India seeks more clarity on scope of moratorium on customs duties on e-transmissions at WTO

Amiti Sen New Delhi | Updated on October 15, 2020 Published on October 15, 2020

Rule-making on e-commerce could create asymmetries in favour of existing players

India has called for greater clarity at the World Trade Organization (WTO) on the scope of the existing moratorium on customs duties on electronic transmissions and argued against rule making on e-commerce at this stage as it could create “asymmetries’’ for developing countries.

At a meeting of the WTO’s General Council this week, New Delhi proposed a regular review of the Work Programme on E-commerce (1998) and insisted it should be a standing committee agenda item at the council’s meetings.

“In December 2019, India joined the consensus on the six-month extension of the moratorium with the understanding that the Work Programme on Electronic Commerce will be achieve clarity on the scope of the moratorium, the definition of electronic transmissions, identification of products which are covered under the moratorium as well as its impact. I urge members to engage sincerely on these issues in the multilateral Work Programme,” as per a statement made by India’s Ambassador to the WTO Brajendra Navnit at the General Council meeting on Tuesday.

The WTO e-commerce moratorium, which prevents member countries from imposing customs duties on electronic transmissions, was agreed upon in 1998, and is usually extended every two years at the Ministerial Conferences. Its continuous extension has recently been questioned by countries such as India and South Africa because of the related revenue loss to developing nations, especially at the time of the Covid-19 pandemic when e-transmissions have increased.

India’s loss of potential taxes because of the continuous extension of the moratorium was estimated at $500 million annually by UNCTAD in a research paper last year. Its call for clarity on products covered under the moratorium is important as there has been a sharp rise in imports of electronic transmissions in the form of movies, music, video games and printed matter in India.

The moratorium was last extended in December 2019 for six months till the next Ministerial Conference scheduled in June 2020, but due to the pandemic, the Ministerial Conference was postponed and a fresh date is yet to be fixed.

On the attempts to frame rules on e-commerce by some WTO members led by Japan, Australia and Singapore under the Joint Statement Initiative on e-commerce (JSI), India said that members must be careful to not curb innovation and intellectual creativity by restricting the play field to established players.

“Rule making under JSI at this stage will once again create asymmetry and reverse special & differential treatment (for developing countries) similar to one existing in Agreements on Agriculture. It will create a non-level playing field in support of existing players and against the interest of new players,” the statement pointed out.

Digital revolution

As the digital revolution is still unfolding, many developing countries still do not comprehend the full implications of effects of e-commerce on competition and market structures, issues related to transfer of technology, data storage and automation and its impact on traditional jobs and the gaps in policy and regulating frameworks in developing countries.

There needs to be greater discussion on the matter at the WTO under the Work Programme, the representative said.

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Published on October 15, 2020
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