Competitive markets

ICC welcomes renewal of WTO e-commerce moratorium

  • 10 December 2019

ICC has welcomed the decision taken today by members of the World Trade Organization to renew the longstanding global prohibition on applying customs duties to cross-border data flows.

Known as the “WTO e-commerce moratorium”, the agreement – first established in 1998 – has played an important role in the development of the Internet by keeping tariffs off digitally delivered products, services and content. In recent months ICC has warned that a failure to renew this deal would not only add to a damaging pattern of escalating tariffs, but could also wreak potential havoc in the online economy.

Commenting on today’s decision by the WTO General Council, ICC Secretary General John W.H. Denton AO said:

“We welcome the pragmatic approach taken by member states to renew the moratorium through to the WTO’s next ministerial conference in June 2020. The potential for tariffs to break the global Internet as we know it today is real… The concept of applying bureaucratic customs checks and duties to the millions of bits of data crossing national borders every minute just doesn’t fit with how the digital economy functions in the real world.

“Today’s decision clearly shows the continued value of the WTO as a forum for multilateral trade policy making. Understandable questions about the taxation of digital products and services cannot – and should not – be resolved by introducing a new frontier for tariff wars. The importance of retaining a global consensus on this agenda cannot be overstated. We stand ready to work with WTO members to advance discussions on why it makes plain sense – for business, consumers and governments – to make the moratorium permanent in the months ahead.”

Addressing one of the core areas of focus in this week’s WTO General Council meeting, ICC has expressed disappointment at the long-anticipated shutdown of the WTO’s Appellate Body but urged pragmatism from governments in maintaining the effective functioning of the multilateral trading system.

Mr Denton added:

“The shutdown of the Appellate Body is, without doubt, a blow – but we shouldn’t slip into exaggerated claims about the imminent death of the WTO. The impasse over the appointment of appellate judges must be viewed in a broader context: WTO committees will continue the essential daily work of resolving trade frictions, while new rule making – in areas such as services, investment and e-commerce – is advancing at a rate not seen for over a decade. The glass is half full if you look beyond the headlines.

“That said, it’s vital that governments adopt a pragmatic approach to resolving trade disputes while the Appellate Body remains in limbo. In the short term, that means eschewing tit-for-tat retaliation and pursuing alternative means of settling disputes under WTO rules – including through binding arbitration.

“More broadly, there’s no doubt that the WTO’s dispute settlement system is ripe for reform drawing on lessons learned from the past two decades. The issues are well-known; the options for renewal are clear. The message from business is simple: get back to the table and hammer out a revised appellate function that works for everyone.”