WT/GC/W/889  
 
10 July 2023 
(23-4666) Page: 1/5 
General Council  
  Original: English  
 
WORK PROGRAMME ON ELECTRONIC COMMERCE  
 
MORATORIUM ON CUSTOMS DUTIES ON ELECTRONIC TRANSMISSIONS  
Communication from Australia; Canada; Chile; Costa Rica; European Union; Hong Kong, China; 
Japan; Korea, Republic of; Norway; Peru; Singapore; Switzerland; Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu ; and United Kingdom.  
The following communication , dated 7 July  2023, is being circulated at the request of the  
above -mentioned  delegations .  
 
 
_______________  
 
This submission seeks to support further discussions under the dedicated sessions of the Work 
Programme on Electronic Commerce, on scope, definition, and impact of the moratorium on customs 
duties on electr onic transmissions ( the "moratorium ").   
1  INTRODUCTION  
1.1.  Since the 12th WTO Ministerial Conference, Members have engaged in a constructive 
reinvigoration1 of the work under the Work Programme on Electronic Commerce2 with a particular 
focus on its development dimension, as well as intensifying discussions on the issues specific to the 
moratorium.  
1.2.  This work is conducted through dedicated sessions which provide a unique opportunity to 
deepen the understanding of Member s' views on key issues, including  those  related to the needs of 
developing Members, the challenges they face, the opportunities presented by digital trade, and 
sharing best practices.  
1.3.  In support of the dedicated sessions on the moratorium, the co -sponsors wish to reiterate 
through this communication their well -established understanding of the scope and definition of the 
moratorium. This Communication also  provide s further evidence on the benefits of the moratorium 
and the negative implications if the morato rium is not renewed .  
1.4.  The co -sponsors are looking forward to continued constructive engagement and active 
discussions related to the moratorium, as well as the development dimension of electronic 
commerce. As Members continue to intensify discussions on th e moratorium, the co -sponsors 
reaffirm the importance of basing these discussions on evidence and facts, including inputs from 
other relevant international organizations , academia, and the private sector. The following is 
presented without prejudice to the  respective positions of co -sponsors with regards to the specific 
issues referred to in the communication.  
2  SCOPE AND DEFINITION OF THE MORATORIUM   
2.1.  Since 1998, WTO Members have periodically taken decisions to continue their practice of not 
imposing custom s duties on electronic transmissions. There is a widespread understanding that the 
moratorium applies to all electronic transmissions, including their content. If the moratorium does 
not cover content, this would imply that the moratorium would have been i ntended to only prevent 
 
1 Including through WT/GC/W/855/Rev.2  
2 This is in line with the relevant MC12 Ministerial Decision WT/MIN(22)/32  WT/GC/W/889  
 
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  the imposition of customs duties on telecommunication signals. This would effectively render the 
moratorium meaningless, given the common understanding that the value of a telecommunications 
signal is not the signal itself but the c ontent it carries.  
2.2.  While no specific definition of "electronic transmissions " is attached to the relevant ministerial 
decisions,  it is commonly understood t o cover anything transmitted by telecommunications, 
including over the internet, and from emails and  software to digital music, blueprints, movies, and 
video games.  
2.3.  The moratorium does not cover physical goods ( e.g., clothing or books ordered from an online 
platform ), which may be subject to applicable import tariffs. Nor does the moratorium limit the 
application of internal taxes (e.g. , Goods and Services Taxes (GST) or Value Added Taxes (VAT) ), 
as the moratorium is only concerned with customs duties. In several FTAs, participants have 
explicitly includ ed language clarifying that internal taxes are not part of the scope of the 
equivalent  discipline.  
2.4.  Looking at FTAs of both developed and developing Members ,3 the practice of not imposing 
customs duties on "electronic transmissions" is a standard feature of most e -commerce chapters 
and/or digital economy a greements. To our knowledge, none of the existing agreements applying to 
e-commerce specify that the moratorium applies only to the electronic transmission as carrier 
medium, i.e. , excluding content. There are a variety of approaches to the way that FTA mo ratorium 
provisions are drafted .4 Regarding content, some trade agreements/provisions specify that deliveries 
by electronic means are considered to be the provision of services while others refer to digital 
products. Even though these approaches may differ, they similarly result in the co ntent of the 
electronic transmission not being subject to customs duties.  
3  BENEFITS OF THE MORATORIUM AND THE IMPACT OF POTENTIALLY IMPOSING 
CUSTOMS DUTIES ON ELECTRONIC TRANSMISSIONS  
Benefits of the moratorium  
3.1.  The benefits of the moratorium for businesses  around the world, including in 
developing -countr y Members  and Least Developed Countries (LDCs), are significant. This is 
particularly the case for micro, small, and medium -sized enterprises (MSMEs), which are the 
lifeblood of the global economy. The morat orium reduces the cost of engaging in trade, for instance 
with respect to transport costs which can amount up to 30% ,5 increases access to knowledge and 
digital tools such as software, and facilitates participation in global and regional value chains .6 This 
reduces the barriers to MSME s' participation in international trade, provides businesses with legal 
certainty, and facilitates investment decisions . These benefits enabl e new opportunities for 
businesses and greater consumer options. Furthermore, the a bility to trade online, without customs 
duties, has created an environment in which women entrepreneurs have been able to operate in a 
more streamlined and flexible manner.  
Economic and consumer impacts of potentially imposing customs duties on electronic  
transmissions  
3.2.  The imposition of customs duties on electronic transmissions would have important adverse 
consequences for the global digital economy, increasing operating costs for exporters and leading 
to higher prices for consumers, as demonstrated by se veral studies.  
3.3.  In 2019, a study by the European Centre for International Political Economy (ECIPE) modelled 
the potential impact of imposing customs duties on electronic transmissions in India, Indonesia, 
South Africa, and China. The study found that the i mposition of custom duties on electronic 
 
3 TAPED database, version of June 2022. Out of 105 agreements containing an e -commerce chapter, 100 
feature a provision related to the non -imposition of electronic transmissions.  
4 Burri and Polanco, (2019): "Digital Trade Provisions in Preferential Trade Agreements: Introducing a 
New Dataset", Journal of International Economic Law  
5 Andrenelli and López González (2019): "Electronic transmissions and international trade - shedding n ew 
light on the moratorium debate", OECD Trade Policy Papers, No. 233, OECD Publishing, Paris  
6 Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions 
(2021)  WT/GC/W/889  
 
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  transmissions would increase prices and reduce consumption, which would in turn slow GDP growth 
and shrink tax revenues .7  
3.4.  ECIPE estimated that widespread imposition of customs duties on electronic transmissions 
would result in annual GDP losses of USD 10.6 billion for developing countries globally, which would 
significantly outweigh any additional tariff revenue .8 Comparatively, t he Organisation for Economic 
Co-operation and Development (OECD) estimates that foreg one revenue due to the moratorium is 
relatively low, representing only 0.08% – 0.23% of overall government revenue on agg regate for 
developing countries .9  
3.5.  More recently, at a WTO Work Programme on Electronic Commerce workshop on 1 -2 June 
2023, UNCTAD hig hlighted the importance of considering the likely negative impact of any customs 
duties on electronic transmissions on consumers. Indeed, research indicates that companies will 
generally pass on the cost of any customs duties imposed by charging higher pri ces to domestic 
consumers, rather than cover the burden of those customs duties. Additionally, the OECD found that 
even if all goods that could be digitised, were digitised and digitally transmitted, removing tariffs on 
such trade would increase consumer w elfare by USD 940 million, outweighing the associated revenue 
losses and providing an  overall net welfare increase of USD 73 million . These results indicate that  a 
discontinuation of the moratorium would diminish  consumer welfare .10 
3.6.  Indeed, the cost of imposing customs duties on electronic transmissions would unduly fall on 
consumers and small producers in importing countries, which could be expected to decrease demand 
for digitally traded goods and services and undermine economic welfare .11 The conseque nce of this 
for developing countries would be particularly negative as such inputs can substantially improve 
productivity and competitiveness. Likewise, companies in developing countries, including LDCs, 
would be harmed by the imposition of customs duties on their digital transmissions elsewhere. 
Moreover, a report funded by Enhanced Integrated Framework (EIF)12 outlines the benefit of the 
moratorium for LDCs, including the potential long -term benefits of not imposing customs duties on 
electronic transmissi ons, by reducing uncertainty.  
3.7.  Additionally, the International Chamber of Commerce (ICC) Working Group on E -commerce 
found that the imposition of customs duties would lead to a decline in domestic output and 
productivity and an increase in unemployment and  inequality .13 Another report by the Global Trade 
and Innovation Policy Alliance (GTIPA ) affirmed that retaining the moratorium "fosters certainty and 
predictability for both domestic digital economic activity and global production networks and supply 
chains".14 
3.8.  As many WTO Members have already committed to the practice of not imposing customs duties 
on electronic transmissions in their preferential trade agreements ,15 or undertaken  other 
commitments that affect the ir ability to levy tariffs on electronic t ransmissions, the absence of the 
moratorium  could lead to the imposition of different rates of customs duties in different jurisdictions, 
 
7 Andrenelli and López González (2019): "Electronic transmi ssions and international trade - shedding new 
light on the moratorium debate", OECD Trade Policy Papers, No. 233, OECD Publishing, Paris  
8 Hosuk -Lee Makiyama, Director of ECIPE (European Centre for International Political Economy) and Fellow 
of London Scho ol of Economics and Badri Narayanan, PhD, Associate Professor at University of Washington, 
Consultant at McKinsey Global Institute, UN ESCWA, FAO, Commonwealth Secretariat and GTAP Research Centre. 
"The Economic Losses from Ending the WTO Moratorium on Ele ctronic Transmissions". ECIPE Policy Brief No 
3/2019  
9 Andrenelli and López González (2019): "Electronic transmissions and international trade - shedding new 
light on the moratorium debate", OECD Trade Policy Papers, No. 233, OECD Publishing, Paris  
10 Andre nelli and López González (2019): "Electronic transmissions and international trade - shedding new 
light on the moratorium debate", OECD Trade Policy Papers, No. 233, OECD Publishing, Paris  
11 ICC & ITC (2023): Joint Policy Brief – Moratorium on Customs Duti es on Electronic Transmissions: What 
is really at stake?  
12 https://www.wto.org/english/tratop_e/devel_e/ldc_s4_olarreaga_1.pdf  
13https://www.iccgermany.de/wp -content/uploads/2021/03/iccissuesbrief2 -moratorium -
1.pdf#:~:text=The%20moratorium%20has%20 enabled%20digital%20trade%20to%20flourish%2C,and%20m
edium -sized%20enterprises%20%28MSMEs%29%2C%20to%20access%20new%20markets . 
14https://itif.org/publications/2020/10/26/gtipa -perspectives -importance -e-commerce -digital -trade -and-
maintaining -wto-e/.  
15 TAPED database , version of June 2022  WT/GC/W/889  
 
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  which would further increase fragmentation, and in turn create market inefficiencies, trade diversion 
and deepening of  the digital divide . 
Impact on businesses, in particular MSMEs, of potentially imposing customs duties on 
electronic transmissions  
3.9.  The imposition of customs duties on electronic transmissions could negatively affect  all 
businesses, and in particular those in  developing countries , in terms of their  ability  to increase 
domestic value added in exports. Digital technologies create new growth opportunities for firms in 
developing countries, including MSMEs, by allowing th em to become exporters. Furthermore, the 
growing use of digitally delivered foreign business services increases export competitiveness, and 
access to such business services is most important for lower -middle -income and lower -income 
countries .16 
3.10.  For all bus inesses, including women entrepreneurs, access to digital tools which are 
interoperable with businesses in other countries or access to digital com ponents of production 
processes  may be key to enabling participation in regional and global value chains. In addition to 
increasing the direct cost of participation, imposing customs duties on electronic transmissions would 
likely result in tracing and notification requirements in order to comply with customs duties 
obligations that would add further costs, as we ll as amounting to a significant practical or 
administrative burden. This dual burden is likely to have a deterrent effect on  domestic businesses 
and foreign investment.  
3.11.  Regarding the protection of nascent digital businesses, e conomic evidence outlined ab ove 
suggests that attempts to protect businesses by imposing discriminatory taxation on foreign imports 
are counterproductive. Where businesses are protected against competition from imports, they will 
have less ability or incentive to innovate, and there will be less downward pressure on domestic 
prices, harming business users and consumers by reducing choice and the quality of products, and 
increasing prices.  
3.12.  The impact on digital businesses is particularly acute. Digital businesses typically do not 
opera te in a vacuum but are highly interdependent with other digital businesses, often relying on 
inputs from different sources across borders. For instance, a software developer of an application 
designed for use on a mobile operating system may need access to  application programming 
interfaces (APIs) and software development kits (SDKs) in order to interoperate with other 
applications and the mobile operating system. Imposing customs duties on those digital inputs would 
create a cost disadvantage for the softw are developer, increase prices for local consumers, and 
reduce the developer 's chances of developing an export business, which may be necessary in order 
for them to scale up sufficiently to grow. The imposition of customs duties on electronic transmissions  
is therefore more likely to exacerbate, rather than address, the digital divide.  
Impacts on women entrepreneurs of potentially imposing customs duties on electronic 
transmissions  
3.13.  Digital Trade is a tool with immense potential for women 's economic empowerm ent. The use 
of digital platforms and digital financial services can help bridge the gender divide by providing 
women entrepreneurs with greater access to markets, knowledge, and more flexible working 
arrangements. The  pandemic has in fact helped to boost South Asian women entrepreneurs into the 
digital economy, allowing them to reach across national boundaries to establish partnerships and 
target new customers, overcoming travel and trade restrictions , according to the Work Bank .17  
3.14.  At the same time, w omen -owned SMEs continue to face many of the same barriers as other 
SMEs but these are compounded by the other issues unique to women.  Studies have shown that 
current tariffs on tangible goods disproportionately impact women , particularly in developing 
countr ies, both through the products that women export and the products they consume .18 These 
 
16 Andrenelli and López González (2019): "Electronic transmissions and international trade - shedding new 
light on the moratorium debate", OECD Trade Policy Papers, No. 233, OECD Publishing, Paris  
17 Fruman (2021): "COVID -19 propels South Asian women entrepreneurs into the digital economy ", World 
Bank Blog, https://blogs.worldbank.org/endpovertyinsouthasia/covid -19-propels-south -asian-women -
entrepreneurs -digital -economy  
18 "Women and Trade" Joint WTO and World Bank report, 2020  WT/GC/W/889  
 
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  conclusions, while measured for physical goods, could be relevant for the possible imposition of 
customs duties for electronic transmissions. Further research is required to better understand the 
effects of potentially imposing customs duties on electronic  transmissions specifically on women 
entrepreneurs.  
4  ALTERNATIVE MEANS OF REVENUE COLLECTION  
4.1.  Members ' concern s regarding revenue loss can be mitigated via internal taxation measures 
(e.g., VAT or GST). A growing number of Members apply such taxation measu res also to digital 
transactions. This has been illustrated in multiple interventions at the WTO when discussing the 
moratorium. In the session of 5 July 2021 of the WTO Structured discussions of the Work Programme 
on Electronic Commerce, several delegatio ns, including Australia, the European Union and 
Switzerland, presented their national experience in the i mposition of internal non -discriminatory 
taxes on electronic transmissions .  
4.2.  Another  example  is the implementation  in 2020  by Singapore of an Overseas Vendor 
Registration (OVR) regime to impose GST on overseas suppliers.19 Through this OVR regime, all 
low-value goods and remote services20 (i.e., digital and non -digital services) supplied to Singapore 
consumers are subject to GST – regardless of whether t he suppliers are local or overseas. In 
Singapore 's experience, this  has helped level the playing field between local and overseas suppliers 
as well as ensure the resilience of the GST system in a growing digital economy.  Taking reference 
from similar OVR r egimes in other jurisdictions and the international VAT/GST guidelines of the OECD 
was helpful , as well as e xtensive industry consultations and early notification of the OVR regime , 
which further eased the implementation and effective collection of GST.  
5  GUIDING QUESTIONS FOR DISCUSSION:  
• What are Members ' own FTA practices and experiences related to the application of the 
non-imposition of customs duties on electronic transmissions?  
• What are the potential implications for businesses, particularly MSMEs, a nd consumers, 
should Members impose customs duties on electronic transmissions?  
• Can Members share their experiences and best practices in levying non-discriminatory 
consumption taxes on emerging digital trade transactions ?  
• Can Members share the feedback they have received from their domestic industry regarding 
the moratorium ? 
 
 
 
__________  
 
19 Prior to the change, GST was chargeable on services only where the supplier was in Singapore.  
20 In Singapore 's context, remote services are defined as any service where there is no necessary 
connection between the physical location of the recipient and place of physical performance at the time of 
performance of the services supplied to consumers in Singapore. Examples include sale of e -books, online 
streaming services and distance learning classes.