India to oppose continuation of moratorium on customs duties on e-com trade at WTO meet

India will strongly oppose continuation of moratorium on customs duties on e-commerce trade at the World Trade Organisation (WTO)’s meeting in Geneva next month as it was adversely impacting developing countries, an official said.

The official said that allowing the moratorium to lapse was important for developing nations to preserve policy space for their digital advancement, to regulate imports and generate revenue through customs duties.

The WTO members had agreed not to impose customs duties on electronic transmissions since 1998 and the moratorium has been periodically extended at successive ministerial conferences (MC), which is the highest decision making body of the 164-member organisation.

“At the 12th MC next month, many WTO members are seeking temporary extension of the moratorium till 13th MC but India does not want this time to continue this further. India will take a hard stand this time on the matter,” the official said.

India and South Africa on several occasions have asked the organisation to revisit the issue and have highlighted the adverse impact of the moratorium on developing countries.

In a joint communication submitted to the WTO earlier, both the countries had stated that all the issues on the e-commerce moratorium need to be revisited with ‘the utmost urgency and in its entirety’.

According to earlier communication from these two countries, the potential tariff revenue loss to developing countries is estimated at $10 billion annually.

India is witnessing an exponential rise in imports of electronic transmissions, mainly of items like movies, music, video games and printed matter, some of which could fall within the scope of the moratorium.

While the profits and revenues of digital players are rising steadily, the ability of governments to check these imports and generate additional tariff revenues is being ‘severely’ limited because of the moratorium on e-commerce.

The moratorium was extended at the 11th MC in Argentina in 2017 for two years. In the General Council meeting in December 2019, members agreed to maintain the current practice till the 12th Ministerial Conference.

Further, the official said India wanted the WTO to intensify the work programme on the e-commerce sector.

In 1998, the General Council of the WTO established the work programme on e-commerce to comprehensively examine all trade-related issues pertaining to global e-commerce by taking into account the economic, financial and development needs of emerging economies.

India has also stated that the Council for Trade in Goods, Council for Trade in Services, Council for TRIPS and Committee for Trade and Development should take up discussions on e-commerce as per their respective mandates originally set.

“We support re-invigorating the work under the 1998 work programme on e-commerce as per its mandate,” the official said, adding discussions had happened on the subject for last several years but there had been no conclusion yet.

The official said India believed that formal negotiations in the WTO on rules and disciplines in e-commerce would be premature given the highly asymmetrical nature of the existing global e-commerce space and lack of understanding on the implications of the multi-faceted dimensions of issues related to the sector.

“Developing countries need to preserve flexibility to implement policies to catch up with the developed countries in the digital arena. We first need to focus on improving domestic physical and digital infrastructure,” the official added.

India and South Africa have made a submission emphasising the need for re-invigorating work under the work plan.