Global trade of electronic transmissions

The United Nations Conference on Trade and Development (UNCTAD) released a research paper titled, “Growing Trade in Electronic Transmissions: Implications for the South,” in February 2019. The paper aims to understand the impact of rising trade in digitizable products i.e. those products that are traded, both in physical form as well as online. These product categories include photographic films, cinematographic films, printed matter, music, media, software and video games. Since most of the countries in the South are net importers of electronic transmissions, the paper estimates its impacts and implications on the tariff revenues of the government.
 
Advancements within the fourth digital industrial revolution (3D revolution, Big Data analytics etc.) are expected to rapidly displace physical trade in the digital era, with severe implications for the existing trade flows and trade competitiveness of developing countries. For example, the current growth in investments in 3D printing will wipe out 40% of cross-border trade as 50% of manufactured products are expected to be printed by 2060.
 
Contextual history
 
In 1998, the WTO had adopted a Declaration on global electronic commerce, which included a two-year Moratorium on custom duties on electronic transmissions. Despite it being renewed multiple times since, certain issues remain unresolved: the (a) lack of clarity about the scope of the Moratorium, i.e., what is covered under electronic transmissions (b) technological feasibility of the Moratoriumi.e. can custom duties be applied to electronic transmissions; and (c) revenue implications of the Moratorium.
 
The constantly evolving technologies in the Industry Revolution 4.0 makes it difficult to limit the scope of electronic transmissions. Two decades later, the question about whether electronic transmissions should be treated as “goods”, “services” or “IP” remains unanswered.The classification of the electronic transmissions is crucial for determining the level of trade liberalisation.
 
The US would prefer those to be categorised under GATT as “products that are transmitted electronically,” while the EU claims they are comparable to services, which do not need physical support for trading, and hence, must be included under GATS. Others argue that electronic transmissions are neither “goods” nor “services” and must be protected under TRIPS, as “digital content” or intellectual property.
 
In the absence of any resolution on the nature of electronic transmissions, the WTO members agreed upon custom duties. However, there was a lack of clarity even here, regarding the exemption of custom duties for the “carrier” or whether it included the “content” i.e.whether the carrier of the software is exempted from custom duties like CDs or diskettes or the content like software or music is also exempted from custom duties. In its current form, the Moratorium applies to the transmission itself and not the value of the content.
 
What theUNCTAD paper says
 
Within this context, the paper discusses the prevalent debates in relation to the trade in electronic transmissions and implications of the Moratorium on the trade revenues of different countries. According to the paper, the potential per annum tariff revenue loss is much more for developing countries as compared to developed countries, which have very low bound custom duties on the digitizable products. Conversely, electronic transmissions can provide an important growing source of tariff revenue for the developing countries and LDCs.
 
Part 2 of the article will provide an overview of the implications of the global trade in electronic transmissions, as outlined in the paper.
 
India Outbound
May 20, 2019
 
 

source https://indiaoutbound.org/global-trade-of-electronic-transmissions/