Advanced medical technology a winner in U.S.-China deal to end tech tariffs

Certain medical device manufacturers will be among the big beneficiaries if an agreement between China and the United States to eliminate tariffs on 200 product lines is approved by the World Trade Organization. A fact sheet published by the White House specifically lists magnetic resonance imaging (MRI) machines and computed tomography (CT) scanners, along with GPS devices, loudspeakers, video game consoles and next-generation semiconductors, as some of the products that would see tariffs eliminated in an amended Information Technology Agreement (ITA). Other unnamed high-tech medical devices also would benefit.

The historic agreement would eliminate trade tariffs affecting $1 trillion in annual sales of high-tech products. It could also lead to the creation of 60,000 jobs in the United States, according to the White House and multiple industry observers.

Currently, tariffs on MRI machines and CT scanners can be as much as 8%. Other nonmedical items, such as printer ink cartridges and loudspeaker, are hit with 30% tariffs. The expansion of the ITA, which has been unchanged since it went into force in 1997, would completely eliminate those tariffs.

Emphasizing the historic nature of this agreement, U.S. Trade representative Michael Froman said to reporters in Beijing, "The last time the WTO agreed to eliminate tariffs on IT products was in 1996, when most of the GPS technology, much of the medical equipment, software, and high-tech gadgetry that we rely on in our daily lives didn't even exist."

U.S. manufacturers of medical scanning and imaging equipment such as GE and advanced medical technology such as Medtronic, as well as startups that are developing the medical technologies of tomorrow, stand to gain from this agreement.

A two-year-old study of the global MRI market pegged annual expension of that sector in the Asian market at 5.2% through 2018, with China accounting for the lion's share of this growth. An elimination of trade tariffs, compounded by rising demand for advanced medical technologies in China, is good news, indeed, for the likes of GE and Siemens, which dominate the diagnostic imaging sector.

Barring any last-minute drama, the ITA expansion could be approved by the WTO in Geneva next month, making it the largest tariff-reduction deal in 17 years.

— Norbert Sparrow

Norbert Sparrow is Senior Editor at PlasticsToday. Follow him on twitter @norbertcsparrow and Google+.