Transcript FTAA.ecom/inf/147 June 5, 2002 Latin America / Trade

Exports of Goods per Capita vs Tariffs for Selected Countries 1999
sources: WTO and Global
Competitiveness Report 2000
IV. What is the Impact of Trade Barriers?
Increases costs to consumers and business
Information Technology use is limited
Stalls growth of e-commerce
Lack of new technology inhibits productivity gains
Deters growth of national competitiveness
Limits demand for higher paying jobs
Increases demand for Gray/Black market products
Source: "Emerging Digital Economy", USG DOC and ITA Coalition
Worldwide IT Tariff Rates
113 Countries - 1999
Very High IT
tariff countries
Surinam
55%
India
40%
Thailand
40%
Brazil
34%
Kenya
31%
Malawi
30%
Azerbaijan
25%
21% of countries
Mexico
non-Nafta
20%
Source: www.ita.doc.gov
Senegal
20%
Tanzania
20%
9% of countries
7% of countries
Very High
> 19% 15%-19%
45% of
countries
Moderate
10% - 14%
Very Low tariffs
0 - 4%
Low tariffs
5% - 9%
18% of
countries
Latin America: IT Tariffs for Hardware - 2000
maximum rates for hardware
* Chile-Canada FTA means effective IT tariffs are zero. ** Mexico tariffs are for trade with
non-NAFTA countries. IN late 2001, Mexico announced their intent to eliminate IT tariffs
source for tariffs: www.ita.doc.gov
What is the Impact of Non-Tariff Barriers?
Trade barriers elude fixed definitions
ƒ government laws, regulations, policies, or practices
–protect domestic products from foreign competition
–artificially stimulate exports of particular domestic products
Trade barriers negatively affect imports
ƒ add costs to imports not imposed on goods produced locally
Difficult to estimate the impact of trade barriers
ƒ warehouse storage
ƒ delayed deliveries
ƒ lost sale opportunities
ƒ costly paper work
But the costs are real
Sources: USTR, Non-Tariff Barriers 2000 Report
and anecdotal information from the IT industry
Non-Tariff Barriers
Complex import procedures
Import licenses
Spare parts import restrictions
Rework restrictions
Performance requirements
Standards, testing, labeling, certification
Import container
Customs administration
Pre-Shipment inspection
Intellectual property - lack of effective protection
E-commerce - lack of legal framework
Sources: CSPP Draft Report on Latin America Trade; Heritage Foundation/Wall Street Journal,
Index of Economic Freedom; USTR, Non-Tariff Barriers 2000 Report
V. Information Technology Agreement (ITA)
Negotiated in 1996 as optional WTO agreement
Eliminated tariffs on products and parts by 2000
ƒ computer hardware
ƒ semiconductors
ƒ semiconductor manufacturing equipment
ƒ software
ƒ telecommunications equipment
Some countries will phase-in reductions
ƒ Costa Rica, Indonesia, India, Korea, Malaysia, Taiwan, Thailand
Membership is continuing to increase
ƒ now 55 countries
ƒ China is joining ITA - will phase-in tariff elimination
ITA Member Countries
North America
Canada
United States
Middle East
Israel
Jordan
Europe
Albania
Croatia
Czech Rep.
Estonia
EU-15
Central America
Costa Rica
El Salvador
Panama
Africa
Mauritius
(not to scale)
South America
none
Source: www.wto.org and www.ita.doc.gov
Georgia
Iceland
Latvia
Liechtenstein
Lithuania
Norway
Poland
Romania
Slovak Rep.
Switzerland
Asia
Australia
Hong Kong
India
Indonesia
Japan
Korea
Kyrgyz Rep.
Macau
Malaysia
New Zealand
Philippines
Singapore
Taiwan
Thailand
Turkey
China has agreed to join ITA.
Mexico has announced elimination of IT
tariffs
Development of the Internet and E-commerce Depends
on Growth of Communications Technologies..........
WTO Basic
Telecom Agreement
Argentina
Yes
Brazil
Yes
Bolivia
Yes
Chile
Yes
Colombia
Yes
Ecuador
Yes
Mexico
Yes
Peru
Yes
Paraguay
Yes
Uruguay
Yes
Venezuela
Yes
Worldwide
75 countries
Source: www.wto.org and www.ita.doc.gov
.......and Information Technologies
WTO Basic
Telecom Agreement
ITA
Argentina
Yes
No
Brazil
Yes
No
Bolivia
Yes
No
Chile
Yes
No
Colombia
Yes
No
Ecuador
Yes
No
Mexico
Yes
No
Peru
Yes
No
Paraguay
Yes
No
Uruguay
Yes
No
Venezuela
Yes
No
75 countries
52
countries
Worldwide
Source: www.wto.org and www.ita.doc.gov
VI. What are the Potential Benefits of Lowering IT Tariffs?
Increases a nation's competitiveness
Offsets tariff loss by increased economic activity
Reduces cost of IT to consumers and business
Expands demand for higher paying jobs
Encourages increased use of e-commerce
Diffuses use of IT throughout economy
Simplifies custom procedures
Source: "Emerging Digital Economy", USG DOC and ITA Coalition
E-commerce and IT industries contribute to
fundamentally altering a country's economy
GDP
Growth
Inflation
Worker
Productivity
Employment
and Wages
Source: "Emerging Digital Economy", USG DOC
Digital Economy Creates Demand for
High Skilled Workers....
1. Communications and Network Services
2. Customer Support
3. Data Management
4. Information Systems Security
5. Policy, Planning, and Management
6. Software Engineering, Application
7. Software Engineering, Systems
8. Systems Administration
9. Systems Analysis
10. Web Development
Source: USG, Office of Personnel Management
VII. Econometric Studies - Country Specific
Brazil
ƒ Federacao das Industries do Rio de Janeiro (Firjan)
–developed by Eliezer Batista - a leading Brazilian economist
–presented to President Cardoso and several cabinet ministers
–Firjan study written up in VEJA - September 2000
ƒ LCM Consultores Associados
–"Technologia da Informacao e Competitidade"
–developed by Lourdemir Carvalho - respected economist
–report published September 2000
–favorable reviewed by several government ministries in 2000
Argentina
ƒ Fundacion de Investigaciones Economicas Latinoamericanas
–"Apertura Comercial en el Sector Informatico"
–FIEL - prominent think tank - study done in spring 2001
Firjan: "Why Brazil is Losing the Technology Race"
Education level lags the rest of Latin America
Workforce is unprepared and lack needed skills
Exports of Manufactured Goods
ƒ declined in 1990's as a percent of total exports
PC's are expensive
ƒ Brazil has very high IT tariffs ( > 30%)
ƒ Tariffs plus other taxes adds 100% to cost of PC's
Internet use is low - only 25 users per 1000 population
Conclusion for Brazil
ƒ eliminating IT tariffs would increase PC use by 50% in 3 yrs.
Brazil: "Information Technology and Competitiveness"
LCM Consultores Associados
 Eliminating IT tariffs in 5 years:
ƒ reduce cost of IT products to consumers and businesses
– average 8%
– as high as 23%
ƒ increase productivity
–generates USD 7.4 billion of value-added exports
ƒ offset loss of tariffs with increased tax revenue
–gain RS 250 in tax revenue for every RS 100 lost in tariffs
ƒ fuel growth of the economy
– add $22b to GDP
ƒ reduce gray market sales
–IDC: current illegal sales is 50% - 75% of total market
– increase lost tax revenue of $600m USD
FIEL: Commercial Opening in the IT Sector
Quantification of the advantages gained by reducing tariffs in Argentina
ƒ Liberalizing IT market will generate economic gains
–increase use of PCs and e-commerce
–increase productivity - personal and national
–improve competitiveness of products made in the country
–increase export of value-added goods
Argentina is a country that counts on the importance of human capital
(measured in years of education average).
ƒ " However, this is not seem sufficiently complemented by the use of new
technologies from the more industrialized countries "
Conclusion
ƒ IT tariff elimination would significantly add to GDP growth
UN Human Development Report 2001
Making New Technologies Work for Human Development
"IT offers the potential for developing
countries to expand exports, create good
jobs and diversify their economies. "