Now would be the time to get things ramped up stateside...
U.S., China to Drop Tariffs on Range of Tech Products
m.wsj.com/articles/us-china-to-drop-tariffs-on-range-of-tech-products-1415670049?mobile=y
BEIJING—The U.S. and China reached an agreement to drop tariffs on a wide range of technology products, in a deal that its backers say could cover $1 trillion in trade and that marks a significant accomplishment amid strained ties between Beijing and Washington.
The two countries late Monday reached a deal to expand the Information Technology Agreement, a global technology trade pact, to cover semiconductors, medical devices, Global Positioning System devices and other newer products, U.S. Trade Representative Michael Froman said Tuesday in Beijing. The deal--reached late Monday after marathon negotiations and more than a year of stalled talks--could be ratified in December by members of the World Trade Organization in Geneva, Switzerland.
U.S. President Barack Obama unveiled the deal Tuesday morning at a gathering of leaders of the Asia-Pacific Economic Cooperation summit in Beijing, which began Monday night. He said the U.S. and China reached an “understanding” on the pact that it “will contribute to a rapid conclusion to the broader negotiations in Geneva.”
The issue of whether certain tariffs will be phased in over time, as China wants, would be resolved in Geneva, Mr. Froman said.
The U.S. has been pushing to include medical devices, advanced semiconductors and other items in the Information Technology Agreement.
The agreement is a rare mark of progress in a U.S.-China relationship that is fraught with challenges across many fronts—from cybersecurity and human rights to Beijing’s territorial disputes with U.S. allies Japan and the Philippines. Economic ties—for many years the foundation of relations—have been rocky, too, over the past decade, with disputes over trade imbalances, China’s tightly managed currency and, more recently, Chinese antitrust investigations into marquee U.S. companies including Microsoft Corp.
Struck on the eve of a two-day summit between Mr. Obama and Chinese President Xi Jinping , the deal would lend momentum to talks that analysts expected would yield little in the way of major breakthroughs.
“This is encouraging news for the U.S.-China relationship,” Mr. Froman said.
The U.S., the European Union and Japan have been pushing to update the deal, which was originally struck in 1997 to curb tariffs in the technology industry. But China had been reluctant to go along, negotiators say, in part because of its desire to protect and build its semiconductor industry.
U.S. and Chinese negotiators conducted exhaustive trade talks on the margins of the Asia-Pacific Economic Cooperation forum in Beijing to get a deal. The U.S. had been counting on the desire of China, as the host country of APEC, to be able to chalk up concrete results.
The U.S. also argued that a deal on technology would help convince the administration and members of Congress that China could show enough flexibility to eventually reach a far more complex investment treaty that the two nations have made a priority. A U.S.-China summit between Messrs. Obama and Xi, which is set to begin Tuesday evening after the APEC forum ends, will focus in part on that investment pact, known as the Bilateral Investment Treaty.
The new technology deal would include 200 different tariff categories. Among the products that would see tariffs eliminated are next-generation semiconductors, which now have tariffs as high as 25%; magnetic resonance-imaging, or MRI, machines, which face tariffs of up to 8%; and GPS devices, which also have tariffs as high as 8%, the U.S. said.
Talks over the technology pact had nearly broken down over its scope, Mr. Froman said, but “last night we reached a breakthrough.” The agreement, while not final, would eliminate tariffs on sales of roughly $1 trillion and could generate as many as 60,000 U.S. jobs, he said.
The U.S.-China deal would be presented to the 54 economies involved in the ITA negotiations in Geneva to get their signoff. U.S. officials said they believe they are all expected to do so because Chinese opposition has been seen as the main obstacle and the U.S. has already consulted with other nations.
Formally, the ITA comes under the jurisdiction of the WTO. ITA members must offer the same tariff deals to all WTO members. But the ITA was an APEC initiative years ago and the APEC summit in Beijing, which includes such high-tech powerhouses as the U.S., Japan, China and South Korea, was seen by negotiators as a good place to complete negotiations on an expansion, which have dragged on for more than a year.
The deal is also a win for the WTO, which has seen one negotiating effort after another end in stalemate. The U.S. said the ITA would be the first major tariff-cutting deal at the WTO in 17 years.
