Threatening to break the internet as we know it, is the abolishment of the Moratorium on Customs Duties on Electronic Transmissions. It has been in place since 1998 and restricts countries from imposing customs duties on digital products purchased on the internet.
The WTO operates on a total consensus model, meaning moratoriums are only extended if all present member nations agree.
But this year, there are dissenters.
An unlikely alliance between India, Indonesia & South Africa is threatening to expose all of us to tariffs on digital transactions – things like e-books, music, streaming subscriptions and software downloads.
Wednesday night deadline
If the rest of the world can’t convince India, Indonesia & South Africa to re-think their position by Wednesday night, June 14 (Geneva time), the moratorium will lapse.
No questions asked.
This will open the tariff floodgates. Allowing any country around the world to start taxing your downloads.
Jon Denton, a writer at The Hill, was onto this emerging issue weeks ago. In an article titled, Will Biden let tariffs break the internet? he highlighted just how big a deal this is.
“At a time when the spill-over effects of the war in Ukraine are already placing a significant drag on global growth, the last thing we all need is for the WTO’s digital moratorium to lapse — opening up a vast new front for protectionists and anxious politicians to exploit,” said Denton.
“We can only hope that the U.S. will step up in the coming days to preserve the most important trade deal that you (probably) never heard of. Absent decisive action in the coming days, trade diplomats may inadvertently break the internet as we know it today.”
So, what do the internet dissenters want?
On face-value the argument is that the internet has seen tax income from items such as books, CDs and CD-ROMs evaporate because they’ve all be digitized.
The internet dissenters see the ability to impose tariffs (like they would on physical imports) as a way of winning back money lost to digitalization, and also a way of promoting the development of their domestic technology industries.
But insiders believe it’s about more than just the internet.
They say India, who is said to be the driving force behind the dissenting trio, is using the moratorium to gain leverage to get its way on other issues such as fishing subsidies.