Pressure mounts on SL to sign WTO’s Information Technology Agreement

• DoC says with ITA, Sri Lanka set to lose Rs.12bn annually 
• 82 WTO members have signed ITA and it covers 97% of world trade in IT products 

Sri Lanka will come under pressure to sign the World Trade Organisation’s (WTO) Information Technology Agreement (ITA) this June, the Department of Commerce (DoC) said, as the government is expected to put forward its position at the agency’s upcoming Ministerial Meeting.

While it is not obligatory to sign the plurilateral agreement, a DoC official said that Sri Lanka would face pressure to get on board by larger economies at the meeting, which will be held in Kazakhstan.

“Sri Lanka has so far not taken any decision. There is no timeline but there is a ministerial conference coming up in June and we will be pressurised by other international organisations and other countries to join.

For that we are currently carrying out consultations with the industry and line miniseries. We are getting ready with our position,” DoC Deputy Director Chandima Kiriwandala said. 

According to the official, the Finance Ministry  has already carried out a feasibility study on entering the ITA and has identified that Sri Lanka will face a revenue loss of about Rs.12 billion per annum, as import duties on listed IT products will have to be at zero levels. 

The ITA, which came into force in 1996, commits its participants to eliminate tariffs on a wide range of IT products with an annual value of approximately US $ 1.7 trillion. 

The agreement has increased worldwide access to high-tech goods, such as computers, mobile phones and semiconductors and the recent extension has eliminated tariffs on an additional 201 IT products valued at over US $ 1.3 trillion per annum. 

Kiriwandala stressed that by entering into the agreement, Sri Lanka will have to abide by the rules, which do not allow changes to the tax levels in future, which could be required to secure the IT industry. 

As of now, 82 WTO members have signed the ITA and it covers 97 percent of world trade in IT products. The ‘zero-in zero-out’ tariffs under the ITA eliminate costly administrative burdens at customs and reduced delays for goods crossing borders, facilitating trade in the ITA products.

According to a report by the WTO, participation in the ITA boosted exports of developing economies’ ITA products to the world. Developing economies’ share of ITA exports rose from 26 percent in 1996 to 63 percent in 2015, whereas in the same period, their share in total world exports only grew from 27 percent to 43 percent.  

By binding and eliminating duties and other charges on the ITA products in their WTO schedules, the ITA participants extend duty-free treatment to all WTO members on a most-favoured nation (MFN) basis, thereby bringing the benefits of the agreement to the entire WTO membership. (SAA)