Talks between China and the US that would have opened up more than $1.3 trillion worth of trade in technology products have collapsed at the on-going World Trade Organisation (WTO) meeting in Nairobi.
This is after the two world's biggest economies failed to reach a deal on the Information Technology Agreement (ITA) that was highly expected at the negotiations.
A meeting between US Trade Representative Michael Froman with Chinese Commerce Minister Gao Hucheng at the Jomo Kenyatta International Airport that would have ended with the announcement of the deal failed to take place.
Instead, Ambassador Froman met journalists alone to announce that there was no deal yet on the ITA products, but could not give details on the key issues that lead to the talks collapsing.
The deal would have set the stage for the biggest tariff cutting agreement under the World Trade WTO for almost 18 years.
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"Following their meeting, they will address the media to provide an update on US-China talks regarding the WTO Information Technology Agreement," an invite sent to the media read in part.
A source familiar with the deal said China and US were expecting to announce the biggest trade deal at WTO, before it emerged that the talks had collapsed.
"This will be the biggest deal at this conference in the technology space that stand to benefit the developing countries," the source had said.
29 participants at the Singapore Ministerial Conference concluded the first ministerial declaration on ITA products in December 1996. The number of participants has grown to 81, representing about 97 per cent of world trade in IT products.
The ITA provides for participants to completely eliminate duties on IT products covered by the agreement.
The collapse of the talks now deals a major blow to the meeting in Nairobi, which is under pressure to strike a deal. Delegates who have spoken at the meeting, from ministers to presidents, have all demanded for an end to fruitless talks that have weakened the WTO as an important trade organ in the world.
The fears of the botched talks were confirmed a day after WTO Director General Roberto Azevedo blamed China for standing in the way of ITA. Mr Azevedo said China delayed to make final submissions for the expanded list of the ITA. "China has not submitted a revised schedule. I know there is a little thing on technical details and some experts still on the way have been negotiating on the plane. There are still the political decisions that have to be delivered in the last minute. When the political will is there, we manage to pull through," Azevedo said.
"In June 2012, 33 WTO members launched negotiations for the expansion of the product coverage of the ITA to include a number of products, which, in light of new technological developments, should be added to the list," the WTO says on its website. Participation in the ITA product expansion negotiations quickly increased to 54 WTO members. After 17 rounds of negotiations at a meeting on 24 July 2015, nearly all the participants agreed to expand the products covered by the agreement and eliminate tariffs on an additional list of 201 products.
Annual trade in these 201 products is valued at over $1.3 trillion per year and accounts for approximately seven per cent of total global trade today.
It was expected that once the technical details for the deal were ironed out, it would have been formally concluded during the 10th Ministerial Conference that is ongoing in Nairobi.
The expanded scheme would rope in liquid crystal display televisions, video games, semi-conductors, printer ink cartridges, loudspeakers, video cameras and even scanners.
WTO says the pact could unlock trade potential that is only compared to the annual global business in iron, steel, textiles and clothing, combined.
China is one of the largest exporters and market for electrical products and holds a big influence in the talks. This is not the first time that China has come under attack for holding back progress on the talks.
For instance, the 2013 ITA talks flopped after China insisted on dropping some items from the ITA list. However, US President Barack Obama and Chinese President Xi Jinping in 2014 reached a bilateral agreement in Beijing on expanding the scope of the pact. Another such agreement that failed to come through in Nairobi is the Environmental Goods Agreement. The deal is likely to be reached next year after the negotiators failed to meet timelines for delivering the list of environmental goods to be earmarked for tariff cuts.