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TWN
Info Service on WTO and Trade Issues (Apr26/07) Geneva, 9 Apr (D. Ravi Kanth) — Turkiye has clarified its stance on the moratorium on customs duties on electronic transmissions, following the conclusion of the World Trade Organization’s 14th Ministerial Conference (MC14) in Yaounde, Cameroon, on 30 March, calling for a clear definition of what constitutes electronic transmissions, along with agreed parameters on the scope and duration of the moratorium. Alongside Brazil, Turkiye rejected a four-year extension of the moratorium demanded by the United States, arguing that it breaks from the established practice of renewing the moratorium every two years. Participants, who spoke on condition of anonymity, said that this issue has been linked to the extension of the moratorium on TRIPS non-violation and situation complaints – which the US was willing to accept at MC14. Despite persistent US criticism of both Brazil and Turkiye over their position, Ankara stated that it has consistently “maintained a constructive approach with regard to the e-commerce moratorium since its introduction in 1998, refrained from opposing its extension for successive two-year periods at all previous Ministerial Conferences.” In its proposal (WT/GC/284) circulated on 7 April, Turkiye said it “agreed to the extension of the moratorium on electronic transmissions for a further two-year period at MC14 as well.” “Moreover, as a compromise aimed at a mutually acceptable solution, Turkiye also accepted the extension of the moratorium for a longer period, provided that its scope and definition are clarified,” it said. It added that its “stated expectation was nothing more than maintaining its rights and obligations under the General Agreement on Trade in Services (GATS).” “In this context,” Ankara said that it “stands ready to outline the basis for a meaningful and forward-looking discussion on the possible extension of the moratorium in the period ahead.” Strikingly, despite what many deemed as an unmitigated disaster at MC14, Turkiye said it “sees the WTO MC14 as a success for having enabled frank discussions between the Members on key issues of the global trade and showed once again the critical importance of the WTO reform process.” Ankara concurred with the MC14 chair’s summary, stating that “the Members demonstrated unity in setting a clear and forward-looking direction for the reform of the organization.” It said that Turkiye, “as a staunch supporter of the WTO and its reform, participated in the 14th Ministerial Conference with a constructive mindset.” At the conference’s opening session, Turkiye’s trade minister, Dr. Omer Bolat, “made it clear that Turkiye regards the WTO as a platform for all to secure fair access and maintain certainty in the global economic order.” In the same speech, he declared that “Turkiye lifted its objection to the incorporation of the Investment Facilitation for Development (IFD) Agreement into the WTO framework.” Notwithstanding its long-standing concerns and reservations about the IFDA, Turkiye said it “made this decision in order to bolster the WTO and support the development needs of the wider membership, especially the African continent.” According to Turkiye, “MC14 was an opportunity for the entire membership to deliver an outcome on the WTO reform agenda and revitalizing the WTO Dispute Settlement Mechanism that has remained paralyzed for many years.” It was of the view that “the reform process should move forward without any condition, and among others, Turkiye also participated in e-commerce discussions during the Conference in a constructive manner.” In short, the time has come for countries to “start preparing to apply customs duties [on electronic transmissions],” said a digital trade expert who requested anonymity. Citing a recent paper, titled “Provisions on importation of electronically transmitted digital goods study case: Indonesia”, by Achmad Hidayat and Gilang Rizki Pamutra – two Indonesian revenue officials – the expert argued that lessons must be learned on how to collect customs revenues on electronic transmissions. The two officials stressed that “the need for comprehensive international trade regulations, ensuring fairness and inclusivity in this digital trade has become paramount” in a world increasingly reliant on e-commerce. In 1998, the World Trade Organization introduced a moratorium on customs duties for electronic transmissions, signaling a commitment to a tariff-free environment for digital commerce, they said. “However, this decision has sparked extensive debates among WTO members, particularly concerning the definition and scope of electronically transmitted content,” the two officials argued. In their study, the officials delved into Indonesia’s “provision for imposing customs duties on digital goods transmitted electronically, offering insights into its policy background, legal framework, and implementation procedures.” Using descriptive qualitative research methods, the two officials said they attempted “to provide a holistic understanding of Indonesia’s customs duties provision for digital imports through electronic transmission.” Their joint study “captures the nuances of this policy by presenting real-world data, observations, and interviews with stakeholders.” To recall, the Indonesian government regulated the importation of digital goods through electronic transmission with the issuance of MoF Regulation Number 190 Year 2022 regarding Import Provisions for Home Use. The authors said “the provisions include three main points: exclusion from some provisions of importation of tangible goods, a minimum requirement of filled-in element data in customs import declaration, and a monitoring and submission mechanism.” In conclusion, the provisions of digital goods importation that Indonesia has implemented accommodate usefulness and ease for importers in declaring import declarations. As a result, the writers maintained, there has been a significant increase in the number of import declaration documents for digital goods since the regulation’s implementation in January 2023. The joint study suggested that apart from the benefits brought by growth of e-commerce, the moratorium may have significant positive effects on the global economy. However, the substantial effects on some countries – particularly developing and least developed countries – must also be considered. For instance, since most business sectors in developing nations are small and medium enterprises (SMEs), domestic retailers in those countries scarcely profit from the tax and tariff-free program for electronic transmission, said the writers. “Moreover, (Rashmi) Banga (2022) has predicted that the online worldwide imports of digitizable goods via electronic transmission will rise from USD 204 billion in 2020 to USD 365 billion in 2025, a rise of 79%, using the 8% Average Annual Conservative Growth Rate (ACGR) of online imports of 49 HS code of digitizable goods,” the writers said. In short, “Imports of digitizable commodities have been rising rapidly, which may signify that physical import trade is shifting to digital trade through electronic transmission.” Some countries have expressed opinions on the moratorium in response to this shifting phenomenon, questioning whether it should continue and arguing that specific measures are required to regulate imports of digitally transmitted goods (South Africa & India, 2020), said the study. For example, Indonesia enacted provisions on administering customs duties for digital goods for several reasons: recording statistical data, creating a level playing field, encouraging local SMEs, providing business certainty, and assessing digital goods risks, it added. In conclusion, people familiar with the development said that developing countries – including India, which appears to have come under undue pressure at MC14 to agree to a four-year moratorium – must reconsider whether the Global South should adopt a common position to start imposing customs duties on electronic transmissions, especially given that their revenue situation is in dire straits following damage to the world economy caused by the recent war launched by the US and Israel against Iran. +
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