A Review To Evaluate The Plausibility of Pakistan’s Accession To Information Technology Agreement
The Information Technology Agreement (ITA) of the World Trade Organization (WTO) aims to eliminate custom duties and reduce non-tariff measures...
The Information Technology Agreement (ITA) of the World Trade Organization (WTO) aims to eliminate custom duties and reduce non-tariff measures on Information Technology (IT) and electronics related equipment. These include computers, monitors, electronic components, LED lights, software, printed circuit assembly, phones and other similar technologies. The total trade under the ITA products was USD 3.67 trillion in 2019, roughly 19 percent of total global trade. The countries which have acceded to the ITA predominantly include advanced economies with higher per capita income and an established export base for electronics prior to accession. A minority of the countries acceded due to economic diplomacy considerations.
There is inconclusive evidence to suggest ITA as an appropriate avenue to expand a country’s capability in manufacturing and exporting electronics and IT products. Whilst countries that are a signatory to the ITA have increased their IT and electronic products exports, others, which are not signatories, have also increased exports manifold. For example, Tunisia increased its exports of ITA related products by ten times, from USD 440 million in 2001 to USD 4.1 billion in 2019. Regional countries such as India and Bangladesh rely on a cascading tariff structure to increase localization and manufacturing of electronics in their countries. India, which is a signatory to the ITA is facing international disputes in the WTO for adopting policies for localizing manufacturing of electronics, claiming them to be against the ITA protocols.
In Pakistan, imports of ITA related products have risen six-fold between 2003 and 2019, significantly higher than the global average. Pakistan’s imports of ITA related products grew by a Compounded Annual Growth Rate (CAGR) of 13.2 percent during 2003-2019. Pakistan has negligible exports of IT products, but exports of IT services increased by a CAGR of 19.2 percent from USD 204 million in 2010 to USD 995 million in 2019. Growth in IT services in Pakistan signal that signing the ITA is not a necessary condition.
PBC policy recommendations are guided by its Make-in-Pakistan thrust, reviewing policies by their impact on creating jobs, increasing exports, substituting imports of finished goods with locally manufactured products and increasing tax revenues. In alignment with Make-in-Pakistan, The Pakistan Business Council (PBC) advises against Pakistan signing the ITA for the following reasons: