The rapid spread of ecommerce across the world is forcing governments to adopt more coherent policies on how—and when—to tax digital transactions. On April 29, experts gathered at World Trade Organization headquarters in Geneva to discuss the current moratorium on customs duties for electronic transmissions. (Since 1998, the WTO has established a work programme “to examine all trade-related issues relating to global electronic commerce, including those issues identified by Members”.
A particularly interesting topic during the April 29 workshop was the discussion on the broader impact of the moratorium on trade and development.Does not taxing e-commerce support or impede development? Who wins and who loses from the moratorium? Should it be continued or lifted by the end of 2019, as some have proposed? At the WTO workshop, economist Rashmi Banga of UNCTAD, for example, argued that the moratorium particularly harms the ability of governments in developing countries to raise tariff revenue. Because developing countries are net importers of digital products, noted Dr. Banga, they stand to lose, by her conservative estimate, 95% of the USD 10 billion in projected annual tariff revenue that would otherwise be collected.
Similar questions were explored at last month’s UNCTAD e-commerce week, “From Digitalization to Development”, where the Virtual Institute had the opportunity to interview Dr. Banga and other distinguished speakers. Highlights below:
UNCTAD’s Banga offered a helpful primer on e-commerce:
What is a “digital revolution”?
What is “a platform”?
Why should developing countries care about “digital economies”?
How can developing countries protect their citizens from digital monopolies?
Abhijit Das, head of the Centre for WTO Studies, explained some of the key e-commerce issues that are now being debated at the WTO.
He offered suggestions on how developing countries could benefit more from e-commerce and his views on the moratorium.
Deborah James, director of international programs at the Center for Economic and Policy Research, expressed similar scepticism that the current regulation of e-commerce is benefiting developing countries
and proposed ways to improve the situation
Shailendra Singh, a leading figure behind India’s current draft legislation on e-commerce, discussed how the proposed law aims to correct flaws in India’s regulation of e-commerce.
As well as the importance of electronic data for developing countries
A final note…
UNCTAD’s Trade and Development Report 2018, released last September, warned that the potential benefits to developing countries of digital technologies risk being crowded out by the rent-seeking of digital monopolies. The report urged action to prevent anticompetitive behaviour by digital platforms, as well as their potential misuse of data—policies that would prioritize things such as data localization, management of data flows, technology transfers, and custom duties on electronic transmissions. At a time when the international policy community was only just awaking to such dangers, UNCTAD’s flagship report was well ahead of the curve.