement Initiative, around 80 WTO members are negotiating rules on electronic commerce and attempting to get some of the countries which had kept themselves out of the two pacts to join them.

“Any binding commitments will erode the much-needed policy space and reduce the ability of the governments to generate additional revenues,” it said.

The think tank said producers of CEO products in India took a “massive hit” as the share of domestic value-added products in the total demand plunged from 70% in 1995 to around 45% in 2011. Business Journal