During the course of the Twelfth Ministerial Conference (“MC12”) of the World Trade Organisation (“WTO”), a Ministerial Declaration on Electronic Commerce [WT/MIN(22)/W/23, dated June 16, 2022] (“Declaration”) was adopted by the Members. Among other things, this Declaration is a continuation of the policy adopted by WTO Members in respect of non-imposition of tariffs on electronic transmissions.
Brief History of the E-Commerce Moratorium
In 1998, in the 2nd Ministerial Conference of the WTO from May 18 to May 20, 1998, the Members had adopted the Geneva Ministerial Declaration on Global Electronic Commerce. A moratorium was imposed on the imposition of tariffs on electronic transmissions. The moratorium has been renewed at every Ministerial Conference. Therefore, Members have been unable to impose tariffs on any electronic transmissions since 1998. A Work Programme on Electronic Commerce was also established.
This moratorium was extended during the MC12 as well. The Ministerial Conference decided to continue the moratorium on the imposition of tariffs on electronic transmission till the 13th Ministerial Conference—which will ordinarily be held by December 31, 2023. It also decided to re-invigorate the E-Commerce Programme on lines with its mandate. Additionally, the Declaration also noted that if the 13th Ministerial Conference is delayed beyond March 31, 2024, then the moratorium will expire, unless the General Council decides otherwise.
Question: What are ‘electronic transmissions’?
Answer: Electronic transmissions are yet to be defined. E-Commerce, however, is defined as the “production, distribution, marketing, sale or delivery of goods and services by electronic means.”
Simply put- technology such as 3D printing, which allows the electronic transmission of goods would be included in the ambit of e-commerce. You may even consider the electronic transmission of multimedia through platforms such as Netflix, Spotify, etc. to be covered as e-commerce.
Question: Is the entire world on the same page?
Answer: Well, no.
For the imposition of duties | Against the imposition of duties |
Not imposing tariffs has resulted in massive revenue losses to the developing countries. The potential revenue loss has exceeded USD 1 billion (estimate) for developing countries such as India between 2017-20. To put things into perspective: LDCs needed approx. USD 4 billion to finance two shots of the COVID vaccine. LDCs could have generated around USD 8 billion, if the moratorium had been removed in 2017. Source: here. | An OECD Report (here) suggests that the foregone revenue as a share of total revenue is relatively small (0.08-0.23% of total revenue). The developing counties with the maximum revenue foregone rely lease on customs revenue as a source of overall government revenue. It's been argued that any revenue foregone can be covered up through domestic taxes. |
This revenue loss is made worse by the fact that these developing countries are net importers of these ‘online importers.’ This has been made worse by the COVID-19 pandemic. | Digitized trade represents only 1.2% of the total trade. The possibility of more products being digitized is limited. |
The lack of regulatory space for developing countries in the e-commerce sector results in domestic SMEs being unable to compete in the international markets (or contribute to their domestic markets!) | Tariff increases are often passed on to consumers, which will limit access to technology in developing and least developed countries. |
The GATS allows developing countries to liberalize trade in services at their own pace. However, the moratorium acts as a hinderance to this flexibility. | Electronic transmissions can reduce trade costs, which is in the benefit of the world economy at large. |
WTO-Boutery: Talk Global Trade Comments:
The debate deepens with technology expanding its reach to various goods and services in the market. There is unlikely to be much progress without outlining the exact definition of electronic transmissions. Without an exact definition, data remains to be an approximation.