US-ABC Calls on the Renewal of the WTO Moratorium on Customs Duties on Electronic Transmissions
The US-ASEAN Business Council (US-ABC) fully supports the extension of the World Trade Organization (WTO) Moratorium on Customs Duties on Electronic Transmissions, and we suggest WTO members, which include all ASEAN Member States, examine a prohibition on these items. First agreed to in 1998, the Moratorium has never been made permanent and legally binding but has been renewed several times at the biennial WTO Ministerial Conferences. The current Moratorium will expire unless renewed at the 12th Ministerial Conference (MC12) in June 2022.
“The WTO e-commerce Moratorium plays a significant role in driving digital trade, job creation, and economic growth,” said US-ABC President & CEO Ambassador Ted Osius. “ASEAN’s MSMEs have come to rely on the moratorium as a key facilitator of global e-commerce and investment in a region where the internet economy is projected to grow to US$1 trillion by 2030.” The Moratorium also empowers e-commerce to bolster investments in innovation, job creation, and economic growth between ASEAN Member States while allowing ASEAN-based companies to expand globally.
The ability for electronic transmissions to move freely across borders also enables the implementation of more efficient trade facilitation measures. According to the OECD, burgeoning digital technologies such as distributed ledgers or blockchain, “have the potential to create novel ecosystems for trade; helping coordinate value chains by increasing trust and speed of transactions; empowering actors; enabling the verification of the provenance of products; facilitating the transfer of funds and helping better enforce or automate contracts (such as through smart contracts).” These enhanced trade facilitation measures will not be possible without duty-free movement of data across borders. Thus, failing to renew the Moratorium will leave a gap to experiment an application of damaging tariffs to cross-border data flows.
Furthermore, imposing customs duties presents a technological challenge for officials, given the need to harmonizing and implementing the specific amount and value of electronic transmissions. This will also create additional administrative and compliance burdens for MSMEs. A lift of the Moratorium will be destabilizing to a wide range of industries, including Industry 4.0 advanced/connected manufacturing, that rely on seamless and unimpeded flow of research, design, software, chemical formulations, manufacturing information, and other data which cross multiple borders daily. Tariffs on the electronic transmissions that help stimulate R&D threaten companies who depend upon technology and data transfers to generate innovations and collaborate with colleagues across borders.
US-ABC looks forward to continuing to work with ASEAN government stakeholders to help extend the Moratorium, including content transmitted electronically, and take steps toward a WTO prohibition. With such a large and rapidly growing e-commerce consumer base, ASEAN has an important voice for raising these concerns and helping to drive the conversation for protecting the e-commerce industry with a renewal of the Moratorium.