What's New in the EU: EU to update its information, technology innovation

The global trading system has seen an unprecedented expansion of trade in IT products since the signature of the Information Technology Agreement.

By ARI SYRQUIN
eu flag biz 88 (photo credit: )
eu flag biz 88
(photo credit: )
The European Commission this week presented at the World Trade Organization (WTO) its proposal to update and expand the Information Technology Agreement (ITA), an existing trade deal between some of the world's biggest trade powers that lowers the cost of IT products. The proposal would take account of new products that have entered the market since the agreement was originally concluded in 1996, eliminating customs duties for these goods. Further points considered are tackling non-tariff barriers "behind the border," as well as the problems caused by the non-functioning of some of the mechanisms and procedures provided for in the current ITA. The Commission hopes that other WTO members will engage in discussions in the near future. The ITA was negotiated and signed in 1996, with the goal of expanding trade in IT and telecommunication products by eliminating tariffs on an agreed range of products. The ITA initially had 14 signatories representing more than 90 percent of world trade in information-technology products. This has since grown to 43 signatories, representing 70 countries or separate customs territories and more than 97% of world trade in IT. The global trading system has seen an unprecedented expansion of trade in IT products since the signature of the ITA. Information technology products now account for more than $1.5 trillion of exports worldwide, which is one-fifth of total world exports of manufactured products, up from $600 billion in 1996. The European Commission has argued for some time that the ITA should be updated. The current agreement has reached its limits in solving issues such as the elimination of non-tariff barriers, the expansion of product coverage to take account of technological evolution and convergence, and the expansion of its membership to include all major IT producing countries. The Commission says it is seeking a prompt launch and conclusion of negotiations to update the ITA within a matter of months, not years. Such a move could provide an additional boost in trade in these products and be the best way to address the increasing challenges of technological development and convergence. The Commission has maintained that a change in ITA criteria can only be made on the basis of consensus amongst all ITA participants, as provided by the agreement itself, and not as a result of litigation by some members. The US, Japan and Chinese Taipei recently requested a WTO dispute settlement panel against the EU with respect to its tariff treatment of certain information-technology products. Also this week, the European Institute of Innovation and Technology (EIT), the EU's flagship initiative for boosting innovation in Europe, marks the launch of its activities with the first meeting of its recently appointed governing board. The EIT is a major EU initiative that aims to foster excellence in European innovation and to provide new solutions for major challenges, such as climate change, renewable energies, and the next generation of information and communication technologies. In order to achieve its ambitious objectives, the European Commission says EIT has been equipped with a fully independent, high-level governing board. It is responsible for guiding the EIT's strategic orientation and for selecting, monitoring and evaluating the EIT's operational base, the so-called Knowledge and Innovation Communities. The board's 18 members come from business, higher education and research, and have a proven track record in top-level innovation. At its first meeting in Budapest, the board is expected to take a number of major decisions determining the EIT's operation, among them the election of the chairperson and of the four other members of the executive committee. Moreover, the board is supposed to discuss first steps toward the selection of the first Knowledge and Innovation Communities (KICs) by early 2010. The KICs are long-term, integrated partnerships comprising universities, research organizations and businesses. Their objectives will be laid down on a contractual basis with the EIT, but they are supposed to have a high level of autonomy in terms of how they organize themselves, how they manage any intellectual property and how they meet the agreed objectives. The Commission claims that the KICs will fully integrate the innovation, research and education dimensions and each one will last for between sever to 15 years. The official line is that the selection of KICs will be based on a competitive, open and transparent procedure. The EIT governing board said it would adopt selection criteria based on the principles of excellence and relevance to innovation. These criteria should be made public, and external, independent experts will be involved in the selection process. syrquin@013.net Ari Syrquin is the head of GSCB Law Firm's International Department.