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U.S., China To Do Away With Tariffs On Some Tech Products


The U.S. and China also say they favor eliminating tariffs on many high-tech products. NPR's Scott Horsley is traveling with the president.

SCOTT HORSLEY, BYLINE: High-tech innovators are constantly coming up with new ideas and new products. Government trade ministers don't always keep up. U.S. Trade Representative Michael Froman says it's been more than a decade and a half since the World Trade Organization's last big effort to cut tariffs on high-tech goods.


MICHAEL FROMAN: Last time the WTO agreed to eliminate tariffs on IT products was in 1996, when most of the GPS technology, much of the medical equipment, software, high-tech gadgetry that we rely on in our daily lives didn't even exist.

HORSLEY: Negotiators have been working for the last two years to update what's known as the Information Technology Agreement, or ITA. But for much of that period, the talks were stalled. Froman says a breakthrough came last night here in Beijing, on the sidelines of the Asia-Pacific Economic Summit. President Obama told his fellow leaders today the APEC Summit has often been an incubator for ambitious free-trade agreements.


PRESIDENT BARACK OBAMA: So it's fitting that we're here with our APEC colleagues to share the news that the United States and China have reached an understanding on the ITA that we hope will contribute to a rapid conclusion of the broader negotiations in Geneva. We think that's good news.

HORSLEY: Dozens of other countries still have to sign on before any tariffs are actually eliminated. But Froman says getting China's OK is a major milestone that should pave the way for a broader agreement


FROMAN: So we're going to take what's been achieved here in Beijing back to Geneva and work with our WTO partners. And while we don't take anything for granted, we're hopeful that we'll be able to work quickly to bring ITA to a successful conclusion.

HORSLEY: If so, hundreds of high-tech tariffs would gradually be phased out. Froman says those tariffs can add 25 percent to the cost of an exported computer chip. So doing away with such trade barriers should make it easier for American companies to sell overseas.


FROMAN: We already export over $2 billion of high-tech, high-end semiconductors, even with 25 percent tariffs. So eliminating those tariffs will obviously expand that trade significantly. It's an area where we have a comparative advantage and where we can support a lot of good, well-paying American jobs.

HORSLEY: While the U.S. and China are now partners in pushing the high-tech trade agreement, they continue to compete for a broader free-trade deal. The Obama administration's backing a trans-Pacific trade agreement that for the moment, at least, excludes China. Meanwhile, Chinese President Xi Jinping is promoting his own rival view of an Asian free-trade area. Obama glossed over this differences today, saying the trade agendas of the world's two biggest economies are moving in a common direction that could eventually come together.


OBAMA: I look forward to the day when all of our economies can be linked together in a high-standard, 21st century agreement.

HORSLEY: Obama calls a strong international trading system one of the bedrocks of a healthy global economy. Scott Horsley, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
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