India will strongly oppose the continuation of freezing tariffs on e-commerce at the World Trade Organization meeting in Geneva next month as it negatively affects developing countries, an official said.
Allowing deferrals to be cleared is important for developing countries to maintain policy space for their digital advancement, regulating imports and generating revenue through tariffs, the official said.
Members of the World Trade Organization (WTO) have agreed not to impose tariffs on electronic transmissions since 1998 and the moratorium has been periodically extended at successive Ministerial Conferences (MC), the highest decision-making body of the 164-member body.
The official said, “At the 12th session of the MC next month, many WTO members are seeking a temporary extension of the suspension until the 13th MC but this time India does not want to continue with this matter. This time India will take a tough stance on the matter.”
India and South Africa have on several occasions asked the organization to reconsider the issue and have highlighted the negative impact of the moratorium on developing countries.
In a joint communication submitted to the World Trade Organization earlier, both countries stated that all issues related to moratoriums on electronic commerce need to be reviewed urgently and in their entirety.
According to a previous letter to these two countries, the potential tariff revenue loss for developing countries is estimated at $10 billion (approximately Rs 77,572 crore) annually.
India is witnessing a huge rise in imports of electronic transmissions, especially of items such as films, music, video games and printed materials, some of which may fall within the scope of the moratorium.
While the profits and revenues of digital companies are steadily rising, the ability of governments to check these imports and generate additional customs revenue is severely limited by the moratorium on e-commerce.
The moratorium on MC 11 in Argentina was extended in 2017 for two years. At the General Council meeting in December 2019, members agreed to maintain the current practice until the Twelfth Ministerial Conference.
Moreover, the official said that India wants the WTO to intensify the work program in the e-commerce sector.
In 1998, the General Council of the World Trade Organization established a Program of Action on Electronic Commerce to conduct a comprehensive study of all trade-related issues related to global electronic commerce by taking into account the economic, financial and development needs of emerging economies.
India also stated that the Council for Trade in Goods, the Council for Trade in Services, the TRIPS Council and the Trade and Development Commission should initiate discussions on e-commerce in accordance with their already established mandates.
“We support the revitalization of work under the 1998 Work Program on E-Commerce in accordance with its mandate,” the official said, adding that discussions on the matter have taken place over the past several years but no result has yet been reached.
India believes that formal negotiations at the World Trade Organization on rules and controls in e-commerce would be premature given the highly asymmetric nature of the current global e-commerce space and a lack of understanding of the implications of the multifaceted dimensions of issues relating to the sector.
“Developing countries need to maintain flexibility to implement policies to catch up with developed countries in the digital arena. We first need to focus on improving the local physical and digital infrastructure,” the official added.
India and South Africa made a presentation emphasizing the need to revitalize work under the Action Plan.