New WTO deal scrapping tariffs on IT products beneficial to Philippines

MANILA, Philippines - The Philippines stands to benefit significantly from a recently-reached World Trade Organization (WTO) agreement eliminating tariffs on 201 products being manufactured under the Information Technology sector, the Department of Trade and Industry (DTI) said.

The DTI said the tariff removal was an offshoot of a July 18 agreement reached by 54 WTO members and confirmed in a July 24 meeting at the WTO headquarters in Geneva, Switzerland.

Trade officials hailed the deal, saying it would greatly benefit the country upon its commencement in 2016.

“Philippine trade of these products in 2013 amounted to $26 billion, with exports reaching more than $14 billion,” DTI Undersecretary Adrian Cristobal said.

He said the country’s electronics sector in particular would benefit from the elimination of tariffs in terms of increased market access on targeted export markets such as the US, Japan, Europe, Korea and Chinese Taipei.

“Moreover, almost all imported raw materials and intermediate inputs and capital equipment requirements can be imported duty free. Once the Information Technology Agreement (ITA) is entered into force, it will provide the Philippines access to over 90 percent of global IT trade. Furthermore, it will create jobs through increase in foreign direct investments and will help boost GDP growth for our country,” he said.

The DTI said among the products covered under the agreement are new generation semiconductors, static converters, video games, and parts of automated electronic component machines wherein the Philippines is part of the regional and global production chain.

Under the terms of the agreement, tariffs will be eliminated on these products within three years, with reductions beginning in 2016.

By the end of October this year, the DTI said each of the participating members would have to submit to the other participants a draft schedule which spells out how the terms of the agreement would be met.

The DTI said the agreement also contains a commitment to work on non-tariff barriers in the IT sector, and to keep the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments.

The agreement this month is an expansion of the 1996 ITA involving 81 members. The Philippines became a part of the ITA in 1997.

In 2012, members recognized that technological innovation had advanced to such an extent that many new categories of IT products were not covered by the existing agreement. Negotiations began in 2012 to expand the coverage of the accord.