WORLD TRADE  
ORGANIZATION  TN/MA/W/59 
4 July 2005 
 
 (05-2883) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Tariff Elimination in the Electronics/Electrical Sector
 
 
Communication from Japan, Korea, Singapore, and the United States 
 
  The following communication, dated 1 July 2005,  is being circulated at the request of the 
Delegations of Japan, Korea, Singapore, and the United States. 
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I. INTRODUCTION 
1. The electronics/electrical sector, which includes information technology, electrical equipment 
and machinery, semiconductors, audio visual products  and consumer electronics, continues to be one 
of the most dynamic in terms of export growth, as countries develop global production networks to 
meet international demand for these products.  As a r esult, liberalization in this sector has proven to 
be an effective policy tool contributing to an increase in trade and job-creating investment in 
developing countries.  Participation by key WT O Members in a sectoral initiative covering all 
electronics/electrical products will further open markets to these important products and will give developing countries additi onal opportunities to further develop this sector. 
 
2. The development of global production and di stribution networks has changed the landscape 
of trade in electronics/electrical products. Increase d trade flows in both intermediate and finished 
products clearly demonstrate that sophisticated integrated production systems are now built across 
borders. These global developments have been augm ented by the reduction and elimination of trade 
barriers (tariff and non-tariff) by both developed and developing countries either through autonomous 
liberalization or through the WTO Information T echnology Agreement (ITA).  Future expansion of 
this sector through additional multilateral trade liberal ization will encourage growth at both global and 
national levels. 
 
3. The electronics/electrical sector includes th e information technology (IT) subsector where 
many tariffs have been eliminated through im plementation of the WTO Information Technology 
Agreement (ITA).  Since the ITA provides duty-free treatment for a finite list of IT products, the 
number of products that fall outside of the origin al ITA product list has continued to evolve and 
converge with technologies in other areas, and ther efore, many of these highly-traded items are still 
subject to prohibitive tariffs in key markets.  For ex ample, multi-chip integrated circuits (MCPs) used 
in cell phones and other handheld devices, which we re developed after 1997 and currently account for 
more than $4 billion in global trade each year, still face unnecessarily high tariffs in many countries.  
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 II. BENEFITS OF TARIFF ELIMINATIO N IN ELECTRONICS/ELECTRICAL 
SECTOR 
A. BENEFITS
 FOR  THE  DOMESTIC  ECONOMY  AND  THE  GLOBAL  ECONOMY 
4. Electronics/electrical products are critically important for a broad range of economic 
activities.  These products increase the efficiency and integration of businesses on a micro level, 
contributing to improvements in productivity and competitiveness of economies generally.  In 
particular, IT and telecommunications infrastructur e, including the Internet, are essential for the 
successful development of all manufacturing sectors,  as are many electronics/electrical products.  
Additional liberalization in electronics/electrical products will streamline import processes for these 
inputs, helping countries to divers ify and expand their manufacturing base.  This is likely to lead to 
increased demand for labour and technological innova tion, and will help build more integrated 
production and distribution networks as ente rprises develop and grow across borders. 
 
5. A recent UNCTAD report1 illustrates the growing importance of this sector for developing 
countries.  For example, the developing country sh are of exports of electronics/electrical products has 
grown from negligible levels in  1985 to 25 percent in 2003.  UNCTAD also cites the increasing 
globalization of supply chains as a major contributing factor to growth in this sector: “A number of 
developing countries have succeeded in entering these sect ors and related value chains in recent years. 
Their experiences indicate that these sectors can provide opportunities for developing countries, 
including least developed countries and other comm odity-dependent economies, to accelerate growth, 
increase domestic value added of exports, incr ease productivity and competitiveness, and enhance 
employment and quality of jobs, thereby contributin g to the achievement of the objectives and goals 
of the United Nations Millennium Declaration.”   
 
B. BENEFITS  FOR  CONSUMERS  AND  SMALL  BUSINESSES 
6. Electronics/electrical products also support many aspects of citizens’ daily lives.  The 
expansion and liberalization of trade in electroni cs/electrical products, for example, would benefit 
consumers, as fewer trade barriers will result in lo wer prices on these essential items.  Further, SMEs 
will benefit from the diversification of trading re lationships and technological  innovation that can be 
sparked by improved access to new technologies.  As these new products flow across borders, 
businesses, including SMEs, will have the opportuni ty to contribute at different stages of 
technological innovation and find new niches in the supply chain. 
 
C. BENEFITS  FOR  THE  PUBLIC 
7. Electronics/electrical products also help governments to provide public administration 
services more efficiently and effectively.  Informa tion technologies, in particular, can assist countries 
at all levels of development to build systems that  provide high-quality public services.  Furthermore, 
these products also contribute to the provision of public education, which is a key aspect of human 
capital development. Developing human capital is impor tant not only for industrial development, but 
also for each country’s overall development. 
 8. In the event of natural disasters or epidemi cs, information technology networks play a crucial 
role in transmitting information quickly.  Enhanc ed access to these products through expanded trade 
will contribute to each country’s ability to manage these situations. 
 
                                                      
1 UNCTAD (December 2004), “Strengthening Participation of Developing Countries in Dynamic and 
New Sectors of World Trade: Trends, Issu es, and Policies” (TD/B/COM.1/EM.26/2)  TN/MA/W/59 
 Page 3 
 
 
 III. CRITICAL MASS 
9. In order to build on the success of the ITA a nd help countries build infrastructure and foster 
movement of electronics/electrical products across borders, a Doha sectoral initiative on 
electronics/electrical products should be broadly constr ucted on the basis of critical mass.  The critical 
mass approach, which was used to create the ITA, brings major traders and/or producers in the sector 
together to decide which products and what leve l of global trade (exports and imports) and/or 
production should be covered by a sectoral initiative.   This approach enables countries with the 
greatest trade interest in the sector to negotiate the products included in a tariff elimination or harmonization initiative.   
    
10. Product coverage for electronics/electrical products sectoral initiative should be wide-ranging 
and simple for Members to implement.  This coul d be accomplished by using broad product coverage 
that would include a significant range of prod ucts, potentially including information technology, 
electrical equipment and machinery, semiconductors, audio visual products a nd consumer electronics. 
 
IV. SPECIAL AND DIFFERENTIAL TREATMENT 
11. With regard to special and differential treat ment for developing countries participating in an 
electronics/electrical sectoral initiative, flexibility could be provided in a variety of ways.  These 
options could include, but are not limited to the following:  
 - longer implementation periods 
 - different implementation patterns for different product groups or subsectors 
 - “zero for x”  - participation in a sm aller number of products 
 
12. For example, longer implementation periods have been used successfu lly in the past to 
address developing countries’ concerns regarding speci al and differential treatment, and were used in 
the implementation of the ITA.  Exactly how special  and differential treatment would be provided to 
participating developing countries would be negotia ted and determined by participants in the 
initiative.  As an example, the staging agreed to  by participants in the ITA is included below. 
 
Example
:  Implementation Period: 
    Singapore Ministerial Declaration -  13 Dec 1996    1st reduction -  no later than 1 July 1997    2nd reduction -  no later than 1 Jan 1998 
   3rd reduction -  no later than 1 Jan 1999 
   4
th reduction(elimination) - no later than 1 Jan 2000 
 13. Under the ITA, each party eliminated custom s duties through equal annual cuts beginning in 
1997 and concluding in 2000.  Extended staging of reductions was granted in  limited circumstances 
and some developing country Members extended the tariff elimination period up to 2005.  
 
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