The WTO Plans to Permanently Ban Taxation on Cross - border Digital Transactions

The World Trade Organization (WTO) recently announced that about half of its member states have reached a preliminary agreement on e - commerce. The agreement will permanently ban tariffs on cross - border digital transactions. The growth rate of such transactions is twice that of physical goods transactions. The 91 participants in the preliminary agreement include the United States, China, Japan, the United Kingdom and major economies in the European Union, although Washington also said it was reluctant to fully support the agreement.

The list of participants announced on the 26th did not include South Africa and India. These two countries have expressed concerns in the past, believing that some rules are designed to benefit rich countries rather than poor countries. Currently, countries prohibit the imposition of tariffs on electronic transmissions under a tariff moratorium. From the end of February to the beginning of March this year, the WTO held a ministerial meeting in the United Arab Emirates. At that time, its 164 members unanimously agreed to extend the moratorium for two years.

This moratorium has promoted the development of the fastest - growing area in global trade - digital goods and services. The global Internet without tariffs is not only the key to the success of US tech giants such as Amazon and Netflix, but also crucial for more and more traditional companies that collect data and engage in e - commerce in foreign markets. But it has also raised concerns in some countries about privacy, the market dominance of large technology companies, cyber vulnerabilities and national security threats.

After a round of heated negotiations in Abu Dhabi, some WTO members said that the moratorium should not be extended again. This increases the possibility that some national governments will take unilateral action for the first time to increase revenue and protect domestic industries by taxing cross - border e - commerce and data. The draft proposed in Geneva this week is the result of five years of negotiations, aiming to address the above - mentioned issues, rather than extending the moratorium every two years as in most of the past 20 years.

The United States said this is an important step, but more work needs to be done. Maria Pagan, the Biden administrations representative to the World Trade Organization, said in a statement: As the United States has repeatedly communicated with the co - conveners and participants, the current provisions are insufficient, and more work needs to be done, including in the area of essential security exceptions.,

The Organization for Economic Co - operation and Development (OECD) previously estimated that digital trade (defined as all international trade transactions ordered and/or delivered digitally) is worth about $4 trillion. This is approximately equivalent to half of global service exports. Jack Colvin, president of the Washington - based National Foreign Trade Council in the United States,foreign tradepraised the progress made by the WTO but criticized the lack of U.S. leadership. Colvin said in an emailed statement: When the United States withdraws, other countries will step into the leadership vacuum. But the fact that other major economies have the courage to advance digital trade without U.S. participation is extraordinary.,

Although the initial agreement is a positive sign, there are still many challenges to overcome in order to achieve the goal of a permanent ban on tariffs on cross - border digital transactions. First, member states need to reach an agreement on the details to ensure that the implementation of the agreement does not cause a major impact on their respective economic interests. Second, how to address countries concerns about privacy and national security also needs to be fully considered in the agreement.

Finally, when the European Union and other major economies promote this issue, they need to demonstrate stronger leadership on the international stage to fill the possible vacuum left by the United States. This will not only help consolidate the liberalization process of global digital trade but also promote the sustained growth of the global economy.

Overall, the preliminary agreement reached by the WTO on cross - border digital transactions this time marks an important step for global trade rules to adapt to the economic needs of the new era. Although the road ahead is full of challenges, as long as countries can work together to find a balance of interests, the prospects for digital trade will be brighter.