Tunisia studies possible participation in the World Trade Organization's Information Technology Agreement

10 June 2015

At the request of the Government of Tunisia, UNCTAD has studied the pros and cons of the country becoming party to the Information Technology Agreement of the World Trade Organization (WTO).

Looking to attract greater foreign direct investment (FDI) into Tunisia - in particular in the IT sector - to boost domestic industrial output and exports of IT and IT-related products, Tunisia's government asked UNCTAD to look at the impact of becoming a participant in the WTO's Information Technology Agreement (ITA).

In response, UNCTAD prepared a study providing policy recommendations, which was presented to government representatives and other stakeholders at a workshop in Tunis on 12 May 2015.

The study assessed the competitiveness of the economy in attracting IT and IT-related industries, and the revenue implications, by looking at various indices. A "linkage analysis" was also carried out to understand the economy-wide implications of becoming a participant in the ITA, which requires participants to completely eliminate duties on IT products covered by the agreement.

The study outlined that:

  • The total loss of revenue, estimated to be about $55 million or 1.4 per cent of Tunisia's total tariff revenue would be much lower since a high share of trade is with the European Union with which the country has a preferential trade agreement

  • There would be an increase in exports of electronics (ITA products); and benefits to the electronics, IT and IT-related sectors

  • The various indices on the competitiveness of the economy are generally supportive of the establishment of IT and IT-related industries

  • Other sectors of the economy would also benefit in terms of output, employment, welfare and capital endowment

Policy Recommendations


Participation in the ITA should not merely be limited to becoming an attractive host for FDI and domestic direct investment in IT and IT-related industries. While this may be a near-term objective, the medium to long-term objective should be to attract IT and IT-related research and development and product design centres to relocate to Tunisia, with the aim of becoming the regional headquarters for the research and development and product design centres of IT and IT-related industries in the Middle East and North Africa region. This would represent Tunisia moving up the value chain.

At the same time, emphasis should be placed on productivity-driven growth such that the value-added per employee rises to a higher stage at all levels of the value chain, which will result in moving the entire value chain to a higher stage.

Participation in the ITA should be complemented by various policy measures, including macroeconomic, trade (including fiscal) and industrial policies, as well as measures aimed at strengthening the regulatory and institutional framework, enhancing the productivity and competitiveness of the economy and creating a more favourable environment for FDI and domestic direct investment.

 

The study was carried out as part of UNCTAD's assistance to Member States in the formulation of their trade policy framework.

Other trade policy frameworks prepared by UNCTAD in support of developing countries include those for Papua New Guinea, Rwanda, Jamaica, Mexico (agriculture) and Angola.