India will oppose any further extension to a moratorium on customs duty on electronic transmission at the next ministerial of the World Trade Organization (WTO) next month, seeking a change in status quo prevailing over the past 24 years, official sources said on Tuesday.
A 2019 study by UNCTAD pointed out that developing countries are losing $10 billion in potential revenue annually, including $497 million by India, due to the moratorium, even going by a conservative estimate. It also revealed that developing countries can generate 40 times more tariff revenue by imposing customs duty on electronic transmission as compared to the developed nations, many of whom have adopted zero bound bound duties on physical imports of digitisable products. The UNCTAD analysis suggests that developing countries suffer more than the developed ones due to the moratorium.
WTO members have agreed not to slap customs duties on electronics transmission since 1998 and the moratorium has been extended periodically at successive ministerial conferences. The validity of the current extension is up to the 12th ministerial, which will be held from June 12 to June 15 in Geneva. Many members, mainly the developed countries, are seeking another extension up to the 13th ministerial (whenever it’s held).
Since most countries didn’t have concrete policies on e-commerce, which was an emerging area of trade in even developed countries in 1998, they had decided to establish a work programme on it to hold intensive talks and also impose a moratorium on customs duties on electronics transmission.
Interestingly, even over two decades later, WTO members have neither defined what constitutes electronics transmission nor come to an understanding on its coverage of products, let alone finding ways to impose the duties. This has made it difficult for countries to even tax imports of products that can somehow be linked to digital goods.
“With increasing diffusion of additive manufacturing technology through3D printing, electronic transmissions have now acquired an additional salience in manufacturing physical products. Both these trends are likely to become more prominent in the near future, thereby, bringing electronic transmissions closer to the centre-stage of national economies. This compels a rethink of the role of the temporary moratorium on customs duty on electronic transmissions,” according to a joint communication by India and South Africa submitted with the WTO earlier.
“India believes there can’t be a blanket moratorium on this issue for an indefinite period,” a senior commerce ministry official said.
Similarly, India wants the work programme on e-commerce invigorated for more intense engagement before firming up rules and disciplines in this area, given the highly asymmetrical nature of the development of e-commerce in the developed world and the developing nations—the latter clearly need more time to do a catch-up.