WTO MC13: India for review of Customs duty pause on digital goods

India on Thursday called for a re-examination of the implications of the customs duties moratorium on electronic transmissions, particularly for developing countries and poor nations.

The issue came up for discussion at a session on e-commerce on the final day of the World Trade Organisation’s (WTO) 13th Ministerial Conference (MC13).

The four-day meet in Abu Dhabi was supposed to conclude with a ministerial declaration on Thursday, however, with a slight delay in building consensus, the declaration is expected post midnight.

India stressed that all policy options, including the imposition of customs duties on e-commerce trade, should be available for the WTO members, to promote digital industrialisation.

Currently, a few firms in developed countries dominate the global landscape of e-commerce and there is a huge digital chasm between the developed and the developing countries which makes it challenging to increase the participation of developing countries in global e-commerce, said an official statement.

“Developing countries need to focus on improving their domestic physical and digital infrastructure, creating supportive policy and regulatory frameworks, and developing digital capabilities. India’s own digital transformation is powered by its unshakeable belief in innovation and its commitment to speedy implementation,” it said.

Under a WTO moratorium, countries do not impose customs duties on cross-border e-commerce transactions. Since 1998, WTO member nations have periodically agreed to extend the moratorium. The last extension was agreed upon during the previous MC in June 2022. The moratorium is set to lapse at MC13, unless a decision is taken to extend it.

WTO member nations have been divided on the issue. Developing countries, including India, have been battling for policy space to impose customs duties on electronic transmissions, holding that the moratorium has adversely impacted their revenue collections.

On the other hand, developed countries such as the UK, Canada, the European Union and Australia do not want the imposition of customs duties on electronic transmissions until the next MC. Most developed countries believe that the exemption of customs duties has supported a “stable and predictable environment” for digital trade to thrive.

Over the last few years, New Delhi has been pointing out that the digital revolution is still unfolding and the advent of artificial intelligence, data analytics and 3-D printing technology will make customs duties on products irrelevant as products that are now delivered through offline mode could be easily transferred electronically.

Late last week, in a submission at the WTO, Indonesia and South Africa explicitly suggested terminating the moratorium on the imposition of customs duties on electronic transmissions.

However, in its submission, India called for ‘periodic reviews’ based on the reports to be submitted by the WTO bodies entrusted and report to the next session of the Ministerial Conference.