Against the background of a growing push by several countries around the world for the reinstatement of customs duties for electronic transmission of digital products and services, a new report compiled by information technology gurus illustrates why this would be a ‘terrible mistake’.
The World Trade Organization (WTO) has since 1998 maintained a moratorium on these duties – but now, despite a strong consensus among economists and trade policy experts that countries around the world greatly benefit from duty-free digital trade, some countries have begun pushing for the moratorium to end.
The report has been compiled by the Information Technology and Innovation Foundation (ITIF) and the Global Trade and Innovation Policy Alliance (GTIPA), a worldwide network of independent think tanks that support trade liberalisation and integration.
The next renewal of the moratorium is set to be considered in the biennial WTO Ministerial Conference of 2020 - and the new report compiles evidence from a dozen countries and regions around world on the benefits of duty-free digital trade, which have only become more pronounced during the Covid-19 pandemic. According to the report, online commercial activity must remain duty free to drive domestic and transnational growth, foster global integration, spark innovation, and narrow the digital divide.
“Imposing barriers on electronic transactions would have serious repercussions for the global economy,” says Stephen Ezell, ITIF’s vice president for global innovation policy. “Countries impacted by digital levies would retaliate with tit-for-tat measures, which would undermine digital trade and e-commerce. By adding duties to the flow of information and digital goods and services, governments would only increase their own industries’ costs of accessing a wide array of technologies and data sources critical to growth and innovation, business operations, and the transfer of technology.”
The report analyses the benefits of free digital trade for Argentina, Colombia, Germany, Ghana, Greece, Italy, Jordan, Mexico, Poland, South Africa and the United States and concludes that ensuring global digital trade and e-commerce remains tariff-free is one part of a broader strategy needed for countries to build a growing digital economy. Other aspects include creating a robust digital payments system, cybersecurity protections, IP protection, data privacy, digital literacy and skills, ICT infrastructure and other elements.