WTO deal to boost IT industriesKorea’s IT-related industries expect to see exports lift as the tariffs on some 201 products, ranging from televisions and cameras to GPS and medical equipment, are expected to decline starting in July next year.
Fifty-three World Trade Organization (WTO) member countries reached a final decision on the Information Technology Agreement (ITA) Wednesday local time in Kenya, agreeing to start lowering tariffs on exports.
It is the second time a number of WTO members have gathered and agreed to eliminate tariffs on IT products. Korea has largely benefited, seeing a large boost in exports after the first ITA deal in 1996, in which 82 countries agreed to eliminate tariffs on mobile phones and computers.
This time, 201 new products subjected to tariff reduction include memory chip parts, television parts, cameras, printers, satellite television receivers, ultrasound equipment and magnetic resonance imaging (MRI) equipment. In particular, 22 products are those that were excluded from Korea-China Free Trade Agreement (FTA)’s tariff elimination list, which currently have tariffs as high as 35 percent. The reductions will happen over the next three to seven years.
Tariff reductions on foreign audio products, like microphone, speakers and headphones, as well as foreign medial equipment, in Korean market will happen over next five to seven years to protect local industries.
The extended ITA agreement is expected to lift Korean exports by $590 million and the trade surplus by $20 million annually, said the Korea Institute for Industrial Economics and Trade (KIET).
“Korean exporters will benefit from reduced tariffs on IT products, which were excluded from tariff elimination lists on the Korea-China FTA,” Kim Soo-dong, a senior researcher at KIET, said. “The ITA agreement will give price competitiveness to Korean products sold in China.”
However, experts say Korea will face stiff competition against IT products from the ITA members, including China, Japan, the United States and the European Union.
“Korean firms will have to rearrange their lineups to focus on a few best-performing products while ditching what isn’t selling,” Kim added
Analysts say that price competition against Chinese and Japanese products will be fierce, and Korean products still have to catch up Japan and Taiwan in product quality.
BY KIM JI-YOON [email@example.com]