Goyal presses for reviewing e-transmission moratorium
PremiumOn the WTO reforms proposal, Goyal pressed for retaining the existing special and differential treatment provisions for the developing members under WTO
GENEVA : In the last leg of talks at the World Trade Organisations' ongoing ministerial meeting on Wednesday, commerce and industry minister Piyush Goyal opposed the proposal to further extend the moratorium on customs duties on electronic transmission, arguing that it only favours developed nations.
On the WTO reforms proposal, Goyal pressed for retaining the existing special and differential treatment provisions for the developing members under WTO and contested the proposals that could result in fundamental changes in the institutional architecture of WTO “running the risk of skewing the system against the interest of developing countries."
With less than 24 hours to go for the conclusion of the 12th ministerial conference, the negotiations went on till midnight on key issues on the table.
Goyal urged the member countries to reinvigorate talks on the Work Programme on e-commerce as per its mandate of comprehensively examining all trade-related issues relating to global e-commerce, taking into account the economic, financial, and development needs of developing countries.
“I think this moratorium that has been continuing for 24 years needs to be reviewed, relooked at. The work program needs to be reinvigorated, and must provide regulatory space for developing countries to provide a level playing field to domestic SMEs in the digital sector while continuing to contribute to their economies," said Goyal during his intervention.
The issue dates back to 1998 when WTO members had agreed not to impose any customs duty on electronic transmission. But, the moratorium has been periodically extended at the ministerial conferences and several countries are seeking to make the moratorium permanent. India is opposed to an extension on grounds that developing countries have been losing revenue. Since digital trade at present is dominated by big tech and developed countries, the moratorium squarely favours the developed nations, India has said.
Goyal during his intervention on the thematic discussion on the topic said that between 2017 and 2020, developing countries have lost potential tariff revenue of possibly upward of $50 bn only on the import of 49 digital products. In fact, 95% of this revenue tariff loss is borne by the developing countries, he said.
“Is it fair that the cost of the moratorium is almost completely borne by the developing countries for extending duty-free quota, quota-free market access, largely for a very few players? Can we justify that this wealth accumulated by the big tech at the cost of the ability of the emerging markets to generate resources, to meet the basic needs of their large population? By the way, by 2025 this revenue loss is estimated to be $30 bn every year. And imagine what public good can be done using these resources," said Goyal.
He flagged that while small exporters of physical products like textiles, handloom, clothing, and footwear, mainly based in the developing countries were facing both domestic taxes as well as customs duties, the big digital exporters are being exempted from customs duties due to the moratorium.
“In fact, going forward one estimate says that 40% of cross-border physical global trade will be replaced by 3D printing by 2040. This will actually jeopardize domestic manufacturing capacities, which will be subjected to regular tariffs who would actually become totally uncompetitive," said Goyal.
(The writer is in Geneva on the invitation of the ministry of commerce and industry.)