The tax-free status of films, music and games traded online is being discussed during a meeting of WTO countries in Abu Dhabi


GENEVA (AP) — Since the turn of the last century and the early days of the Web, digital media providers like Netflix and Spotify have had a free hand from international taxes on movies, video games and music that are shipped across borders. Internet.

But now, the global consensus on this issue may be beginning to crack.

As the World Trade Organization begins its latest biennial meeting of government ministers on Monday, its longstanding moratorium on duties on e-commerce products – which has been renewed almost automatically since 1998 – is under greater pressure than ever. Is coming.

This week in Abu Dhabi, the WTO's 164 member states will raise several key issues: Subsidies that encourage overfishing. Reforms to make agricultural markets fairer and more environment-friendly. and efforts to revive the system of the Geneva-based trade body to resolve disputes between countries.

These are all big orders, but the prohibition on e-commerce charges is perhaps the most important issue. It focuses on "electronic broadcasts" – music, movies, video games, and so on – more than physical goods. But the rulebook is not clear on the entire range of products affected.

“This is of great importance for millions of businesses, especially small and medium-sized businesses,” said WTO Director-General Ngozi Okonjo-Iweala. “Some members believe that it should be extended and made permanent. Others believe...there are reasons why this should not happen.

"So there has been debate and hopefully – because it affects so many people's lives – we hope the minister will be able to make an appropriate decision," he told reporters recently.

Under WTO rules, major decisions require consensus. The e-commerce moratorium cannot be imposed automatically. For the extension to take effect, countries must actively vote in favor of it.

Four proposals are on the table: two would extend the suspension of duties. Two – presented separately by South Africa and India, two countries that are vigorously pursuing their interests at the WTO – will not do so.

Supporters say the moratorium helps keep costs down for consumers and promotes a broader rollout of digital services in both rich and poor countries.

Critics say it deprives debt-burdened governments in developing countries of tax revenue, although there is debate over how much this will benefit the exchequer.

The WTO itself says that on average, the potential loss would be less than one-third of 1% of total government revenues.

the stakes are high. A WTO report published in December said the value of exports of "digitally delivered services" grew by more than 8% from 2005 to 2022 – ahead of goods exports (5.6%) and other-services exports (4.2%). More.

However, development has been uneven. Most developing countries do not have as extensive a digital network as countries in the rich world. Those countries see less need to extend the moratorium – and could gain needed tax revenue if it ends.

The South African proposal, which seeks to end the moratorium, calls for the creation of a fund to receive voluntary contributions to bridge the "digital divide". It also wants to require "leading platforms" to promote the promotion of "historically disadvantaged" small and medium-sized enterprises.

The industry, at least in the United States, is working hard to extend the moratorium. In a letter to Biden administration officials dated February 13, nearly two dozen industry groups, including the Motion Picture Association, the U.S. Chamber of Commerce and the Entertainment Software Association – a video-game industry group – called on the United States to "make its full contribution." requested. Support” for renewal.

The letter says, "Accepting anything less than a multilateral extension of the moratorium that applies to all WTO members would open the door to the introduction of new customs duties and related cross-border restrictions that could harm American workers in industries throughout the economy." Will deliver." ,

The groups wrote that the collapse would deal a "major blow to the credibility and stability" of the WTO and would be the first time that its members have "changed the rules to make it significantly more difficult to conduct trade", adding that Their members also include companies. Which together employ more than 100 million workers.



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