TWN Info Service on WTO and Trade Issues (Feb20/03)
18 February 2020
Third World Network

India, South Africa get green light for workshops on e-com moratorium
Published in SUNS #9066 dated 12 February 2020

Geneva, 11 Feb (D. Ravi Kanth) -- India and South Africa have secured the green light for holding workshops, along with dedicated WTO General Council meetings, to reassess the scope and definition of the existing moratorium that prohibits countries from imposing customs duties on electronic transmissions.

At an informal General Council (GC) meeting on Monday (10 February), India and South Africa made a strong case as to why WTO members must reassess thoroughly all aspects concerning the moratorium and the heavy loss of revenue suffered by developing countries for not levying customs duties on electronic transmissions.

In his introductory intervention at the GC meeting, India's trade envoy Ambassador J. S. Deepak reminded members that New Delhi had "joined the consensus on the six-month extension of the e-commerce moratorium with the understanding that the Work Programme on Electronic Commerce will be reinvigorated with the specific objective of achieving clarity on issues related to the scope of the moratorium, the definition of electronic transmissions, identification of products which are covered under the moratorium as well as its impact."

Recalling the two joint submissions made by India and South Africa last year on the moratorium, Ambassador Deepak said "based on the identification of a small number of digitizable products in five areas, namely, printed matter, music downloads, video downloads, software and video games, the United Nations Conference on Trade and Development (UNCTAD) had estimated an annual loss in tariff revenue of more than $10 billion globally because of the moratorium," with 95 per cent of the loss in tariff revenue globally being "borne by developing countries!"

These estimates, he said, "were confirmed by the UNCTAD Trade and Development Report of 2019."

"It is also important to keep in mind that the estimate of $10 billion as the potential tariff revenue loss per annum is only the tip of the iceberg, as this estimate is based on only a small number of 49 HS 6-digit products," he said.

Given the proliferation of digitized products with the advent of industry 4.0 and the advance of 3D printing technologies, the likely estimate of fiscal revenue foregone would snowball in the near future, the Indian trade envoy emphasised.

The moratorium, which has been implemented since 1998, "will also erode the existing GATT bound rates, which are typically higher in developing countries, and bring them to zero for digitized products, thereby removing an important tool which developing countries have to protect their industries," he cautioned.

"This could have a catastrophic effect on the ability of developing countries to protect their nascent domestic digital industries resulting in loss of jobs and consequent destitution of large numbers," Ambassador Deepak warned.

As regards the proposed discussions on the scope and definition and other impacts of the moratorium, he said there is broad agreement that the meetings of the General Council should be supplemented by workshops.

"These workshops should provide an opportunity to all the leading researchers from UNCTAD, ECIPE (European Centre for International Political Economy), the OECD (Organization for Economic Cooperation and Development) and even the WTO Secretariat to make presentations and participate in deliberations on the critical issues related to scope of the moratorium, the definition of ET (electronic transmission) and identification of products which are covered under the moratorium together with its impact."

He suggested at least two informal open-ended dedicated meetings of the GC, one at the end of March or thereabouts and the other at the end of April.

"The proposed workshop could be a two-day event scheduled between the two open-ended GCs, say in early or mid-April," Ambassador Deepak said.

Members could also hold another workshop after the meeting of the GC scheduled for May 2020, he said, suggesting that "in the coming weeks, we also look forward to new submissions from Members, from researchers and from other international organisations that can contribute to our understanding of the issues associated with the e-commerce moratorium."

In her intervention, South Africa's trade envoy, Ambassador Xolelwa Mlumbi-Peter, said "the various studies on the impact of the E-commerce moratorium necessitate a deeper discussion by the membership on its implications, especially on developing countries."

"The loss of tariff revenue and broader development implications of the moratorium necessitate a thorough discussion and rethink of the implications of a further extension of the moratorium," she said.

She suggested convening "an open-ended Informal GC in March 2020 that will focus on the scope of the moratorium", followed by "a workshop in April 2020 on the impact of the moratorium."

"The workshop should include the experts that have published various papers (ECIPE, OECD, UNCTAD) on the impact so as to get a balanced perspective that will assist the membership to consider this important issue," she said.

"We can consider a 2-3 day workshop, starting with an engagement between the membership and the experts and the last day can include a half-day engagement with the private sector to be followed by a closed wrap-up session of members," she said.

She said the "workshop should include a session on the technical feasibility of imposing customs duties and this could include experts from WCO (World Customs Organisation) and countries that have made provision in their HS codes for imposing duties (Indonesia)."

Ambassador Xolelwa also suggested "an Informal open-ended GC to discuss the impact, in April 2020, after the workshop which will provide an opportunity for the membership to reflect on issues discussed at the workshop."

More importantly, she said that an informal open-ended General Council meeting must be convened in May to discuss the technical feasibility of imposing customs duties.

"The purpose of these discussions will be to assist Ministers to take an informed decision at MC12 [12th ministerial conference in Nur Sultan, Kazakhstan, in June]."

Sri Lanka and China supported the suggestions made by India and South Africa.

The United States, which had initially opposed proposals for a workshop to consider various issues concerning the moratorium, agreed to the proposed workshops by India and South Africa, said participants who attended the meeting.

The US said that it would prefer a permanent moratorium for not levying customs duties.

The US was ready to participate in the workshops, adding that participants such as UNCTAD must come up with new studies and not repeat their earlier works, said participants who asked not to be quoted.

The European Union called for extending the moratorium for another two years.

More than 12 countries intervened during the meeting. +