At what cost the free flow of digital goods?

Does the WTO extending its moratorium on duties on ecommerce widen the digital divide?

03 May 2024

Donald MacKay, XA Global Trade Advisors

On March 1, the World Trade Organisation (WTO) voted to extend the moratorium on customs duties on ecommerce products for the next two years. The decision, made during the 13th WTO Ministerial Conference in Abu Dhabi, means that all WTO members will abstain from imposing taxes on electronic transmission until at least early 2026. The moratorium has been an important factor in the development of the internet, and has been in force since 1998. It’s now set to expire in 2026, and will require fresh negotiations at the conference to be held in that year.

This is good news for companies such as Netflix and Spotify, which boast massive user bases worldwide; when their customers stream their products, they don’t have to pay any customs duties. However, for some parties, the moratorium on the taxation of digitally transferred goods has become a bone of contention. After all, the internet is now a very different place to what it was 26 years ago, and is dominated by digital giants raking in billions in revenue.

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