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U.S. blames China for breakdown of trade talks

By Doug Palmer

WASHINGTON (Reuters) - The United States blamed China on Wednesday for a breakdown in trade talks aimed at eliminating tariffs on a new generation of technology products and everyday consumer electronics like speakers and flat-panel displays.

"The United States is extremely disappointed that it became necessary today to suspend negotiations to expand the Information Technology Agreement (ITA)," U.S. Trade Representative Michael Froman said in a statement.

"Unfortunately, a diverse group of members participating in the negotiations determined that China's current position makes progress impossible at this stage," Froman said.

China is one of 20 World Trade Organization members, along with the United States and the 28-nation European Union, that have been negotiating for months to expand the 1996 Information Technology Agreement to eliminate tariffs on additional goods.

Negotiators had hoped to finish the deal this week, working from a draft list of 256 technology products targeted for tariff elimination. But apparently under pressure to protect domestic industries and preserve tariff revenues, China identified 148 "sensitive" products that it either wanted to exclude from tariff cuts or reserve for long tariff phase-outs.

"We are hopeful that China will carefully consider the concerns it heard this week from many of its negotiating partners, and revise its position in a way that will allow the prompt resumption of the negotiations," Froman said.

A spokesman for the Chinese Embassy was not immediately available for comment.

The United States is the world's largest producer of information and communications technology products and holds a 26 percent share of the global market, according to a 2012 report by the Information Technology and Innovation Foundation.

U.S. industry has pushed for an expanded ITA pact covering an additional $800 billion in trade, which the Information Technology and Innovation Foundation has estimated would boost U.S. exports by about $2.8 billion annually.

Canada's ambassador to the WTO, Jonathan Fried, informed negotiators of the decision to suspend the talks in a letter distributed in Geneva, where the talks were being held.

As a practical matter, the earliest that the talks could reconvene is September, trade experts said.

The Consumer Electronics Association, which represents about 2,000 U.S. companies, urged countries to strive now for a deal no later than December, when all 159 members of the WTO will be in Bali for a ministerial meeting.

'STILL TIME TO GET IT DONE THIS YEAR'

The original Information Technology Agreement pact eliminated tariffs on computers, semiconductors, software, fax machines, telephones and other information technology goods among member countries.

But some important products such as semiconductor manufacturing equipment and certain types of memory chips were left off the list, as well many types of audio-visual equipment such as speakers, DVD players and video cameras.

U.S. industry has also been pushing to include products such as video-game consoles, GPS systems, flat-panel displays and a new class of semiconductor chips called multi-component semiconductors, or MCOs.

John Neuffer, senior vice president at the Information Technology Industry Council, said the decision to suspend the talks was the right call because China's position made it difficult to reach a final agreement.

"We would have been sitting here next year looking at that same list or something a little bit smaller," Neuffer said.

But the former U.S. trade official said he was not ready to give up on reaching a deal in the negotiations.

"We were hoping it would be this week, but we still have time to get it done this year," Neuffer said.

The suspension "gives the Chinese some more time to reflect, to get to a more reasonable place," he added.

(Reporting by Doug Palmer; Editing by Jackie Frank and Peter Cooney)

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