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Ministers move to scrap hi-tech product tariffs

The US, Japan and the European Union took a big step yesterday towards removing tariffs on information technology products, and asked other nations to band together to open up the global industry, which generates annual sales of $600bn (pounds 363bn).

The agreement in principle to scrap tariffs was prepared by Quad, a forum comprising the EU, US, Japan and Canada, at a meeting of ministers of the World Trade Organisation in Singapore. While the final details remain to be agreed, the Quad will try to persuade 35 countries from Asia and other regions to join an Information Technology Agreement (ITA).

Sir Leon Brittan, EU Trade Commissioner, said yesterday: "It's not just a US-Europe deal. We're doing our damnedest to make it happen."

Computer and telecommunications companies from the US and Asia stand to profit if tariffs are reduced. Tan Kok Hin, managing director for South- east Asia at Compaq Computer, said: "It will definitely help our business. Tariffs are very high in some places."

EU tariffs on computer equipment are around 7 per cent, low compared to India where duties and taxes can add 40 per cent to prices.

A full ITA may not be signed until March to give countries more time to draft proposals. "The idea may be to have an agreement and then wait until March to see how many more countries can come on board," said Jean- Marie Noirfalisse, a Belgian trade negotiator.

Up to 30 of the 128 members of the World Trade Organisation are expected to sign the ITA. They including such Asian members as Hong Kong, Singapore, South Korea and Taiwan.

In 1995, Quad members Korea, Malaysia, Taiwan, Singapore and China accounted for information technology exports worth $423bn.

EU ministers are considering the detailed list of technology products for the ITA. France and some other WTO members are concerned the ITO may exclude products such as fibre optics at the request of the US. Global fibre optics trade, dominated by New-York-based Corning company, is worth about $2bn a year.

Japan wants the inclusion of audio-visual products such as CD-ROMs, something the EU would like to exclude. Similarly, Japan is anxious to persuade its trading partners to leave out silicon components used to make semiconductors. Still, such disagreements appear unlikely to endanger the ITA. A trade official said Japan was willing to make compromises.

Backing from the US, Japan and the EU may not be enough, however, to produce an agreement to eliminate all tariffs by the year 2000 - the stated goal of the ITA talks. There is opposition from some Asian and Latin American nations, including India, Thailand and Malaysia, which want more time to develop home-grown industries.

"We didn't come here to discuss an ITA," said Rafidah Aziz, the Malaysian trade minister. "We'll come in [the ITA] when we're ready."