Friday, November 14, 2014

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U.S. and China strike historic deal to eliminate tech tariffs

Photo credit: U.S. News & World Report

The U.S. and China reached a historic tech trade deal in early November that would eliminate tariffs on the global trade of $1 trillion in high-tech products in a move that could support up to 60,000 new U.S. jobs.

The tentative agreement would cover approximately 200 product lines, from printer cartridges and semiconductors to video game consoles and magnetic resonance imaging machines.

"This shows that China, despite any resistance it may have, has been willing to give a little bit," said Omar Hamid, head of Asia Pacific country risk for IHS Global Insight.

The World Trade Organization must approve the pact, struck at the Asia Pacific Economic Cooperation summit in Beijing. At the summit's plenary session, President Obama said he hopes the deal "will contribute to a rapid conclusion of the broader negotiations in Geneva."

"To give you some idea of the importance of this agreement, the last time the WTO agreed to eliminate tariffs on (information technology) products was in 1996 when most of the GPS technology, much of the medical equipment, software and high-tech gadgetry that we rely on in our daily lives didn't even exist," U.S. Trade Representative Michael Froman said at a briefing afterward, according to a White House transcript.

If approved by the WTO, the agreement would do away with tariffs on high-tech products traded among 54 economies, including the U.S. and China. It would contribute about $190 billion annually to the global economy, according to the Office of the U.S. Trade Representative.

The U.S. is likely to be the biggest beneficiary of the agreement because it sells more than $100 billion of the $1 trillion in annual global IT sales. Much of the new U.S. sales spurred by the agreement would probably be to China "because it's the biggest potential untapped market," Hamid says. "China has given up more than it's gotten in return."

Other products that would be impacted by the agreement include loudspeakers, global positioning systems, video cameras, software media and high-tech medical devices.

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