Benefits and Drawbacks of the E-commerce Moratorium

India and South Africa circulated a communication to members of the World Trade Organization (WTO) General Council, arguing that the WTO moratorium on customs duties on electronic transmissions has “catastrophic” impacts on developing countries’ economic growth, jobs, and the attainment of the SDGs. In another communication, a group of WTO members highlighted “the overall benefits” of duty-free electronic transmissions.

The WTO e-commerce moratorium, which bans countries from imposing customs duties on electronic transmissions, dates back to 1998 when ministers at the Second Ministerial Conference adopted the Declaration on Global Electronic Commerce, calling for the establishment of a work programme on e-commerce, which was adopted later that year. Since then, at every Ministerial Conference, WTO members have agreed “to maintain the current practice of not imposing customs duties on electronic transmissions.”

The WTO Work Programme on Electronic Commerce defines “electronic commerce” as the “production, distribution, marketing, sale or delivery of goods and services by electronic means.” According to a recent WTO report, the enforcement of social distancing, lockdowns, and other measures to address the COVID‑19 pandemic resulted in an uptake in e-commerce, including online sales and streaming of videos and films.

In March 2020, India and South Africa circulated a communication, outlining the implications the moratorium has on developing countries, including: tariff revenue losses; impacts on industrialization; impacts on the use of digital technologies like 3D printing in manufacturing; as well as losses of other duties and charges. The countries argue that the moratorium is “equivalent to developing countries giving the digitally advanced countries duty-free access to [their] markets.”

According to a UN Conference on Trade and Development (UNCTAD) article, in 2017 alone, the potential tariff revenue loss to developing countries due to the moratorium was USD 10 billion. The article further notes that removal of the moratorium could provide policy space for developing countries to regulate imports of electronic transmissions and generate annual tariff revenue of up to 40 times greater than that in developed countries.

communication from Australia, Canada, Chile, Colombia, Hong Kong, China, Iceland, the Republic of Korea, New Zealand, Norway, Singapore, Switzerland, Thailand, and Uruguay, circulated in June 2020, highlights a paper by the Organisation for Economic Co-operation and Development (OECD) titled, ‘Electronic Transmissions and International Trade: Shedding New Light on the Moratorium Debate.’ The members state that, according to the paper, “the overall benefits” of duty-free electronic transmissions “outweigh the potential forgone government revenues” due to the moratorium. The members recommend that these findings be considered in the current discussions on the extension of the moratorium.

A decision on whether or not the moratorium should continue will be taken at the 12th WTO Ministerial Conference (MC12). Originally scheduled for June 2020, the Conference has been tentatively postponed until June 2021.

Source: SDG Knowledge Hub, 23 July 2020

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.