India seeks review of WTO e-transmissions moratorium

What is the news?

Ahead of Ministerial meeting 12 (MC-12) of WTO, India and South Africa are collaborating for joint effort for review of E-transmission moratorium imposed by WTO.

What is E-transmission moratorium?

In 1998, WTO member countries agreed to temporarily keep custom duties, on electronic transmission of services such as e-books, music, and a variety of services, at zero.

• The moratorium dates back to 1998 when ministers at the Second Ministerial Conference adopted the Declaration on Global Electronic Commerce, calling for the establishment of a work programme on e-commerce, which was adopted later that year.
• The WTO Work Programme on electronic commerce defines electronic commerce” as the “production, distribution, marketing, sale or delivery of goods and services by electronic means.”

The moratorium is extended every year.

Issues with the moratorium

India and other developing countries fear that the moratorium imposed by WTO is hurting the sentiments of developing countries.

In March 2020, India and South Africa circulated a communication, outlining the implications the moratorium has on developing countries, including:

• Tariff revenue losses: According to a UN Conference on Trade and Development (UNCTAD), in 2017 alone, the potential tariff revenue loss to developing countries due to the moratorium was $10 billion.
• Impacts on industrialization
• Impacts on the use of digital technologies like 3D printing in manufacturing
• Losses of other duties and charges

The countries argue that the moratorium is “equivalent to developing countries giving the digitally advanced countries duty-free access to [their] markets.”

Way forward

The COVID-19 pandemic has revealed the importance of preserving policy space in trade agreements. In these times of crisis, it’s extremely important for developing countries to regulate their luxury imports of movies, music, and video games. Removal of the moratorium will provide this policy space to governments.