OWINFS Opposes Renewal of WTO's Moratorium on Customs Duties on Electronic Transmissions

Our World is Not for Sale (OWINFS) strongly opposed the renewal of the e-commerce moratorium at the 13th Ministerial Conference of the World Trade Organisation (WTO). In a press release, the organisation listed out issues with the extension of WTO's moratorium on customs duties on electronic transmissions. 

As per the statement, the moratorium precludes regulatory options in a sector that has been developing rapidly. Additionally, the WTO's moratorium "disproportionately impacts countries without a highly advanced domestic tech sector", as the technology sector is largely dominated by companies from the US and China. The moratorium, as per OWINFS, harms developing countries by stopping them from imposing tariffs on digitalised goods and services. 

The harm is greater for the Global South as it has "fewer avenues for taxation and cannot afford to provide unfettered access to its own markets with no compensation." 

Here is the full statement: 

One of the critical issues being discussed at the World Trade Organization’s 13th Ministerial Conference is an extension of the WTO’s Moratorium on customs duties on electronic transmissions. The Moratorium prevents countries from imposing import duties on digital products and services. 

The Moratorium precludes regulatory options in a nascent and rapidly changing industry: The technology sector has been developing rapidly, especially with advancements in AI. Some emerging policy options include digital public infrastructure and innovative international taxation mechanisms, all of which require domestic policy space to be preserved. 

The Moratorium disproportionately impacts countries without a highly advanced domestic tech sector: The global technology sector is dominated by large companies from two countries – the US and China. By giving up the ability to impose tariffs on digitalised goods and services, all other countries (who are net importers of digitised goods and services) will lose revenue through the Moratorium. 

The harm caused by the Moratorium is greater in the case of the Global South, which has fewer avenues for taxation and cannot afford to provide unfettered access to its own markets with no compensation. 

Historically, customs duties have been imposed by developed countries to protect domestic industries and enable them to become internationally competitive. Customs duties can be used by developing countries as a strategic policy tool to nurture their nascent digital sectors. 

The Moratorium is a tax evasion mechanism for Big Tech, and reduces global tax revenue in a rapidly digitizing economy: The Moratorium effectively removes the ability for countries to tax digital products and services at the borders. This removes a tool from the arsenal of all countries to tax the digital economy. 

An increasing number of goods and services today have a software or digital component. As the quantum of tech-enabled goods and services increases, the Moratorium prevents the taxation of this software component and, therefore, a significant portion of all goods traded. This includes, for instance, smart cars, IoT devices, etc. 

It is universally agreed that the digital economy, which will eventually encompass most of the economy, must be taxed. Each country and economy should be free to find the optimal way to tax the digital economy, and this may include customs duties in some cases. 

More information: http://bit.ly/ecommerce-moratorium | https://bit.ly/understanding-moratorium