As governments gather in Cameroon this week for the World Trade Organization’s (WTO) 14th Ministerial Conference on March 26-29, they have an opportunity to cement a longstanding and critically important pillar of the international trade system: rendering permanent the WTO Moratorium on Customs Duties on Electronic Transmissions.
Since its inception in 1998, the Moratorium has underpinned global trade by ensuring that data, software, and digitally delivered products can move across borders without being subject to tariffs or customs processes. The predictable and frictionless treatment of electronic transmissions has fueled innovation, investment, and collaboration around the world while expanding access to digital tools for consumers and companies of all sizes. Absent the Moratorium’s support for a duty-free digital environment, many technological advancements and economic opportunities driving the 21st century economy would have been much harder – if not impossible – to realize.
In addition to facilitating a boom in digitally delivered services, the Moratorium has also strengthened supply chain resilience across sectors, from semiconductors and consumer electronics to automotive manufacturing. It has simultaneously expanded opportunities for micro, small, and medium-sized enterprises (MSMEs) and contributed to their competitiveness. These “born global” firms can often take advantage of new markets from day one, all thanks to internet-based business models, reliance on digital tools and technologies, and access to international data, platforms, and customers. A 2021 of MSMEs in Indonesia found that the use of digital goods and services caused MSMEs’ revenues and profits to increase by an average of over 20% per month, due to both an increase in consumer base and product variations and a decrease in costs associated with marketing, delivery, and logistics.
Support for the Moratorium comes from a broad and diverse coalition of industries and geographies: more than 200 civil society and industry organizations from Africa, Asia, the Americas, Europe, the Middle East, and Oceania joined a in support of continuing the Moratorium ahead of the WTO’s 13th Ministerial Conference in 2024. Their position recognizes that establishing barriers to cross-border would do more harm than good: a 2023 by the IMF, OECD, UNCTAD, and WTO found that imposing duties on electronic transmissions “would likely negatively affect those who can benefit most from digital delivery or from the use of digital tools to trade, namely MSMEs and women-owned traders.” Jurisdictions such as India, which has seen an explosion in its share of global digital exports in recent decades and for which 60% of all services exports are digital, would be particularly vulnerable if the Moratorium were to lapse.
The evidence is clear: the Moratorium is a key digital trade enabler that benefits every person and company that buys, sells, or interacts with cross-border goods and services. Given the Moratorium’s broad economic benefits, WTO Members should seize the opportunity to secure a win for innovation and competitiveness and make this cornerstone of the international trade environment permanent.