Around the world, countries keep benefiting from e-commerce and digital trade. Keeping a customs-free ethos drives domestic and transnational growth, fosters global integration, sparks innovation, narrows the digital divide, and creates employment opportunities. This is why GTIPA members support keeping the WTO moratorium on customs duties on electronic transmissions. Moreover, COVID-19 serves as a vivid example of the crucial role of e-commerce and digital trade. Electronic transactions have become a key driver in keeping the global economy afloat. If yesterday’s governments, businesses, and citizens had the option of conducting transactions offline, today it is a reality, a key for survival.
Keeping the free flow of digital transactions reinforces overall economic, social, and political stability. Across the spectrum, actors benefit from increased connectivity and expediency while saving on costs, resources, and bureaucratic procedures.
Online transactions help governments in various ways, including by expanding their net of services while improving time and efficiency, making information available to their constituents, reaching vulnerable communities, and modernizing governmental processes. On a wider perspective, electronic transactions also boost ICT infrastructure and the economic growth of countries. Recent studies estimate that digital commerce accounts for 15.5 percent of global GDP.298 Second, citizens gain access to a broader amount of goods and services at a fair price. Given the increased accessibility, firms compete for price and quality, thus benefiting consumers. It should also be noted that digital flows are how it’s possible to connect the unconnected, enhancing inclusive growth.
Finally, businesses—particularly MSMEs—can access untapped markets worldwide, increasing their revenue and resiliency. Accessing and operating in foreign markets is vital for the survival of MSMEs and local entrepreneurial ecosystems. Electronic transactions also facilitate knowledge and data sharing, enabling seamless, digitally integrated global supply chains. Moreover, firms are incentivized to innovate, unlocking more investment resources in both tangible and intangible assets.
Digital economic activity drives economic growth and activates a win-win scenario that maximizes the welfare of big and small players alike. Ensuring electronic transaction flows fosters certainty and predictability for all—an Indian mother using an online payment platform to pay for her son’s tuition in the UK, a Nigerian startup offering ICT services in Vietnam, or a local Argentinian municipality processing the paperwork of one of its ex-pats.
With all of this at stake, WTO members should renew the moratorium on customs duties on international electronic transmissions, and ideally make it permanent and binding. The temporary and ambivalent status of the suspension feeds into the uncertainty that affects the broader trade environment. Therefore, policymakers should acknowledge the palpable necessity and benefits of suspending duties on e-transactions by promoting policies directed to:
- Increasing connectivity, including ICT infrastructure and the adoption of emerging technologies.
- Investing in intangible assets, including R&D, high-skilled training, and intellectual property rights.
- Providing economic incentives for innovation.
- Elevating the digital services capacities among developed and developing countries.
- Promoting free trade globalization on the international stage.
Far from erecting barriers to trade and transactions, the international community should build bridges to enhance connectivity, economic stability, and survival. An open and tariff-free Internet leads to global economic growth as it makes trade more accessible, dynamic, and innovative.
To download the full report, please click here.
2020-gtipa-e-commerce