High Tech Policy Guide - Trade

Trade Trade
Barriers to trade in the technology sector raise prices and hurt consumers, increasing the digital divide. Free trade in information technology goods and services represents the best possibility for improving the productivity of a country, its industries and its citizens. The primary reasons that governments around the world support an open trading system are to increase economic vitality, enhance consumer choice, spur foreign investment and create economic interdependencies.

Open trade policy - and the agreements that result - benefit the high-tech industry as a whole and consumers worldwide by reducing or eliminating restrictive national policies in five key areas, such as those that:

  1. Deny consumers access to the highest-quality, lowest-cost products and services, regardless of origin;
  2. Fail to adequately protect and enforce intellectual property rights (IPR);
  3. Discriminate against foreign investors;
  4. Favor local industry in the government procurement market;
  5. Slow innovation and the diffusion of productivity-enhancing IT products and services through the adoption of unnecessary, discriminatory or non-transparent technical regulations.
Impact to Business
Technology and e-commerce impact business globally. Critical inputs such as highly skilled engineers, IT specialists, component parts, etc. are sourced internationally. And outputs, whether they be Taiwanese produced chips, US software, or Indian services are sold worldwide. In this global business environment, open and free trading systems are critical to ensuring access to the best components, services and capital worldwide in order to produce the most sophisticated, highest quality, lowest cost technology goods and services.

In FY04, over half of Cisco's total product bookings originated from customers outside of the United States. Accordingly, market rules and regulations in foreign countries have a significant impact on the competitiveness of Cisco products, services, and in some case, our overseas operations.

World Trade Organization (WTO)
Headquartered in Geneva, Switzerland, the World Trade Organization (WTO) assists in orchestrating the rules of trade between nations in order to ensure the flow of free, equitable trade. The director-general leads the 600 person staff in, among other things, negotiating WTO agreements which are then signed by the majority of the world's trading nations and approved in their parliaments. The WTO's 148 members conduct 97% of the world's trade.

WTO negotiations are making headway in a number of areas. As part of the Doha Ministerial Declaration, most negotiations are set to conclude by early 2005. Important areas of discussion for the technology sector are: e-commerce, services (particularly computer and telecommunications services), government procurement, the expansion of products and WTO member participation in the tariff-eliminating Information Technology Agreement (ITA). Progress had stalled, but was put back on track, as WTO members recently agreed on a negotiating framework.

European Union Enlargement
In 2004, the European Union successfully grew from 15 to 25 members. The 10 new member states are: Cyprus, Malta, Estonia, Slovenia, Czech Republic, Hungary, Slovakia, Lithuania, Poland and Latvia. Bulgaria and Romania hope to join by 2007. Croatia and Turkey are also being considered for membership.

European Union (EU) Bi-Lateral Negotiations
The European Union (EU) remains firmly committed to working with the countries of Eastern Europe and Central Asia to support their political and economic transformation.

Enlargement has already brought the EU much closer to the countries of Eastern Europe. The European Neighbourhood Policy, presented by the European Commission in May 2004, aims at reinforcing existing relations with neighboring and partner countries: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

In 2004, as part of the EU Common Strategy, the EU hosted the 14th EU/Russia summit in order to welcome the extension of the existing EU/Russia Partnership and Cooperation Agreement to the ten new EU Member States. The summit discussed the necessary objectives and action steps in order to create four common spaces: a common economic space (with specific reference to the environment and energy); a space of freedom, security and justice; a space of cooperation in the field of external security; and a space of research and education, including culture.

The Asia Pacific region contains many crucial partners for the EU as well. A significant number of bilateral agreements have already been concluded with Australia and countries in Central Asia, South Asia and Northeast Asia. The EU is fully committed to supporting China's reforms and liberalization through its co-operation program. Chinese tourists will soon benefit from facilitated procedures to visit Europe through a major agreement made in May 2004.

An important agreement with China on customs cooperation, which aims to further facilitate trade and fight against piracy and counterfeiting, was also signed in 2004. New dialogues in the fields of intellectual property rights, competition policy, enterprise policy, textiles and the environment have also recently commenced. In December 2004, the EU and China conducted their 7th Annual Summit. The focus was on further strengthening their maturing strategic partnership. Also, agreements were concluded on customs co-operation and science and technology.

US Free Trade Agreements
The U.S. Government is aggressively moving forward with a series of free trade agreement (FTA) negotiations. To date, the Bush Administration has completed twelve FTAs with Chile, Jordan, Singapore, Central America (CAFTA - Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica & the Dominican Republic), Australia, Morocco and Bahrain. Congress has adopted the U.S.-Jordan, U.S.-Singapore, U.S.-Chile, U.S.-Morocco and U.S.-Australia FTAs. The U.S.-Bahrain FTA and US-CAFTA have not yet been sent to the U.S. Senate for its approval. The Administration recently notified Congress of its intent to begin negotiations with the United Arab Emirates and Oman in February 2005. Negotiations are underway with eleven other countries: the Andean countries (Bolivia, Colombia, Ecuador, Peru), Panama, Thailand and with the five nations of the South African Customs Union - Botswana, South Africa, Lesotho, Swaziland and Namibia. The FTAs include precedent-setting standards for the promotion of e-commerce, the reduction and/or elimination of duties on technology products and components, greater transparency in customs procedures and strong intellectual property protection. The U.S. Government continues its efforts to conclude a Free Trade Agreement of the Americas (FTAA), despite a political impasse on several issues.

An open and liberal trading system is the cornerstone of a healthy global economy and is vital for continued technological development and advancement. To ensure that products, services and investments are treated fairly in overseas markets, Cisco supports policies that:

Eliminate tariff barriers to high-tech products
Liberalize the services sector, including the promotion of broadband
Enhance enforcement of Intellectual Property Rights
Protect foreign investment
Open the government procurement market
Reduce unnecessary or discriminatory technical regulation

Key Messages
International trade is a key contributor to the overall economic health and growth of countries around the world. It boosts living standards, creates jobs and expands consumer choice.
Trade is an economic equalizer among nations. It raises economic benefits to all participants. By contrast, trade barriers deny access to critical technology products and services.
Countries should be encouraged to promote liberalization of trade worldwide through trade agreements and through independent liberalizations of trade in the information technology area.
Cisco is a global company that exports almost half of its production worldwide.
Trade and regulatory requirements in Latin America, Europe and Asia have significant implications on a company's ability to function as a multinational corporation that actively promotes the growth of the global networked economy. Liberal trade and investment policies create a win-win situation for national economies, companies and citizens.
Cisco encourages an active and rapid conclusion of the WTO negotiations on e-commerce, services and further liberalization through the Information Technology Agreement (ITA) of all WTO members.
In general, the Internet should remain a "free trade zone" to the greatest extent possible, unhindered by excessive regulation.
The private sector should play the primary role in shaping the electronic commercial environment.

WTO Link to the Information Technology Agreement
WTO e-Commerce Discussions
WTO Services Negotiations
Association of Southeast Asian Nations (ASEAN)
Japan Ministry of Economy, Trade and Industry
Ministry of the Economy, Mexico
China Ministry of Commerce
Office of the US Trade Representative
U.S. International Trade Commission

As of January 2005