India, SA ask WTO to review moratorium on e-commerce customs duties

In a joint communication submitted to the WTO on Tuesday, both the countries have stated that the “General Council needs to revisit” all the issues on the e-commerce moratorium

India and South Africa have asked the World Trade Organization (WTO) to revisit the issues related with moratorium on customs duties on e-commerce trade, which is expiring in December this year.

In a joint communication submitted to the WTO on Tuesday, both the countries have stated that the “General Council needs to revisit” all the issues on the e-commerce moratorium with the “utmost urgency and in its entirety”.

According to industry experts, India wants an end to the moratorium and imposition of import duties to protect domestic industry and revenue.

Since 1998, the moratorium is being extended time and again for two years.

The communication said the potential tariff revenue loss to developing countries is estimated at $10 billion.

It said the moratorium will negatively impact the efforts of many developing countries, which are laggards as far as digital industrialisation is concerned, to industrialise digitally.

It could also undermine existing industries and tariffs play an important role in protecting infant domestic industries from more established overseas competitors until they have attained competitiveness and economies of scale.

“Customs duty-free imports of digital products may also hinder the growth of the infant digital industry in developing countries,” the communication said.

It said that with no customs duties on the imports of software, data and computer aided design or CAD files, which are the core resource for 3D printing and which will increasingly be used in almost all manufacturing industries, the dependence of manufacturing sectors in developing countries from the developed nations will considerably increase.

This will also negatively impact digital industrialisation, local employment creation and erode trade competitiveness of small and medium enterprises (SMEs) in developing countries, it added.

“The objectives included examination afresh of the impact of the moratorium, given that the realities prevailing in 1998, when WTO members agreed for the first time, to the temporary moratorium on customs duties on electronic transmissions, have changed significantly,” it said.

It added that digital trade has acquired dimensions that were then unimaginable.

“The impact of the moratorium needs to be understood from the revenue point of view and, from a development perspective, we need to analyse how the moratorium is impacting the efforts of developing countries and LDCs (least developed countries) to industrialise digitally and otherwise,” it said.

It said countries also need to understand the ruinous impact of digitisation on SMEs in developing countries and LDCs.