The Importance of E-commerce, Digital Trade, and Maintaining the WTO E-commerce Customs Duty Moratorium
This report shows GTIPA members’ perspectives on e-commerce and digital trade in light of negotiations on new rules World Trade Organization (WTO) member nations are deliberating regarding the moratorium on cross-border electronic transmissions customs duties (i.e., duties on digital products). This volume aims to demonstrate how GTIPA member countries—including Argentina, Colombia, Germany, Ghana, Greece, Italy, Jordan, Mexico, Poland, South Africa, and the United States—benefit from and support e-commerce and digital trade, and how keeping tariffs off the Internet drives domestic and transnational growth, fosters global integration, sparks innovation, narrows the digital divide, and creates employment opportunities.
Information and communication technologies (ICT), such as the Internet, have transformed the economic exchange of goods, services, data, and information, which collectively constitute e-commerce and digital trade. The United Nations Conference on Trade and Development (UNCTAD) reported that e-commerce sales hiked to $25.6 trillion globally in 2018, up 8 percent from 2017. From e-files, blueprints, data-hosting systems, and software solutions to websites, emails, music, and movies, electronic transmissions and the content and services they constitute are critical to today’s global economy.
Moreover, the current global health crisis accentuates the importance of maintaining and developing a global digital marketplace. E-commerce and digital trade are lifelines people rely on during COVID-19-induced forced isolations. More broadly, the pandemic has accelerated businesses’ digital transformation in all sectors, from healthcare and retail to manufacturing and financial services. This growing reliance on digital technologies and connectivity makes it clear that the international community should enact new rules to support digital free trade and e-commerce, including by refraining from passing customs duties on electronic transmissions.
The benefits of e-commerce and digital trade are clear, abundant, and undebatable. Not only does the 21st-century economy enable more trade to occur, but it also connects the previously unconnected to the global marketplace. Electronic transmissions undoubtedly promote Internet penetration and mobile connectivity. In Jordan, the nation’s robust information and communications technology (ICT) infrastructure has permitted several start-ups to flourish, including the famous incubator Oasis500. Consumers have an increased ability to access a comprehensive set of goods and services at reduced prices and higher quality. Businesses (especially small and medium-sized enterprises (SMEs)) can easily enter new markets around the world, often through the use of platforms. This diversifies their sales and thus increases their profitability and likelihood of survival. In effect, e-commerce and digital trade shrink the distance between buyer and seller—by nearly one-third. Easing online transactions expands efficiency and 6 speed while lowering operational costs and bureaucratic procedures. Academic research has shown that e-commerce reduces transaction or trade costs by a substantial margin.
Greater use of digital tools and engagement in international e-commerce and digital trade unlocks more resources for investments in intangible assets (i.e., research and development (R&D), staff training, intellectual property (IP), and branding), hence sparking more innovation. With the digital economy at an all-time high, it is natural that intangible assets continue to flourish. According to the McKinsey Global Institute, intangible assets have more than doubled as a share of global revenue, from 5.5 to 13.1 percent since 2000. In short, an open and tariff-free Internet leads to global economic growth as it makes trade more accessible, dynamic, and innovative. (...)
Introduction by: Yamel Sarquis, Information Technology and Innovation Foundation
Chapter on Poland (pp. 73-81).
By: Krzysztof Głowacki and Karolina Zubel
Poland has many of the key components in place that together have led to its emergence as a dynamic and growing digital economy. It has already shown enormous potential in not only growing its market share within the European Union but also developing sectors which have proven overwhelmingly successful in the global digital economy, including the video game industry. An ambitious outcome at the WTO would benefit Poland’s ability to engage in cross-border digital trade and e-commerce. But likewise, failure to achieve an agreement would likely lead to more barriers that would prevent its firms from benefiting from the economies of scale that come from an open, rules-based global digital economy. (...)
The Global Trade and Innovation Policy Alliance (GTIPA) is a global network of over 40 independent, like-minded think tanks from 26 economies throughout the world that believe trade, globalization, and innovation—conducted on market-led, rules-based terms—can maximize the welfare of the world’s citizens. The Alliance exists to collectively amplify each member’s voice and enhance their impact on trade, globalization, and innovation policy issues while bringing new scholarship into the world on these subjects.