Info Service on WTO and Trade Issues (Nov18/08)
12 November 2018
Third World Network
Pressure being exerted to oppose India-South Africa e-com proposal
Published in SUNS #8792 dated 9 November 2018
Geneva, 8 Nov (D. Ravi Kanth) - Intense pressure is being exerted
on several developing countries at the World Trade Organization (WTO)
to oppose a proposal by India and South Africa that calls for a "re-think"
on the current moratorium on customs duties on electronic transmissions,
said sources familiar with the development.
The joint proposal by India and South Africa on the current "Moratorium
on Customs Duties on Electronic Transmissions: Need for a Re-think"
will come up for discussion at a specially convened General Council
(GC) meeting on 23 November.
Significantly, it is the first time that a GC meeting is being held
for examining all aspects related to the imposition of customs duties
on electronic transmissions.
Ahead of the meeting, trade envoys for several developing countries
who are not members of the informal plurilateral negotiations on electronic
commerce are being subtly told to oppose the India-South Africa joint
paper, said a trade envoy from a South American country, who asked
not to be identified.
The United States, the European Union, Japan, Australia, and several
other industrialized and some developing countries - who are members
of the joint initiative launched on the margins of the WTO's eleventh
ministerial meeting in Buenos Aires, Argentina, on 13 December 2017
- want the moratorium on electronic transmissions to be made permanent.
In its report "2018 Trade Policy Agenda" issued early this
year, the US said the Trump Administration intends to use the ongoing
discussions on digital trade "as a valuable forum to develop
commercially meaningful rules that address restrictions on digital
trade, and will work with like-minded WTO Members who share the Administration's
interest in moving forward on digital trade issues within the
Without clarifying what constitutes electronic transmissions, the
developed and some developing countries of the joint initiative on
electronic commerce are preparing the ground for a formal launch of
plurilateral negotiations at the WTO's 12th ministerial conference
in Astana, Kazakhstan, in June 2020.
Against this backdrop, the India-South Africa joint paper, circulated
on 12 July 2018, says that "the realities prevailing in 1998,
when WTO Members agreed for the first time to the temporary moratorium
on customs duties on electronic transmissions, have changed significantly
during the subsequent two decades."
"These changes," according to India and South Africa, "necessitate
a re-examination of the implications of the temporary moratorium,
particularly from the development perspective."
The two countries argued that "while there is no definitive estimate
of the volume of cross-border electronic transmissions, it is likely
that the volume of such transmissions has increased manifold over
the past two decades."
They maintained that "until a few years ago, electronic transmissions
were mainly used to deliver digitalised products, such as e-books,
music and a variety of services."
With an explosion in the manufacturing technology through 3-D printing,
"electronic transmissions have now acquired an additional salience
in manufacturing physical products," India and South Africa argued
in their proposal.
Consequently, the new techniques of electronic manufacturing raise
serious questions on what would constitute electronic transmissions,
with serious implications for national economies on the customs and
several other fronts, the joint proposal by India and South Africa
In effect, there will be serious revenue implications for national
governments, particularly on the customs duties front, "as more
products, which are presently traded in physical form, get digitalised
and delivered through electronic transmissions," India and South
Citing a study by the United Nations Conference on Trade and Development
(UNCTAD) on "Rising Product Digitalisation and Losing Trade Competitiveness,"
India and South Africa maintained that developing countries will suffer
"a loss in customs revenue, if the temporary moratorium on electronic
transmissions is made permanent."
Moreover, "a moratorium on customs duties on electronic transmissions
could imply that customs duties are not imposed on products exported
in digitalised form, even if the bound rate on the same product if
it is delivered in the physical form, is not zero," the two developing
countries pointed out.
"Thus, a moratorium on customs duties on electronic transmissions
could in effect undermine the existing schedule of tariff concessions
of WTO Members. Given the fact that the average bound tariffs of developing
countries are considerably higher than those of developed countries,
a moratorium on customs duties on electronic transmissions could significantly
alter the negotiated balance of rights and obligations," India
and South Africa maintained.
Further, it is important to consider the scope of the current e-commerce
moratorium because there is no agreed definition, nor common understanding
amongst the Membership of what is covered under "electronic transmissions."
At the WTO's eleventh ministerial conference in Buenos Aires last
year, Indonesia had issued a statement "regarding the scope of
the application of the moratorium on customs duties on electronic
transmissions in the context of electronic commerce discussions."
Indonesia, which delivered the statement at the Facilitator's Consultation
Meeting on Electronic Commerce, had said "in regards to the discussion
on the moratorium on customs duties on electronic transmissions, it
is our understanding that such moratorium shall not apply to electronically
transmitted goods and services."
"In other words," said Indonesia, "the extension of
the moratorium applies only to the electronic transmissions and not
to products or contents which are submitted electronically."
Indonesia shared its views with the Director-General Roberto Azevedo
at the Buenos Aires meeting. Indonesia called for inserting a footnote
in the outcome document stating that "it is understood that such
moratorium shall not apply to electronically transmitted goods."
But no footnote was issued in the outcome document.
Against this backdrop, India and South Africa said all these issues
are of "critical importance to most, if not all developing countries,
given the role of development and industrial policies in the digital