WTO impasse may lead to duties on digital downloads, streaming; impact big tech cos

Despite the 14th Ministerial Conference (MC-14) of the World Trade Organisation (WTO) stretching into an unscheduled 5th day on 30th March in Cameroon, several contentious issues remained unresolved due to lack of consensus between member countries.

With the existing moratoriums on electronic transmissions and TRIPS non-violation slated to expire on 31st March, the impasse at the WTO may lead to levy of duties on digital downloads and streaming.

Brazil had opposed the extension of waiver on duties on electronic transmissions, while several developed nations had sought long-term waivers, with the US seeking a 5 years-long waiver.

Estimates suggest a potential annual tariff revenue loss of $10 billion for developing countries, and over $500 million for India due to the moratorium which was in place since 1998. While member countries agreed to continue the talks on unresolved issues at the WTO headquarters in Geneva, a lack of extension will mean the possibility of levy of duties electronic transmissions after 28 years of waiver.

Since May 1998, WTO members have been agreeing biennially to not impose customs duties on electronic transmissions, with the moratorium being extended every 2 years until the recently concluded MC-14.

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WTO's work programme defines e-commerce as the production, distribution, marketing, sale or delivery of goods and services by electronic means. Noting that problems have arisen due to many goods getting digitised, India had indicated that the scope of the moratorium needs to factor in those physical goods which have been digitised over the course of time, with streaming services replacing CDs or DVDs and e-books replacing physical books at places.

Having already placed papers inviting further discussions on subjects like consumer protection, digital public infrastructure, and competition; government sources had stressed on the need to promote competition in the field of e-commerce.

GTRI Founder Ajay Shrivastava said that the lapse in waiver of duties will open doors for countries to impose tariffs on digital transmissions, adding that most gains from such duty waivers benefit top US tech companies, including Google and Meta.

As profits and revenues of players in the digital transmission space continued to rise, the moratorium hindered the possibility for developing countries to generate additional tariff revenue by regulating such imports.

At the last WTO Ministerial MC-13 in Abu Dhabi, India had sought discussions to continue on the scope and objective of the e-commerce moratorium. While the United States had backed extension of the moratorium, several developed and developing countries stood pitted against each other on the issue.

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An Indian government official had said: "We are not in favour of extension. We are in favour of continuation of the work programme. There is a need to look at the subject from a development dimension and not from the eyes of big tech companies", "there is a need to discuss the scope of the moratorium as there are revenue implications because of it," and "there is a need for a clear definition of e-commerce trade. We need policy space for the sector."