The International Chamber of Commerce (ICC) and other associations urge WTO members to support continuation of the Moratorium on Customs Duties on Electronic Transmissions at the WTO’s Thirteenth Ministerial Conference (MC13).
Allowing the Moratorium to expire would be a historic setback for the WTO, representing an unprecedented termination of a multilateral agreement in place nearly since the WTO’s inception – an agreement that has allowed the digital economy to take root and grow. All WTO members have a stake in the organisation’s continued institutional credibility and resilience, as well as its relevance at a time of unprecedented digital transformation.
Continuation of the moratorium is critical to the ongoing COVID-19 recovery. As detailed by the United Nations, the World Bank, the OECD, and many other organizations, the cross-border exchange of knowledge, technical know-how, and scientific and commercial information across transnational IT networks, as well as access to digital tools and global market opportunities have helped sustain economies, expand education, and raise global living standards.
Continuation of the Moratorium is also important to supply chain resilience for manufacturing and services industries. Manufacturers – both large and small, and across a range of industrial sectors – rely on the constant flow of research, design and processed data and software to enable their production flows and supply chains for critical products.
The moratorium is particularly beneficial to micro, small and medium-sized enterprises (MSMEs), whose ability to access and leverage digital tools has allowed them to stay in business amid physical restrictions and lockdowns. Failure to renew the moratorium will jeopardise these benefits, as customs restrictions that interrupt cross-border access to knowledge and digital tools will harm MSMEs and the global supply chain – increasing digital fragmentation. As UNCTAD has explained, such fragmentation “reduces market opportunities for domestic MSMEs to reach worldwide markets, and reduces opportunities for digital innovation, including various missed opportunities for inclusive development that can be facilitated by engaging in data-sharing through strong international cooperation. Most small, developing economies will lose opportunities for raising their digital competitiveness”.
The risks of ending the moratorium have been discussed in recent publications by the International Monetary Fund, OECD, World Bank, United Nations and WTO; and by think-tanks in India, Indonesia, Switzerland, Belgium and around the world.
The Secretary-General of ICC Ghana, Emmanuel Doni-Kwame, explained that tariffs on electronic transmissions would hit low-income country trade the most, since countries that impose such duties also face longer-term harms due to a less predictable investment climate, reduced foreign direct investment, and reduced access to knowledge, information and digital tools needed by local workers, artists, patients, students, consumers and other constituents.
Finally, at a time when the G20, seeking to establish “a more stable and fairer international tax system,” has formally endorsed the OECD Inclusive Framework’s Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, it seems unnecessarily disruptive for the WTO membership to abandon a foundational quarter-century-old agreement regarding the treatment of electronic transmissions. We also note in this regard the G7 Digital Trade Principles, which state that “electronic transmissions – including the transmitted content – should be free of customs duties, in accordance with the WTO Moratorium on Customs Duties on Electronic Transmissions.”
We, therefore, urge all WTO members to show strong leadership and support of the digital economy by supporting continuation of the WTO Moratorium on Customs Duties on Electronic Transmissions.
