India will take a stand against the perpetuation of a moratorium on Customs Duties on electronic transmission (E-Transmission) at the World Trade Organization’s (WTO) 12th Ministerial Conference (MC12) to be held in June 2022. This is because it perceives this step as being primarily beneficial for developed nations. This moratorium was last extended in 2017, during the 11th MC in Argentina, and was meant to last two years. In 2019, members agreed to uphold this practice until the 12th MC.
The E-transmission Moratorium Explained
Since 1998, WTO members have concurred not to apply customs duties on electronic transmissions. These agreements have been regularly renewed during successive Ministerial Conferences (MCs). These conferences are the highest decision-making bodies of the organization, which boasts 164 members.
Products that can be digitised, such as photographic films, printed matter, music, software, and video games, fall under this moratorium. The idea behind this was to encourage discourse on e-commerce—an area most countries did not have concrete policies on in 1998—and impose a duty-free period on electronic transmission products.
Work Programme on E-Commerce
A work programme focusing on e-commerce to scrutinize all trade-related issues was established by the WTO’s General Council in 1998, taking into consideration the economic, financial, and development requirements of emerging economies. The WTO Work Programme defines “electronic commerce” as the “production, distribution, marketing, sale or delivery of goods and services by electronic means”.
India’s Take on the Current Situation
The upcoming 12th MC in June 2022 has compelled many WTO members to consider a temporary extension of the moratorium until the 13th MC, which is not what India wants. On multiple occasions, India and South Africa have asked the WTO to re-evaluate the situation and have underscored the negative effects of the moratorium on developing countries.
India’s primary aim is for the WTO to bolster the work programme on the e-commerce sector. Furthermore, India has suggested that trade-related discussions on e-commerce be conducted by different councils and committees, in accordance with their initial mandates.
Problems with the Moratorium
India is currently experiencing an upsurge in electronic transmission imports, especially of items like films, music, video games, and printed matter. These could potentially come under the scope of the moratorium. The significance of letting the moratorium expire lies in allowing developing countries to retain their policy space for digital advancement, regulate imports, and generate revenue from customs duties.
Furthermore, the potential tariff revenue loss for these countries as a result of the moratorium on e-commerce is estimated to stand at USD 10 billion annually. This is especially problematic considering the steady rise in profits and revenues of digital players, while governments’ abilities to control these imports and procure additional tariff revenues are severely restricted due to the moratorium.
The Way Forward
It is vital for developing nations to maintain flexibility in implementing policies in order to keep up with developed countries in the digital realm. Initially, the focus should be on enhancing domestic physical and digital infrastructure. It’s exceedingly important for these nations to regulate luxury imports such as films, music, and video games. Abolishing the moratorium will grant this policy space to governments.
India’s stance at the upcoming WTO meeting will be significant in shaping global trade policies and practices, particularly in regard to digital trade and e-commerce. The country’s decisions will not only impact its own economy but also influence the global discourse on digital trade, potentially setting precedents for other emerging economies.