India for digital public infra, fair competition at WTO

New Delhi India wants three key issues on e-commerce to be included at the World Trade Organisation’s deliberations – using digital public infrastructure (DPI) for development, disciplining unfair competition and consumer protection – while it may oppose a move by wealthy nations to perpetuate duty-free online trade by further extending a moratorium on customs duty on electronically transmitted products, two people aware of the development said.

India has also highlighted the need to deliberate on the development impact of nearly $860 billion in remittances and use of DPI for cost-effective, cross-border payments and money transmission, they said, requesting anonymity.

India wants the world, particularly the developing and least developed countries (LDCs), to gain from technological advancements such as DPI, and it wants WTO members to deliberate on this matter at the thirteenth ministerial (MC13), they said. The four-day meeting of WTO ministerial conference (MC) started in Abu Dhabi on Monday. MC is the highest decision-making body of the multilateral institution.

“DPI can be foundation for e-commerce in developing countries and LDCs. Similarly, the world trade must factor in rising unfair practices by influential e-commerce entities and protect customers from their dominance,” one of them said. India is a pioneer of using DPI for direct transfer of subsidies to bank accounts and its indigenously developed online payment system is gaining international traction.

In a communication to the WTO on January 23, India expressed concern over the “deep digital divide afflicting developing and least developed countries”, pointed at the “uneven spread” of global e-commerce and “inequitable gains” arising from the digital economy, and sought members’ attention to address these issues.

“India along with other developing countries such as South Africa and Indonesia are against a further extension of customs duty moratorium on e-commerce, which is a ploy of developed countries like the US and the European Union to gain duty-free access to markets, largely developing countries and LDCs,” a second person said. WTO members have been extending this moratorium since 1998. The last time they agreed to extend it further was at MC12 held in Geneva in June 2022 until the MC13 or March 31, 2024, whichever was earlier.

The proponents of the moratorium say the standstill on customs duties has supported a “stable and predictable” environment for digital trade, allowing it to thrive, according to the Digital Trade for Development report prepared jointly by the International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations Conference on Trade and Development, World Bank and WTO.

“They also contend that the moratorium delivers benefits by reducing trade costs for digitalized products subject to duties if traded offline, increasing consumer welfare, and extending access to foreign digital inputs that are key for export competitiveness,” the report said. “It contributes to giving confidence to business to invest and create jobs by signalling that WTO members intend to maintain the status quo regarding the application of customs duties to electronic transmissions.”

India and like-minded countries are, however, perturbed about the justification, the two persons said. The proponents are mainly developed countries. There is no consensus on the scope of moratorium. Customs duties are levied on only goods and not services, they said.

But there are many goods that have been digitised due to the advancement of technology, such as e-books, music or movies. They are now being traded across the border through e-commerce instead of shipped in physical form. Such digital trade must be treated as goods and attract customs duty, they said.

“Developing countries and LDCs are importers of these digitised products and developed countries are exporters, who get duty-free access to these markets through this moratorium,” the second person said. It has two serious repercussions. First, you cannot give duty protection to your own industry, and second, huge revenue loss.”