Global Economy
August 11, 2015

ITA 2.0 Is a Big Deal

By Andrea Durkin

ITA graph 3

The original Information Technology Agreement (ITA), launched in 1997, was a boon to global trade in information and communication technologies (ICTs).  Trade in ICTs took off from $1.2 trillion before the agreement to more than $5 trillion today.

But the original list of products covered under the ITA – about 250 products mainly intended for business and professional use – could not keep pace with technological innovation. Many common consumer electronic products such as DVD players and printer ink cartridges didn’t even make the first cut in 1997.

Since then, myriad new products have been invented and creative engineers and scientists continue to think up new applications for existing technologies.  ICTs enable processes that make our lives easier, like checking in for flights using our phones or kiosks.

ICTs drive competitive edge.  Advanced manufacturing is a frontier constantly evolving thanks to a conveyor belt of innovations such as new-generation semi-conductors.  Combine harvesters can navigate themselves with GPS, collect precise data on yields per acre, determine soil health, and deliver just the right amount of fertilizer to reduce cost and impact to the environment.

Medical products get smarter by the day, ranging from continuous glucose monitors and insulin pumps that automate blood sugar management, to powerful diagnostics like magnetic resonance imaging known as MRIs.  Miniaturization of ICT components and integration with everyday devices may enable health providers one day to conduct ultrasounds on smart phones.  Inventions such as this would unlock access to healthcare in rural and remote areas.

Many products formerly used primarily for business are now common for personal use.  And products that served one primary purpose, like watches, now function as phones and cameras.  ICTs are ubiquitous in daily life and confer competitive advantages throughout the entire value chain from R&D to manufacturing to supply chain management and service delivery.

The “new and improved” ITA will bring nearly double the product coverage and has the potential to reap some $50 billion in tariff savings each year globally.  The Information Technology and Innovation Foundation (ITIF) estimates the ITA will increase the size of the global ICT marketplace add $190 billion annually.

Who benefits?

 ITIF estimates the expanded ITA could generate $2.8 billion in US exports, boosting revenues of American ICT firms by $10 billion, and supporting approximately 60,000 new jobs.  IT-intensive firms are 25-30% more likely to grow employment.  According to the OECD, the probability of innovation in a firm increases with the intensity of ICT use in manufacturing and service firms alike.  So the benefits of acquiring ICTs cheaper confer widely across the economy.

ICTs are critical infrastructure for all facets of development, from healthcare to education to economic opportunity.  In the first twelve years of the original ITA, developing country exports of ICTs increased almost 34%.

Not all WTO Members have joined, but the 54 Members who signed up for expanded coverage represent 90% of world trade in the new products covered, reducing costs for everyone.

For developing and least-developed countries that rely on imports of ICTs, joining the ITA could extend the reach of life-saving and life-enhancing technologies, hasten their adoption and drive domestic productivity and economic growth.