White Paper on International Trade 1997

Japan External Trade Organization

3. Global Information and Telecommunications Era Drives Trade in Manufactured Goods

In the first half of the 1990s, it was electronics equipment that contributed the most to the expansion of global trade in manufactured products. Starting in the 1990s, exports of this product group rose by an average 14.8 percent a year, bringing the value of those exports up from the US$298.2 billion in 1990 to US$594.8 billion in 1995. A breakdown shows that during that time frame, exports of electronics equipment from North America climbed by US$52 billion in terms of absolute value (up from US$57.5 billion to US$109.5 billion) while exports from Western Europe jumped US$67.6 billion (up from US$95.5 billion to US$163.1 billion). There was a US$168.6 billion increase in exports from Asia (up from US$136.0 billion to US$304.6 billion) - exceeding the increases of North America and Western Europe combined.

Share of world trade by sector 1990/95 (based on exports)

Matrix of trade in electronics 1990 and 1995 (based on exports)

(1) Looking at the product mix in global trade in the first half of the 1990s, the share of agricultural and fishery products in exports declined from 12.2 percent to 11.8 percent, while the share of mining products fell from 14.1 percent to 10.5 percent. On the other hand, industrial manufactures rose from 70.5 percent to 74.5 percent. Breaking down these industrial manufactures into more detail, it is seen that electronics equipment contributed to this rise in large part.

(2)The electronics equipment spoken of here means office equipment (including computers), communications equipment, audio and visual equipment, and electronic components (including semiconductors) . This product group is playing a major role in the dawning of a global era of information and communications. This new era of information is prompting governments to set up information and communications infrastructures and encouraging private businesses to invest in rationalization and improved efficiency. The growth in demand is in turn triggering growth in trade of semiconductors, personal computers, cellular telephones, etc.

Definition of electronics equipment

Japan and U.S. investment share in information industry (in nominal capital investment)

(3) In recent years, the WTO has adopted two important decisions which will lead to further growth in the trade in electronics equipment. The first was the Information Technology Agreement (ITA) of the 1st WTO Ministerial Meeting held in Singapore in December 1996. This called for reducing tariffs on computers, communications equipment, semiconductors, semiconductor manufacturing devices, computer software, etc. by 25 percent at a time in four steps from July 1997 and to completely abolish them by the year 2000. As of July 1997, there were 43 signatories (counting the EU as 15 countries). These cover over 92 percent of the global trade in information technology products. In other words, this will lead to almost complete liberalization of the hardware.

Summary of the Information Technology Agreement (ITA)

(4) The second decision was related to the service side of telecommunication. Specifically, this was an agreement adopted by the WTO in February 1997 to liberalize basic telecommunications, one of the four areas remaining from the GATT Uruguay Round. The aim of the accord is to liberalize the communications service, that is, international telephone calls and cellular telephone services, to ease foreign entry. At first, the WTO hoped to reach an accord by the end of April 1996, but it was not until February 1997 that final agreement was reached among 69 countries and regions participating (counting the EU as 15 countries). The agreement is scheduled to take effect January 1, 1998.

Summary of WTO Basic Telecommunications Agreement

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