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India and South Africa have started bringing pressure on the World Trade Organisation (WTO) ahead of the 12th ministerial meeting (MC-12) scheduled to begin on 30 November, urging it to review a moratorium on imposition of customs duty on electronic transmissions so that developing countries can generate more revenues.

“During the coming few months before MC-12, we need to engage constructively on various issues under the (e-commerce) work programme. We also need to have a clear understanding on the scope of moratorium, to enable us make an informed decision on extension or otherwise of the moratorium in the upcoming Ministerial Conference. As we have been repeatedly highlighting, a re-consideration of the moratorium is critical for developing countries, inter alia, to preserve policy space to regulate imports, generate revenue through a simple and direct instrument such as customs duties and achieve digital industrialization," India said at the General Council meeting of the WTO last week.

In 1998, WTO members agreed to temporarily keep customs duties on electronic downloads at zero and this has been reviewed and extended every year since then. Developing countries, including India, fear that with the advent of artificial intelligence and 3-D printing technology, products that are now delivered through offline modes could be easily transferred electronically. This will make customs duties on such products irrelevant.

In December 2019, India and South Africa joined the consensus for a six-month extension of the moratorium, with an understanding that the work programme on e-commerce at the WTO will be reinvigorated. The idea was to achieve clarity on various issues, including the scope of the moratorium and its impact on members’ policy space and revenues.

Since then due to repeated postponements of the 12th ministerial conference, the moratorium has got extended by about two years and no progress has been made on the work programme on e-commerce.

India said the cost of the moratorium is mainly borne by developing countries for extending ‘duty free quota free’ market access, largely to developed countries. “Some members have opined that the moratorium has brought about significant benefits in terms of increasing digitalization and development of the digital economy. We request the proponents of the moratorium to provide specific evidence that the development of this sector depends on the moratorium and that its withdrawal will disrupt it," India said.

During the Buenos Aires Ministerial of WTO in December 2017, 71 members led by China, Japan and the US started work toward future WTO negotiations on trade-related aspects of electronic commerce which has made substantial progress in recent days. India and South Africa have opposed the proposed plurilateral negotiations holding that it goes against WTO principles of consensus-based decision making.

India said while digital infrastructure has played a critical role during the ongoing pandemic, it has also brought out clearly the widening digital divide among members.

“Moreover, many of us are yet to fully comprehend implications of e-commerce on competition and market structures; issues related to transfer of technology; data storage; automation and its impact on traditional jobs; and gaps in e-commerce policy and regulating frameworks in developing countries including LDCs (least developed countries). That is why, India has been a proponent of strengthening our multilateral work," it added.

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