Extension of the WTO Moratorium on Customs Duties on Electronic Transmissions is ASR’s top priority issue for the 13th WTO Ministerial Council Meeting (MC13), February 26-29, Abu Dhabi. In our capacity as co-convenor of both the Global Services Coalition and the Asia-Pacific Services Coalition, ASR has worked closely with our partners around the world to assemble an up-to-date evidence base on the benefits of the Moratorium, especially for MSMEs in developing countries. Some of the analysis required has been commissioned, in collaboration with research partners; some of it we have done ourselves.
Should MC13 fail to extend the Moratorium, the serious negative impact on all businesses and all consumers, in all sectors, but especially in trade in services, simply cannot be overestimated. This is the issue, not WTO reform, not agriculture, which will matter most to business. This is because business is not asking for anything new. Extending the Moratorium simply means retaining the WTO’s only existing trade governance. Losing it means the global digital economy potentially goes into tailspin. If we lose it, business confidence in the WTO will undoubtedly dissipate.
ASR Director Jane Drake-Brockman joined a team of Indian and Indonesian co-authors to analyse the impact of the Moratorium on Indonesian MSMEs. The study finds that small businesses in Indonesia that use digital services stand to deliver greater output, enhanced labour productivity as well as increased employment. Every 1% increase in imported digital inputs by Indonesian MSMEs generates the following positive impacts:
- GDP (production output) increases by 0.96%
- Labour productivity (defined as MSME output per employee) rises by 0.95%
- Employment grows by 0.42%
Small businesses are especially dependent on the seamless flows of electronic transmissions to bolster their competitiveness. Any measures to curtail digital imports would be expected to have a significant negative impact on Indonesia’s MSMEs. See below for the full report along with other material on the E Commerce Moratorium.