For technology-driven sectors like the US semiconductor industry, often our greatest challenge is ensuring that policy keeps pace with innovation.
One example is the effort under way to expand a highly successful trade pact, the Information Technology Agreement (ITA). This pact promotes fair and open trade by providing for duty-free treatment of a broad range of information technology products, including semiconductors, but the list of covered products has not been updated since the ITA's inception in 1996. Semiconductor technology, of course, has advanced dramatically in the interim, and the ITA does not cover many of the latest products.
International negotiators in Geneva are working to fix this problem by expanding the ITA, but we are not over the finish line yet, and strong leadership is needed from the Obama administration to ensure that a commercially significant deal gets completed in the coming weeks. Likewise, our biggest trading partners need to come to the table, set aside minor issues, and embrace the same long-term, robust view that visionaries arrived at nearly two decades ago. Arguably, no other trade agreement has benefited consumers of information and communication technology (ICT) products like the ITA. Expanding the ITA is a common-sense initiative that would strengthen the worldwide semiconductor industry, the broader technology sector, and the overall US economy.
The ITA has a tremendous record of success. Since its adoption in 1996, two-way trade of ITA-covered products has more than tripled, from $1.2 trillion to $4 trillion, and US exports of ICT products have grown nearly as fast, reaching an estimated $1.4 trillion in 2010. The ITA has benefited semiconductors in particular. A recent World Trade Organization study found that semiconductors are the largest information technology product category in the ITA and accounted for one-third of global exports of such products in 2010.
The Semiconductor Industry Association has vigorously advocated expanding the ITA to include two new types of devices: multicomponent semiconductors and multichip packages. These innovations have enabled smaller, faster, more efficient, and less costly end-user devices such as notebooks, mobile phones, medical devices, handheld projectors, and gaming consoles.
We also support expanding the ITA to include upstream semiconductor manufacturing tools, equipment, and materials, as well as downstream consumer products. Lowering costs throughout the ICT supply chain will ensure that countries across the globe have access to the technologies that help support their critical infrastructure, economic strength, and productivity. It will also help keep prices low for consumers of ICT products around the world.
Amid the many contentious policy debates in Washington, ITA expansion has broad bipartisan support in Congress. It also has the support of the international community, including the World Semiconductor Council (WSC), a worldwide body of semiconductor industry leaders and executives from China, Chinese Taipei, Europe, Japan, Korea, and the United States. The WSC has stated that the "competitiveness of companies and their products, not the interventions of governments and authorities, should be the principal determinant of industrial success and international trade." It's time for all ITA negotiators to embrace an ambitious outcome that reflects this sentiment -- an outcome that will have long-term benefits for all parties involved.
The list of reasons for expanding the ITA is long, but time is short. Negotiators are aiming to finalize the list of products to be added this summer. Expanding the ITA would be among the most significant WTO accomplishments for the ICT sector and the consumers of our products in nearly two decades. The SIA will continue to advocate for a successful outcome that ensures the ITA will keep pace with changing times and technologies.
Brian Toohey is president and CEO of the Semiconductor Industry Association.