US and EU agree deal on IT

THE price of computers and high tech goods and information services - but not computer games or CD players - is likely to fall world wide by the end of the century, following an agreement on information technology between the United States and the European Union. The accord was described by EU Commissioner Sir Leon Brittan yesterday as a "huge advance for the world economy".

Also yesterday, World Trade Organisation delegates reached agreement on a final declaration to be announced today, with compromises on contentious issues such as labour standards. "We got everything," WTO director general Mr Renato Ruggiero said.

The information technology deal was struck after four days and nights of hard bargaining between the two economic powers at the World Trade Organisation's week long inaugural ministerial conference in Singapore, which ends today. The EU-US accord, which could set the basis for a worldwide agreement, aims to lift tariffs on information technology products by the year 2000 or earlier.

"The basis of what we have agreed with the United States provides for a deal on [the] ITA (information technology agreement), which will be a huge advance for the world economy," an ebullient Sir Leon told a news conference. "This is the biggest trade step forward that has happened since the end of the Uruguay Round," he added, referring to the seven year world trade negotiation signed in 1994.

The agreement covers the bulk of industrial information technology products as well as digital photocopiers and capacitors - circuits used in electronic equipment - but does not include consumer electronics and audio materials, the EU Commissioner told a news conference yesterday.

The breakthrough heralds one of the biggest steps toward global free commerce, and fulfills a major trade goal of the Big Four trade powers in Singapore - the United States, Japan, the European Union and Canada. The Minister for Tourism and Trade, Mr Kenny, who chaired meetings of EU trade ministers monitoring the negotiations between Sir Leon and the US acting trade representative, Ms Charlene Barchefsky said the accord gave new opportunities to Ireland as a base for exporting computers, components, software and telecommunications equipment.

"We are a major location for the global electronics industry," Mr Kenny said, and the ITA had opened up new markets with the prospects of more jobs in Ireland.

While the accord gives the WTO an important symbolic boost, it represents a major achievement for the United States. The US stands to gain more from it than the EU. Currently, American high tech exports to Europe stand at 16 billion ECUs (£12 billion) while EU exports to the US come to seven billion ECUs.

To swing the deal the American negotiators agreed to bring forward the lifting of tariffs on the import of brown spirits from EU countries by three years to 2001, and to include white spirits.

EU trade ministers are to meet this morning to give their approval.

Details of the timing of tariff cuts were left to be worked out by negotiators in January. While the 15 EU countries want an accelerated tariff reduction schedule, Asian countries who have expressed interest in joining the ITA want more flexibility on timing.

The US and EU negotiators in Singapore lobbied hard yesterday to bring as many countries as possible along with them. Sir Leon appealed to Asian nations to join in. The agreement is not to take effect unless about 90 per cent of the $600 billion (£361 billion) world trade in information technologies is covered.

US spokesman Mr Jay Ziegler said it was now critical to win agreement from countries representing 90 per cent of the trade in the information technology sector. "If we don't do that, the agreement doesn't take effect," he said.

Sir Leon said however the 90 per cent threshold was not "a rigid barrier". The date of March 15th, 1997 has been set for all participants to join.

Separately, China complained in Singapore yesterday that politics was holding up its application for entry to the WTO, as well as "the excessive demand for immediate commercial benefits". China's Deputy Minister of Foreign Trade and Economic Co operation Mr Long Yongtu, in an address to the conference, accused some members of taking advantage of the negotiation process to resolve bilateral trade disputes not relevant to WTO rules. Beijing has met particularly stiff resistance to its accession to the WTO from the United States, which argues that China should enter as a developed nation. China wants the benefits of developing nation status.

"On our part, we shall take a flexible, pragmatic and forward looking attitude and in the hope that other members will do likewise," Mr Long said.

China's Foreign Minister Mr Qian Qichen said last month that talks with the United States on entry could be completed by the middle of next year.