28 May 2019
Technology Industry Association Voices Concern about U.S. Trade Policies
CompTIA, the technology industry trade association, indicated in its recently released Tech Trade Snapshot 2019 that U.S. technology exports totalled some US$340 billion last year, directly supporting nearly 860,000 jobs. The report also looked at U.S. state-level exports and employment in technology goods and services to emphasise to readers the importance of this sector for U.S. economic development and employment.
CompTIA included an analysis of the U.S. technology deficit with mainland China, emphasising the complex nature of many of these transactions. The association reported that U.S. technology product exports to the mainland increased by 4.9 percent to US$17.9 billion in 2018, while U.S. companies exported US$2.2 billion worth of technology services to the mainland in 2017. These exports were dwarfed by U.S. imports of US$187.7 billion in technology products and services from the mainland in 2017. Hong Kong was a described as a “notable newcomer” for its rise to tenth position in the U.S. technology services export rankings.
CompTIA also sought to describe the complicated value-added calculations that could more accurately reflect corporate earnings and commercial realities, quoting the research consultancy HIS Market’s estimate that mainland Chinese assembly facilities receive just three to six percent of the manufacturing cost of an iPhone. The report also quoted Louis Kuijs, head of Asia economics research at Oxford Economics, as saying that “if trade deficits were measured to account for the complex nature of global supply chains for products such as smartphones, the U.S.-China trade deficit would be about 36 percent lower.”
In a press release accompanying the report, CompTIA expressed concern about current U.S. trade policies affecting the technology sector. Since high-tech products have typically been subject to very low tariff rates in the United States, with many products entering duty-free under the WTO Information Technology Agreement, the imposition of a 25 percent additional tariff on certain products under Section 301 constitutes a huge tariff increase. The U.S.-mainland China trade dispute “resulted in tariffs on tech product imports increasing fivefold from 2017 to 2018,” Stefanie Holland, CompTIA's vice president for federal and global policy, said in a statement. “Should a 25 percent tariff rate apply to all tech product imports the costs could run into the tens of billions of dollars,” she added. Accordingly, CompTIA urged the U.S. government to work towards a deal that protects American innovation and intellectual property while avoiding the imposition of additional tariffs on imports of high-tech products into the United States.