E-commerce at WTO

Subject – Economy

Context – WTO Ministerial Conference (MC12) got postponed due to the outbreak of the Covid-19 pandemic

Concept –

When e-commerce was still at a nascent stage, in September 1998, the work programme on e-commerce was adopted by the General Council of the WTO.
- The programme was largely exploratory in nature, focussing on examining all trade issues relating to global ecommerce, considering the economic, financial and development needs of developing countries.
Under the programme, WTO members agreed to continue the practice of not imposing Customs duties on electronic transmissions.
- Also known as “moratorium on Customs duties”, this has been renewed regularly at each Ministerial Conference and many WTO members, led by the US wanted the moratorium to continue in MC 12. With the postponement of MC12, this is likely to continue.
- One of the reasons for implementing the moratorium is that it is technically not possible for Customs to collect duties on digitalised products like software.

Change in stance

India’s position has changed over time. India, with a vibrant software industry, was a proponent of liberalisation of Mode 1 or cross-border trade.
However, with the growth of e-commerce, there is a fear that developing countries, including India, are importers and thereby losing out on Customs duty.
On March 10, 2020, India and South Africa circulated a paper on the need to understand the scope and impact of the moratorium.
- Citing UNCTAD studies, it presented the potential tariff revenue losses from goods that have become digitised, and which are digitisable.
- Based on a limited number of digitised goods, namely, films, printed matter, video games, software and music, the UNCTAD study estimated a loss of tariff revenue of more than $10 billion globally because of the moratorium, 95 per cent of which is borne by developing countries.
The study did not consider that with growing trade agreements, tariffs are reducing.
India itself announced Early Harvest with key trading partners like the UK and Australia in March 2022 and relaunched the India-US Trade Policy Forum and, hence, the country is open to tariff reduction.