NEW DELHI: India has proposed that the World Trade Organisation (WTO) clearly define what constitutes goods and services in relation to cross-border electronic transmissions such as content streaming.
The suggestion, made by senior Indian officials at a meeting of WTO member countries in Geneva last week, is aimed reaching a multilateral agreement to put import duties on at least the “goods” component of such cross-border trade, a senior official said on the condition of anonymity.
“Now goods and services are embedded. Then there is a definitional problem. For example, when a streaming platform like Netflix is showing a film in India, the film is a product but the membership that Netflix is taking to show it is a service. So it is very difficult to make that distinction between goods and services,” the official added.
Even outside the WTO, the services trade is not subject to customs duty by any of the major economies.
As electronic transmissions, like streaming of entertainment content and use of social media platforms, grow exponentially, the developing countries led by India, Indonesia and South Africa want the moratorium on taxation that was agreed to at WTO in 1998 to be withdrawn. The moratorium is not permanent and is extended at every Ministerial Conference of the WTO that is held with a gap of two years.
India will again oppose the extension of the moratorium at the 13th Ministers Conference of the WTO at Abu Dhabi in February 2024.
The members who have expressed reservations about a further extension or a permanent moratorium are concerned about the revenue foregone as digital trade continues to grow.
According to estimates, the global streaming market is expected to grow to $330 billion by 2025 from $174 billion in 2020. The global social media market is expected to reach $124 billion by 2025, up from $94 billion in 2020.
In a computer software or an entertainment product stored on a hardware like a computer disk there is a clarity on what is a product and what is a service. An understanding is required among the WTO members what is a product and what is a service when an entertainment platform streams content to consumers all over the world or a social media platform that has users all over, the official added.
In parallel, the WTO is working with other international organizations – United Nations Conference on Trade and Development, the International Monetary Fund, the Organisation for Economic Cooperation and Development and the World Bank – to gather evidence from all sides to inform the discussions.
Source: The Financial Express