Home Business News Warnings over risks to cross border digital trade if agreement not reached this week

Warnings over risks to cross border digital trade if agreement not reached this week

by Amy Johnson LLB Finance Reporter
27th Feb 24 11:40 am

The World Trade Organization’s 13th Ministerial Conference (MC13) is taking place this week in Abu Dhabi, United Arab Emirates.

Ministers from across the world will attend to review the functioning of the multilateral trading system and to take action on the future work of the WTO.

One of the major topics for discussion is the moratorium on customs duties for electronic transmissions, which is set to expire on March 31st, 2024, after MC13, if an agreement on extending it is not reached. This could mean imposing tariffs on cross-border digital transmissions for the first time since 1998.

Marco Forgione, Director General of The Institute of Export & International Trade and Chairman of the UK’s E-Commerce Trade Commission, highlighted the importance of the moratorium in facilitating cross border trade.

Fogione said, The moratorium is an agreement that nations won’t charge tariffs or tax on the cross-border transfer of data or information. It has been in place for a number of years, but it’s due to expire at the end of March if an agreement is not reached by the conclusion of this ministerial conference.

“There’s a lot of concern that some of the larger developing nations are not going to agree to the moratorium continuing, which would then create an unstable and uncertain future with regards to how trade, particularly services but also digital e-commerce, can take place across borders.

“The last time that tariffs and tax was applied to cross border trade was in 1998 and the digital landscape is unrecognisable from then. To put this into perspective, the moratorium expiring would impact any sharing of data across borders, for example social media apps which allow for the transfer of data.

“It could also be very damaging for manufacturers, engineers and architects sharing technical drawings across the internet, as this is classed as a transfer of data across borders. It will significantly impact not just consumer life but also business-to-business trade.

“There are a number of nations, such as India, Indonesia and South Africa that feel the moratorium will negatively impact their home-grown technology companies compared to those in more advanced nations.

“They feel this moratorium penalises their businesses and their tech sector. But the OECD has done a piece of research shows that if the moratorium were to cease, lesser developed countries in particular would see their imports reduced by about 35% and their exports by about 3%.

“The moratorium is a really fundamental part of the global trading system. But more importantly, with the growing digitalisation of international trade, it will become even more important in the years ahead.

“There is a growing pressure on the global supply chain and global trading environment and consumer demand for even greater digitalisation and greater use of tech-based solutions for a whole host of consumer business and personal uses.

“Continuing this moratorium is essential. As the chair of the UK’s E-commerce Trade Commission, I call on all parties to reach agreement on this. I will be pushing hard to ensure these provisions stay in place and that businesses and consumers across the world can benefit from cross border trade.”

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