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Info Service on UN Sustainable Development (Sept23/10) Geneva, 20 Sep (D. Ravi Kanth) — India, Indonesia, and South Africa on 18 September “showed the mirror” to the United States, the European Union, and other proponents of the e-commerce moratorium on customs duties on electronic transmissions, stressing that it has caused incalculable damage to the developing countries by denying them the necessary policy space to pursue their digital industrialization, said people familiar with the development. The three developing countries issued a strong message that the moratorium has to be terminated at the upcoming World Trade Organization’s 13th ministerial conference (MC13), taking place in Abu Dhabi in February 2024, said people, who asked not to be quoted. At an informal meeting on 18 September, convened at the request of India, Indonesia, and South Africa, the three opponents of the current moratorium on customs duties on electronic transmissions set the ground by highlighting the inestimable damage to developing countries caused by the moratorium on several grounds. Right at the beginning of the session, the Indian trade envoy, Ambassador Brajendra Navnit, shared his disappointment with the Secretariat and narrated that the three countries had put in a proposal for a discussion in the WTO Public Forum (held last week) but their proposal was not accepted. Maybe, he said, the Secretariat did not think the countries had the expertise to discuss this issue or because the minutes of the Public Forum were already written to forward the agenda of the advanced countries and the three countries’ narrative did not fit that agenda. The “Information Session on the Moratorium on Customs Duties on Electronic Transmissions: A Development Perspective” brought to the fore several issues stemming from the implementation of the moratorium over the past 25 years. The moratorium was agreed at the WTO’s second ministerial conference in Geneva in 1998, and ever since then, it has been extended every two years on allegedly dubious grounds. At the WTO’s 12th ministerial conference (MC12) held in Geneva last June, trade ministers agreed “to maintain the current practice of not imposing customs duties on electronic transmissions until MC13, which should ordinarily be held by 31 December 2023. Should MC13 be delayed beyond 31 March 2024, the moratorium will expire on that date unless Ministers or the General Council take a decision to extend.” At the information session on 18 September, Ambassador Navnit from India pointedly asked the proponents not to tell the developing countries what is good for them, and instead, they should “tell us how much your industry has benefited from the moratorium and then we will negotiate.” The trade envoys of India, Indonesia, and South Africa acknowledged that the digital economy is growing rapidly and so is the digital divide between countries and sectors. Against this backdrop, the three trade envoys, in varying emphasis, said that it is now important for developing countries to revisit the decision on the e-commerce moratorium, which will end in March 2024, if no consensus is reached to extend it before that. Ambassador Navnit said there is a need for using customs duties as a strategic policy tool for building digital sectors in the developing countries, going beyond the debate on how much tariff revenues are lost due to the moratorium. The Indonesian trade envoy, Ambassador Dandy Iswara, shared the experience of Indonesia in the digital economy, indicating that the growth has been rapid. He said that Indonesia has always maintained that the moratorium is on the electronic transmissions and not on the “content” of the transmissions. Accordingly, Indonesia has introduced the Chapter 99 HS Code and successfully recorded the imports of digital content into the country. South Africa’s outgoing trade envoy Ambassador Xolelwa Mlumbi-Peter highlighted the use of discriminatory taxes like customs duties as a simple and effective tool for boosting digital industrialization and providing a level playing field to nascent digital industries. At a time when the major industrialized countries are repeatedly using customs duties to protect their already established sectors, the three developing countries said that it is somewhat meaningless for them to argue against the use of tariffs by the developing countries when it comes to the digital economy, said people familiar with the proceedings. The three countries emphasized that the developing countries know what is good for them and don’t need pointers from the advanced countries. Without mentioning the digital giants Google, Amazon, Facebook, Apple, and Microsoft in addition to Alibaba and Tencent, the three countries said what is needed is a clear recognition that the moratorium has helped the private sector in the digital economies of the advanced countries who now want access to the larger markets of the developing countries. Even though the moratorium was supposedly built on the basis of leaving electronic transmissions free without any customs duties, it soon morphed into the supply of digital goods and services through the cross-border supply of services under Mode 1 of the WTO’s General Agreement on Trade in Services (GATS). The recent proposals by some industrialized countries to include services in the scope of the moratorium show that the developed countries also want to take away the GATS flexibilities available to the developing countries and force them to open all their services sectors, the three developing countries argued in varying emphasis. Further, India, Indonesia, and South Africa noted that much has changed since the moratorium was put in place in 1998 when no one knew how to collect duties on digital goods, while today, many developing countries know how to do it. Indonesia’s trade envoy said from Indonesia’s perspective, “the application of customs duties becomes a precise and effective policy tool to regulate the import of digitally transmitted goods.” More importantly, the imposition of customs duties “serves as one of the primary forms of fiscal rights of a state,” and “taking into account its strategic importance, such application should be left to the discretion of individual WTO members,” the Indonesian trade envoy emphasized. Further, according to Indonesia, “the application of customs duties will enable the respective country to monitor data and transmission, record trade statistics, assess digital risks, support MSMEs (micro, small, and medium enterprises), and thus create a conducing environment for all stakeholders.” Accordingly, Jakarta argued that imposing customs duties on digital goods will not lead to any trade distortions at the global level, nor will it create any undue administrative burdens for the importation process of digital goods that are transmitted electronically. The provisions on digital goods’ importation, which Indonesia has implemented, accommodate usefulness and easiness to the importers in declaring import declaration, it said. There are no obstacles or complaints so far from the importers of digital goods in fulfilling the regulation, Indonesia informed members. As a result, there has been a significant increase in the import declaration of digital goods since the implementation of the regulation in January 2023, it added. At the meeting on 18 September, the US questioned Indonesia’s figures and approach, suggesting that it fails to capture the dynamics of digital trade, said a person, who asked not to be quoted. In response, the Indonesian official said the data presented at the meeting reveals the overall dynamics of the digital sector, the person said. The EU said that it took note of the presentations made by the three countries, including on the issue of digital industrialization, said people present at the meeting. +
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