Electronic transmissions risk facing tariffs

News

Presently, electronic transmissions can flow freely across borders without tariffs, thanks to the WTO e-commerce Moratorium. However, this may change, potentially causing significant effects on trade.

At the next ministerial meeting between WTO members in Abu Dhabi at the end of February 2024, the WTO moratorium on customs duties on electronic transmissions is on the agenda. If not all members agree to an extension, the moratorium will end, and tariffs risk being imposed.

“Nobody knows exactly what will happen if the moratorium is not extended. But what we do know is that uncertainty is harmful to trade. We are potentially facing a situation where companies may have to pay tariffs for digital inputs,” notes Emma Sävenborg.

While there is no clear definition of what constitutes an electronic transmission, items such as music, movies/videos, publications, software, app updates and security updates could be covered by the concept of electronic transmission and thus be subject to customs duties.

At the same time, subscription services such as music streaming services might be exempted, as they are regarded as being a service and, according to the WTO rules, are not subject to tariffs.

The number of countries that would actually impose tariffs also remains unclear, with numerous jurisdictions, including the EU, having reached agreements with bilateral partners to maintain the flow of electronic transmissions free from tariffs.

“The introduction of tariffs can transform small companies from being profitable to becoming non-profitable,” notes Emma Sävenborg.

Read the policy brief:
Customs duties on electronic transmissions – why the WTO moratorium matters

Contact
Emma Sävenborg
firstname.lastname@kommerskollegium.se
+46-8-690 48 71

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