Moratorium on e-commerce trade

In News: India to oppose continuation of moratorium on customs duties on e-commerce trade at WTO meets in Geneva

• Allowing the moratorium to lapse is important for developing nations to preserve policy space for their digital advancement, to regulate imports and generate revenue through customs duties.
• The United Nations Conference on Trade and Development has estimated the potential tariff revenue loss for developing countries every year due to the moratorium on e-transmissions at $10 billion as compared to only $289 million for high-income countries.

Background

• The WTO members have agreed not to impose customs duties on electronic transmissions since 1998 and the moratorium has been periodically extended at successive ministerial conferences (MC)
• The moratorium was extended at the 11th MC in Argentina in 2017 for two years. In the General Council meeting in December 2019, members agreed to maintain the current practice till the 12th Ministerial Conference.
• India and South Africa on several occasions have asked the organisation to revisit the issue and have highlighted the adverse impact of the moratorium on developing countries.
• India is witnessing an exponential rise in imports of electronic transmissions, mainly of items like movies, music, video games and printed matter, some of which could fall within the scope of the moratorium.

World Trade Organization

• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
• The WTO has 164 members (including European Union) and 23 observer governments (like Iran, Iraq, Bhutan, Libya etc).

History

• The General Agreement on Tariffs and Trade (GATT) traces its origins to the 1944 Bretton Woods Conference
• In Havana in 1948, the UN Conference on Trade and Employment concluded a draft charter for the ITO – International Trade Organization (ITO) which would have created extensive rules governing trade, investment, services, and business and employment practices.
• The Havana Charter never entered into force
• Meanwhile, an agreement as the GATT signed by 23 countries in Geneva in 1947 came into force on Jan 1, 1948 with the following purposes:
• To phase out the use of import quotas
• And to reduce tariffs on merchandise trade,
• The GATT became the only multilateral instrument (not an institution) governing international trade from 1948 until the WTO was established in 1995
• The Uruguay Round, conducted from 1987 to 1994, culminated in the Marrakesh Agreement, which established the World Trade Organization (WTO).

Governance

Ministerial Conference

• The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years.
• It brings together all members of the WTO, all of which are countries or customs unions.
• The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.

General Council

• It has representatives from all member governments and has the authority to act on behalf of the ministerial conference which only meets about every two years.

Dispute Settlement Body (DSU)

• The General Council convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members.
• Such disputes may arise with respect to any agreement contained in the Final Act of the Uruguay Round that is subject to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

Appellate Body

• The Appellate Body was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
• The DSB shall appoint persons to serve on the Appellate Body for a four-year term.
• It is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO Members.
• The Appellate Body can uphold, modify or reverse the legal findings and conclusions of a panel
• The Appellate Body has its seat in Geneva, Switzerland.

Previous Year Questions (PYQs)

Q.1) Consider the following statements: (2017)

1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
3. TFA came into force in January 2016.

Which of the statements given above is/are correct?

1. 1 and 2only
2. 1 and 3 only
3. 2 and 3 only
4. 1, 2 and 3

Q.1) In the context of which of the following do you sometimes find the terms ‘amber box, blue box and green box’ in the news? (2016)

1. WTO affairs
2. SAARC affairs
3. UNFCCC affairs
4. India-EU negotiations on FTA

Source: The Economic Times