NEW DELHI: India will oppose extension of moratorium on customs duties on cross-border e-commerce beyond 2024 and an attempt by a China-led group to bring in investment facilitation agreement within the World Trade Organisation (WTO) framework during the 13th ministerial conference of the global trade regulating body in Abu Dhabi this month-end, a senior official said Tuesday.
The moratorium on customs duty on e-commerce has been in place since 1998 and has seen many two-year extensions since then. India will be seeking an end to it to get back the power to tax electronic transmissions in the conference that will be held from February 26-29.
While there is no bar on taxing cross-border flow of goods through e-commerce, issues have cropped up as digitisation has resulted in many goods like books or movies being delivered digitally, escaping the tax net.
According to a study by the United Nations Conference on Trade and Development (UNCTAD) based on 2017 data loss through the moratorium amounts to $10 billion annually, primarily to developing countries as they are the largest consumers. Losses to India estimated by UNCTAD for 2017 stood at $0.5 billion. Since then digitisation has grown manifold and losses would be much higher in 2024.
Apart from revenue, India wants the power to tax electronic transmissions to give protection to its nascent industry, a senior official said.
He said earlier music, gaming consoles, movies or books would be imported in physical form but now they are delivered digitally so India will also seek clarity on what counts for services and what constitutes goods in electronic transmissions.
The official clarified that while streaming services like Netflix or some music apps are providing services because they are not selling the movie or music but if they allow downloads for a fee then it becomes a product. Similar clarity is needed in other such transactions which will be asked for as the line between digital product and services is very thin. Along with India, South Africa, Argentina and Indonesia are among countries opposing the moratorium.
India will, however, work for reinvigoration of the work programme on e-commerce which aims to examine trade-related issues associated with e-commerce. These include the protection of privacy and public morals and prevention of fraud, access to and use of public telecommunications transport networks and services, rules of origin, increasing the participation of developing countries in the e-commerce marketplace, protection and enforcement of copyright and trademarks, and enhancing the participation of developing countries and their small and medium-sized enterprises (SMEs)
India will also oppose the move to the China-led group of 130 countries to make their agreement “Investment Facilitation for Development;’ in WTO. While all decisions at WTO are on consensus basis, it also allows countries to form a group and have agreements among themselves. To bring it into the WTO even the members who are out of it agree to. These are part of Annex 4 of the WTO agreement that deal with Plurilateral Trade Agreements.
This pact was first mooted in 2017 by China and other countries who depend heavily on Chinese investments, Foreign Direct Investment exporters and countries with Sovereign Wealth Funds are party to that pact.
They want this pact to be part of WTO so that they can have access to the dispute resolution mechanism of the multilateral body.
The focus of the IFD Initiative is not on changing Members’ investment policies in substance, but on making such investment policies more transparent and investment related administrative procedures more streamlined and efficient. Because it can lead to questioning of investment-related decisions of the government like channelling of investment to identified geographies or investor countries, India has decided to stay out of it.
Among major countries, the US is also sitting out of the agreement. Even India’s neighbours like Sri Lanka and Pakistan are not part of it. Another objection India has is that investment issues should not be part of the trade body.
Source: The Financial Express
