The Internet has made the world feel a lot closer. We can be in rural Canada and watch a livestream of an elephant sanctuary in Thailand as if it’s right down the street. We can work for a company in Belgium and buy accounting software from New Zealand to manage our business’s finances.
With Internet access, we can easily access digital entertainment, services, tools, and more from around the world without having to think twice about the cost of downloading it from somewhere else in the world. This is because of a purposeful decision World Trade Organization (WTO) members made almost 30 years ago.
Every two years since 1998, WTO members have renewed their agreement not to impose customs duties on electronic transmissions (things like digital purchases or video streaming services) to allow for the growth of e-commerce. This voluntary agreement is known as the Moratorium on Customs Duties on Electronic Transmissions. It was part of the Geneva Ministerial Declaration on global e-commerce adopted in 1998.
This year, at the WTO’s 14th Ministerial Conference in Cameroon, the WTO may choose to make it permanent.
Why Was the Moratorium Initially Proposed?
Once web browsers started to emerge in the mid-1990s, it did not take long for word to spread about the value of the Internet and how it could help people connect with the world from their very own homes. Significantly, the Internet opened up new avenues for trade through ecommerce.
Recognizing that global electronic commerce was growing and its potential for trade, the WTO formally agreed to continue the practice of not imposing customs duties on electronic transmissions. While this consensus may have been reached with business interests in mind, it also acknowledged a fundamental principle of the Internet: its key value proposition is global connectivity, and the Internet can only offer this benefit for everyone if it remains open.
Every two years, WTO members have reassessed the moratorium and renewed it, thereby enabling the global economy to grow and data to flow across borders.
Since the moratorium was first introduced, the Internet has grown to more than 75,000 globally interconnected networks, ushering in countless new and innovative digital services, jobs, and emerging technologies that would have once been thought of as merely science fiction when the original moratorium was established.
There is no denying the Internet is indispensable to digital trade, which now represents 25% of global trade, as well as logistics and digital commerce.
What Are the Benefits of Prohibiting Customs Duties on Digital Trade?
Establishing a durable WTO commitment to not impose customs duties for receiving data, communications, digital content, or services via the Internet would help keep the Internet open and global, support local economic development, and leave the door open for newer and more innovative forms of digital trade. It’s also a strategic investment for countries looking for trade resilience amid global uncertainty.
A permanent moratorium would help provide certainty to countries seeking to diversify trade alliances while also ensuring developing countries can have the same opportunities to grow their digital trade economies.
For millions of people worldwide, committing to keeping the Internet open translates to tangible economic benefits by securing their access to a resource increasingly vital to their livelihoods, education, and for connecting with loved ones.
Could Customs Duties Actually Help Boost the Economies of Growing Nations?
Without a moratorium, tariffs or duties on electronic transmissions would reverse decades of innovation across all sectors of the global economy, drive up Internet access and connectivity costs,and set back countries undergoing digital transformation.
Countries eager to find new revenue sources may see customs duties on electronic transmissions as an untapped revenue opportunity. The reality is that this scenario would have a snowball effect, with countries establishing virtual toll booths to charge people for sharing and accessing content over the Internet’s networks. These digital barriers would shatter the Internet into a version we could no longer recognize, nor rely on for global connectivity.
The Internet has proved its worth time and again in times of global uncertainty and crisis. The world found a way to keep working, learning, and doing business in a global pandemic because we could rely on the Internet to adapt to our evolving needs. That trust and certainty would disappear the moment countries started placing barriers to access, like tariffs, to use essential features of a globally connected Internet.
WTO members can support the Internet’s ability to enable digital trade by making the moratorium permanent and in doing so, signaling a durable commitment to the Internet as a foundation to digital trade.
How Does This All Impact the Internet?
With the current trajectory of geopolitics, global conflict, and trade, it’s all too easy to imagine a future in which where there is no longer consensus on the principle of an open Internet.
The Internet can only continue to deliver on the promise of opportunity if it remains open to those who want to participate. That means respecting the principle that “you don’t have to pay to play.” This is not a political choice, nor a question of digital sovereignty. It’s a necessity.
Establishing a WTO permanent moratorium would be a signal to people worldwide of broad consensus that we can and should keep counting on the Internet for global economic opportunity and resilience.
To learn more about what the Internet needs to exist and thrive, check out our Internet Impact Assessment Toolkit.
Image © Mehedi Hasan on Unsplash