Fabian Demicoli

Discussion of Trade in Electronics sector

The Trade Policy Committee – Steel, Textiles and other Industrial Sectors (TPC STIS) is proposing to discuss EU trade in electronic goods. Discussion will focus on the offensive side of trade. The Economic Policy Division would appreciate to know of any concerns or any general comments on trade in this sector in Malta.

 

The electronic sector can be divided into four sub-sectors: electronic components, computer and office equipment, telecommunications equipment, and consumer electronics. The first three are also commonly referred to as Information and Communication Technology (ICT). The borders between these categories are often fluent, with consumers increasingly having access to professional equipment and multifunctional devices. Electrical appliances are not covered (the so-called "white goods", such as washing machines or refrigerators).

The EU maintains a strong international position in telecommunication and some other product categories, but is a major importer of consumer electronics. Overall it encounters a large trade deficit in electronics. The importance of the sector is not limited to its own economic weight. It accounts for a much larger share of overall productivity growth thanks to the important role that ICT plays in boosting innovation throughout the economy. Semiconductors for instance are a key enabling technology for the electronics and many other sectors such as automotives, machinery or medical devices. The electronics sector is dominated by large multinational companies with global supply chains. Another typical feature of the sector is the increasing link between goods and services.

The discussion in the TPC STIS would focus on a selection of significant trade issues in a wide variety of fields affecting the EU electronics industry. Tariff barriers still play a role for products not (yet) covered by ITA or in non-ITA countries (Latin America, Russia). However, non-tariff barriers are the key issue for EU industry, such as burdensome certification procedures and IT encryption requirements, double testing, IPR protection, but also access to raw materials (e.g. rare earth).

Due to well established global supply and value chains of multinational companies in the area of electronics, intra-company trade and global sourcing plays a big role which has an impact on trade flows, rules of origin, and companies' European or global interests in general. As far as investment incentives and subsidies are concerned, they play a role in the global competition for instance in the area of semiconductors due to huge investment costs and high fluctuation in product and conjuncture cycles. Another specific feature for semiconductors is the existence of a plurilateral forum that represents over 90 % of worldwide semiconductor production, the Government/ Authorities Meeting on Semiconductors (GAMS). It comprises the EU, China, Japan, Korea, Taiwan and the US and addresses all sector related trade, regulatory, IPR, counterfeiting, environmental and other aspects.

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