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Tech Industry

High marks for tariff pact

U.S. firms salute the information technology tariff agreement, forecasting a boom as overseas customers no longer bear the brunt of high tariffs.

A number of technology companies today saluted the information technology tariff agreement, forecasting a boom to their business as overseas customers no longer bear the brunt of high tariffs on their products.

Cisco Systems (CSCO), Compaq (CPQ), Apple Computer (AAPL), and Adobe Systems said they expected to benefit from the agreement, which eliminates tariffs by the year 2000, or earlier in the United States, the European Union, Japan, and Canada, on such products as computers, parts, circuit boards, semiconductors, telecommunications equipment, and software.

Cisco, for example, said over 50 percent of its $4.1 billion in revenues are generated overseas. The average tariff will fall around 5 percent, lowering prices for overseas customers.

"The agreement lowers the cost of procurement for our customers and when they succeed, we succeed," said Greg Stein, Cisco's senior manager of worldwide logistics and trade. "If we can lower our price, then customers will be able to access more of the equipment that they want."

Compaq said the agreement will enable the computer maker to reduce its costs. The company imports components from across the globe and has to pay tariffs on those products.

The company cited one case in Europe where under the previous rules, Compaq's local access network products, like hubs and switches, were taxed as telecommunications products. But with the agreement, the items will be taxed at a "much lower" rate.

Apple too applauded the agreement for moving free trade along for the information technology industry.

"This agreement is a universal step forward to global fair and free trade for the information technology industry," said George Scalise, chief administrative officer. "The consumer will be the ultimate beneficiary from lower prices on products resulting from tariffs."