Signing The WTO IT Pact, A Big Mistake

India’s voluntary decision to join the WTO Information Technology Agreement (ITA) in 1997 was deemed a big mistake by some.

India having lost the WTO dispute on customs duties on mobile phones and certain other IT products is now old news. But an important facet of the dispute appears to have escaped attention of the analysts — why did India voluntarily join the WTO Information Technology Agreement (ITA) in 1997 and commit to eliminating customs duties on about 200 IT products? An answer to this question has enduring lessons for trade negotiators from India and other developing countries.

At the outset, recounting a bit of history of the ITA appears relevant. During the first ministerial conference of the WTO held in Singapore, a few WTO Members concluded the ITA on December 13, 1996.

Under the agreement, the participants decided not to impose customs duties on about 200 products related to the IT sector.

The main proponents of the ITA included the European Union (EU), Hong Kong, Japan, Korea, Singapore, Thailand, and the US. These WTO members were either benefiting from royalty flows from sales of branded IT products, or had become significant manufacturing hubs in this segment on account of foreign investment from the developed countries.

In short, countries with strong technology and manufacturing base stood to benefit from the ITA. On these twin aspects India was on the backfoot.

While India did not join the ITA at the Singapore ministerial meeting, it appears to have engaged actively in negotiations on this issue. It is relevant to recall what India’s
Commerce Minister said on this issue in the Lok Sabha on December 16, 1996: “India had taken the view that strengthening of the global information technology infrastructure would be generally beneficial and therefore, subject to the interests of domestic producers being adequately safeguarded, India could consider joining the programme of phased tariff reductions.”

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