FOR IMMEDIATE RELEASE: November 14, 2011
AFTER PUSH FROM SCHUMER TO US TRADE OFFICIALS, RUSSIA AGREES TO JOIN INFORMATION TECHNOLOGY AGREEMENT, PROVIDING BIG BOOST TO IBM & PREVENTING NY TECH JOBS FROM GOING OVERSEAS
Schumer Pushed U.S. Trade Representative Kirk to Secure Russian Commitment to Join Information Technology Agreement As Part of Current WTO Accession Negotiations
Move Will Fully Open Russian Markets to Exports from American Info Tech Firms like IBM And Allow Them To Grow In NY, Prevent Jobs From Heading Abroad
Schumer: This Is A Big Victory For New York Jobs and Fair and Open Trade
Today, U.S. Senator Charles E. Schumer announced that the U.S.-Russia bilateral WTO accession agreement currently under negotiation, and the final WTO Working Party Report on Russia’s accession to the WTO, will reflect an unequivocal commitment by Russia to join the Information Technology Agreement (ITA), providing a big boost to IBM and other high-tech companies in the Empire State, and across the country. Schumer pushed for Russia’s membership in the ITA because is critical to New York companies in the Information Technology (IT) sector, especially firms like IBM, because ITA member countries must eliminate import duties on a wide range of information technology (IT) products, including computers, telecommunications equipment, semiconductors and software. After Schumer’s push, American firms like IBM will not face any tariffs when shipping products to Russia.
Now that the tariffs are set to be eliminated, New York companies like IBM, which already does about $14 million in direct hardware sales to Russia annually, will be free to pursue an expansion in this emerging market. Schumer had warned that if Russia evaded joining the Information Technology Agreement (ITA), companies like IBM could be forced to move manufacturing facilities overseas to Russia, in order to remain competitive in the booming Russian market. IBM estimates that this move will result in tens of millions of dollars of growth over the next five years, which means high-tech job growth for New York.
“This is a very positive step for free and fair trade that allows American firms to compete on an even playing field in the emerging Russian market; it sets us on the path to creating more high-tech jobs here in New York at companies like IBM and other high-tech and telecommunications firms,” said Schumer. “We need to do more to open foreign markets to high-tech products made in the Empire State, which is why I pushed U.S. trade officials to make sure Russia committed to join the ITA and eliminate tariffs on American information technology products. The best part is, IBM and other tech and telecom companies will be creating jobs, and they’ll be creating them here in New York, instead of overseas. I’m going to work closely with Ambassador Kirk and the USTR to ensure that Russia follows through and joins fully implements its commitment to join the ITA as soon as they become a member of the WTO.”
Schumer urged USTR Ron Kirk to hold Russia to its commitment to join the Information Technology Agreement, pointing to the risk imposed on American IT companies and their employees if high tariff barriers to trade are not eliminated. Previously, Russia was not an ITA member, and imposed high duties on U.S. Information Technology companies that sell American-made info tech products in Russia. This barrier to free trade was both a cost of millions to companies like IBM, and an impediment to deploying growth strategies in Russia, which is otherwise an ideal market for American IT investment products.
In 2006, Russia pledged to become an Information Technology Agreement (ITA) member upon accession to the World Trade Organization, but in the Administration’s efforts to wrap up negotiations with Russia on accession to the WTO, Russia was considering backing out of its commitment to join the ITA. Schumer warned that this could allow Russia to become a member of the World Trade Organization while still imposing tariff barriers to trade with U.S. companies, potentially forcing them to open manufacturing plants in Russia to avoid paying millions of dollars in import duties. Schumer stated that these high tariff rates must be eliminated as previously planned, so that American jobs at companies like IBM are not in danger of being shipped overseas. Russia has been working on negotiating its accession to the WTO (and its predecessor the GATT) since 1993, and will now join the WTO and the ITA.
In his initial push, Schumer pointed to the importance of Russia’s participation in the Information Technology Agreement in relation to New York’s growing information technology (IT) sector and job-creating companies like IBM. When Russia fully implements it ITA obligations, Russian tariffs will be eliminated on a wide range of U.S.-made information technology products, including computers, telecommunications equipment, semiconductors and software. Elimination of Russian tariffs on IT products will expand and create significant new market access opportunities for IBM and other U.S. technology exporters in Russia, a large and underserved market. Schumer noted that duty-free access to the Russian market will mean an increase in jobs ranging from manufacturing at IBM’s semiconductor plant in East Fishkill, to innovation jobs in the cutting-edge research and development focused on supercomputers and mainframe development.
Schumer noted the positive economic impact that IBM has had on New York’s economy, which will only be amplified with free trade in the IT sector with Russia. Since 2000, IBM has invested over $6 billion in its East Fishkill semiconductor facility and, in September 2011, IBM announced that it will invest an additional $3.6 billion over five years in NY to advance its semiconductor leadership. Last year, IBM alone exported over $3 billion in IT hardware – over half of all the hardware that it manufactured in the U.S., linking thousands of jobs in production facilities in NY to the global market. These jobs range from hardware design and manufacturing to planning, accounting and logistics. IBM is already one of the largest U.S. exporters of software, which helps make software engineering IBM’s largest job category in the U.S. Schumer pointed to this strong platform for exports, and stated that significant increases in demand are expected once Russia implements its ITA commitments to reduce and eliminate tariffs, meaning short and long term job growth for IBM and other IT companies in NY.