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A new joint report released on December 7 examines the opportunities that digital trade offers to developing economies, and the challenges they face in this area. Entitled “Digital Trade for Development”, the report is a joint publication of the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and (UNCTAD), the World Bank and the World Trade Organization (WTO). The report explores specific policy issues, including the WTO moratorium on customs duties for electronic transmissions, regulation of cross-border data flows, competition policies and consumer protection.
Speaking on 7 December 2023, at a high-level ministerial roundtable on digital trade at UNCTAD eWeek, Deputy Director-General Johanna Hill said: “This report draws on the expert knowledge of each of the five international organizations to take stock of digital trade, its current state, and the opportunities available to policymakers to make it a more powerful engine of growth and development.”
The report indicates that cross-border services delivered digitally represent the fastest growing segment of international trade, in which new players are emerging. Since 2005, services delivered digitally have almost quadrupled in value, growing by 8.1% per year on average over the period 2005-2022. This growth exceeded that of merchandise exports (5.6%) and exports of other services (4.2%), to represent 54% of total services exports. With the emergence of new ways to gain comparative advantage, opportunities arise for new actors, including farmers and small businesses, to participate in global trade.
The report highlights the benefits that digital trade can bring to LDCs, women, MSMEs and youth, as well as the need to bridge the digital divide and strengthen the responsive capacities of developing economies to benefit from of digital commerce. According to the publication, there is a need to increase international financial and technical support to strengthen the capacity of developing economies to improve connectivity and skills, and international cooperation must be intensified to regulate trade-related areas. digital.
The report also indicates that WTO members’ current practice of not imposing customs duties on electronic transmissions — the “moratorium” — has only a limited impact on government revenue.
The report acknowledges that there are uncertainties about the scope of the moratorium and the definition of electronic transmissions, but states that current estimates indicate that the revenue that could be generated from the imposition of customs duties on electronic transmissions would range, on average, between 0.01% and 0.33% of total public revenues for developing economies, and that some economies would suffer larger losses.
The report also noted that while customs duties and value added taxes (VAT) are not mutually exclusive, recent data shows that for most economies, given current rate structures and with appropriate investment in the capacity of tax administrations, higher VAT revenues could be raised by imposing a tax on electronic transmissions rather than hypothetical customs duties. In addition, tariffs on electronic transmissions would reduce digital trade and associated benefits, and could also impact the competitiveness of businesses and their participation in trade, particularly micro, small and medium-sized enterprises and owned businesses. by women.
The report also highlights that global solutions are needed to address regulatory issues related to, for example, cross-border data flows, competition and consumer protection.
Global cooperation is also highlighted as necessary for small businesses, women, and young entrepreneurs and consumers in all economies to reap the benefits of digital commerce. “International organizations can support these efforts by strengthening their cooperation with governments and stakeholders, and by collaborating with each other, a path this report takes.”it is indicated.
E-commerce
The Declaration on Global Electronic Commerce, adopted at the Second Ministerial Conference in May 1998, called for the creation ofa work program which would examine all trade issues related to global electronic commerce. The Work Program was adopted by the General Council in September 1998, leading to regular discussions on electronic commerce in various WTO bodies since then.
Separate discussions are taking place in a group of WTO members under the Joint Initiative on Electronic Commerce. (Source: wto.org)