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UNCLAS STATE 022242 
 
SIPDIS 
 
SIPDIS 
GENEVA AND BRUSSELS FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD WTO
SUBJECT: DEMARCHE ON MAINTAINING ITA DUTY-FREE COVERAGE 
 
REF: 06 STATE 178455 
 
¶1.  Summary and Action Request:  The USG has raised several 
proposals relating to the WTO Informational Technology 
Agreement (ITA) at the WTO Committee for the Expansion of 
Trade in Information Technology Products (ITA Committee), 
expressing concerns that ITA members such as the European 
Union (EU) may no longer be providing duty-free treatment on 
certain ITA products.  All ITA Members, but especially those 
countries/entities which are significant exporters of ITA 
products, should take a special interest in this issue.  The 
ITA Chair has called for an informal meeting in Geneva to 
discuss this issue on March 6.  Action addressees are 
requested to meet with appropriate host country/entity 
officials in advance of this meeting to seek support for the 
U.S. position, drawing from the background talking points in 
paragraph 7.  End summary and action request. 
 
OVERVIEW OF THE ITA ISSUE 
 
¶2.  The United States is concerned about specific actions or 
proposals by the EU that would no longer guarantee duty-free 
treatment for certain ITA products.  We understand that 
duties as high as 14 percent could be applied to imports of 
these ITA products, products that are not only commonly used 
by millions of businesses and consumers but are produced and 
exported from many developed and developing economies such as 
China, Malaysia, Korea, Chinese Taipei, Indonesia, 
Philippines, Thailand, Vietnam Costa Rica, Hong Kong, and 
Singapore.  Total EU imports of these products were valued as 
high as US$20 billion in 2005. 
 
¶3.  All ITA signatories committed to bind and eliminate 
customs duties on ITA-covered products.  This commitment, in 
our view, applies to all ITA products, even technologically 
advanced or sophisticated versions of the same products.  The 
USG believes that subjecting technologically advanced 
versions of ITA-covered products to tariffs meets neither the 
spirit nor the letter of the ITA agreement. 
 
¶4.  More information about these specific products can be 
found in the U.S. proposal tabled at the last informal 
meeting of ITA Committee (G/IT/W/26), available on the WTO 
web site.  Please also refer to previous demarche (reftel) on 
this issue as well as two earlier proposals that the U.S has 
submitted to the ITA Committee (G/IT/W/21 and G/IT/W/23 at 
the WTO web site) if needed.  Japan has partnered with the 
United States in consistently raising raise this issue and 
APEC Ministers also made a statement in support of 
maintaining duty-free coverage for ITA products in November. 
 
¶5.  Geneva-based representatives from Korea, Malaysia, Hong 
Kong, Singapore, Canada, Vietnam, Philippines, and Chinese 
Taipei either publicly or privately expressed interest or 
initial support of the U.S. position on this issue during the 
last informal ITA meeting on January 19.  However, many of 
these representatives have also informed us that they have 
not received instructions or guidance from their own capitals 
or industry associations.  With the especially busy schedule 
of WTO Doha/NAMA negotiations during the next few months, 
they may need specific instructions from their capitals in 
order to express more vocal support at future ITA Committee 
meetings. 
 
¶6.  Support from other ITA members is crucial at this 
juncture. The United States and Japan originally proposed the 
notion of informal consultations between ITA Members in 
Geneva to discuss this issue.  The next round of informal 
consultations is scheduled for March 6.  However, without the 
support of other Members, the Chair could decide to dissolve 
such consultations, perceiving this not as a global issue but 
as a dispute between the EU on one side and the United States 
and Japan. 
 
BACKGROUND POINTS 
 
¶7.  Action addressees should draw from the following 
background talking points when discussing this issue with 
host government officials: 
 
-- Before the last formal meeting of the ITA Committee on 
October 31, we asked for your support on a U.S. proposal that 
raised concerns about ITA products that are in danger of no 
longer receiving duty-free treatment from the EU.  We thank 
you for the support of your Geneva representatives at that 
meeting, which prompted the approval of informal 
consultations between ITA Members on this issue. 
 
-- The first round of informal consultations was held on 
January 19.  Geneva representatives did privately express 
support for the U.S. position on this issue after the 
meeting.  However, we will need more vocal support during the 
next round of informal consultations tentatively scheduled 
for March 6 if we are to continue to raise this issue. 
 
-- The EC has already or is considering applying duties as 
high as 14 percent on imports of several ITA products 
including set-top boxes with a communication function and 
computer LCD flat panel displays.  This is an important issue 
with potentially negative consequences that could affect many 
economies-not just the United States. Total EU imports of 
these products are valued at over $20 billion, including 
significant amount of imports from (your country/entity). 
 
-- We provided trade data showing the impact of these 
proposals to your representatives in Geneva and are happy to 
provide these to you as well. We would also request that you 
review the document that the U.S. provided during the January 
informal consultations (G/IT/W/26) for more information about 
some of the specific ITA products that are of concern to us. 
 
-- All parties to the ITA made a commitment that for those 
products specified in the ITA, customs duties shall be bound 
and eliminated.  The United States feels that we should be 
moving in the direction of enhancing market access 
opportunities for information and communications technology 
(ICT) products, not increasing tariffs on products already 
covered by the ITA. 
 
-- As an ITA Member (and an exporter of ITA covered 
products), we would encourage you to participate in the March 
informal consultations and to raise concerns or questions 
about the products we mentioned or other specific products 
that are of concern to you.  Without input from other 
Members, the Chair could decide to dissolve such 
consultations. 
 
-- The United States and partners are sending representatives 
from our respective capitals to the next informal meeting in 
early March. We encourage you to provide your representatives 
with instructions to offer statements of support for a 
continued dialogue on this issue during the meeting. 
 
-- The EU has expressed their wish to avoid further 
discussion on this issue until the ITA Committee addresses 
how to update the original ITA product list to include 
additional products.  We feel that there is nothing to be 
gained from this strategy. We should not be negotiating on 
expanding the ITA to cover additional products in return for 
maintaining duty-free treatment for products that are already 
covered under our commitments. 
 
-- The tenth anniversary of the ITA will be observed with a 
symposium on March 28 - 29.  We would also encourage your 
participation in the symposium as an excellent opportunity to 
highlight the benefits of ITA membership such as advancing 
the development of ICT infrastructure, spurring innovation in 
the ICT industry, and facilitating the overall growth of ITA 
Member economies. 
 
END BACKGROUND POINTS 
 
¶8.  The Office of the United States Trade Representative 
(USTR) thanks Posts for their assistance in this matter. 
Questions relating to this issue should be directed to Jason 
Bernstein, Director for Tariff Affairs 
(Jason Bernstein@USTR.EOP.GOV, 202-395-6577) or Eric 
Holloway, Office of Technology and Electronic Commerce, U.S. 
Department of Commerce (Eric.Holloway@mail.doc.gov, 
202-482-4936). 
RICE