ICC for freeze on e-commerce duties

Current moratorium is renewed by WTO every 2 years and the body wants it to be made permanent

Tax talk: A permanent moratorium is not in the interests of developing countries, says Abhijit Das of the IIFT.

In a bid to boost global e-commerce, the International Chamber of Commerce (ICC) wants the World Trade Organisation (WTO) member countries to make permanent in December 2017, the current moratorium on imposing customs duties on electronic transmissions.

The ICC, the world’s largest business organisation working to promote international trade, is led by Bharti Enterprises Chairman Sunil Mittal.

The moratorium was included in the 1998 ‘Declaration on Global E-commerce,’ adopted by the WTO member nations in May 1998 at the global trade body’s second Ministerial Conference (MC).

The MC, a biennial event, is the WTO’s highest decision-making body. The moratorium, which is currently temporary, is renewed at each MC. According to the WTO, in 2015, global e-commerce in goods and services was worth about $22 trillion, and has grown the fastest in emerging economies.

Digital trade

Pitching for multilateral rules for digital trade within the WTO framework, the ICC, in its recently released agenda proposals for the WTO’s December 2017 MC, said: “It is perhaps unrealistic to expect that very substantial results could be delivered at the 11thMC in this area (of e-commerce). Nevertheless, at a minimum, the current moratorium on imposing customs duties on e-commerce transactions should be made permanent.”

The December 2017 meeting in Buenos Aires, Argentina is the WTO’s 11th MC. The ICC, with a total of over 6.5 million members in more than 130 nations including India, said on March 22 in its ‘World Trade Agenda for the Buenos Aires Ministerial’ that: “It is important to the business community that new rules on e-commerce be developed on a global, multilateral basis.”

The WTO had said that in a meeting of its member countries held during March 14-17, the debate on ‘future work on e-commerce’ focused on the moratorium concerning customs duties on e-commerce transmissions.

Noting that its members have renewed their commitment not to impose customs duties on these transmissions at each MC, the WTO said: “Members discussed making the moratorium permanent, allowing e-signatures as a means of determining the digital identity of users, electronic authentication, increasing transparency and promoting the participation of small and medium-sized businesses in services trade.”

Permanent moratorium

Abhijit Das, Head & Professor, the Centre For WTO Studies at the Indian Institute of Foreign Trade, said, that it would not be in the interest of developing countries to agree to a permanent moratorium.

“Soon, a larger share of cross-border global trade will happen through electronic transmissions, and a permanent moratorium will result in significant revenue leakage. With growing prominence of Internet-based new technologies like 3D printing, a moratorium on customs duties would result in devastation of domestic manufacturing sector,” he said.

Mr. Das said a permanent moratorium on imposing customs duties on electronic transmissions could reduce negotiating leverage for developing countries to seek a permanent moratorium on Non-Violation Complaints (NVC) under the TRIPS agreement, adding that such a scenario would have severe adverse consequences for the generic pharmaceuticals industry in the world.

As per NVC “a government can go to the WTO Dispute Settlement Body even when an agreement (of the WTO) has not been violated.”