Cross-border services delivered digitally grow fastest in global trade

Digitally-delivered services have registered an almost four-fold increase in value since 2005, rising by 8.1 per cent on an average per year between 2005 and 2022.

This has outpaced growth in goods exports (5.6 per cent) and other services exports (4.2 per cent) to account for 54 per cent of total services exports, the report, titled ‘Digital Trade for Development’ notes.

With new ways of obtaining comparative advantage, opportunities arise for new players to engage in global trade, including farmers and small business.

The report explores specific policy issues, including the WTO’s moratorium on customs duties on electronic transmissions, regulation of cross-border data flows, competition policies and consumer protection.

It sheds light on the potential benefits of digital trade for least developed countries, women, micro, small and medium enterprises (MSMEs), and young people as well as the need to bridge the digital divide and strengthen the readiness of developing economies to benefit from digital trade.

More international financial and technical support is needed to build the capacity of developing economies to improve connectivity and skills and more international cooperation is needed to regulate in areas relevant to digital trade, it says.

The report also notes that WTO members' current practice of not imposing customs duties on electronic transmission—the so called ‘moratorium’—has a limited impact on government revenue, a WTO release says.

The report acknowledges that uncertainties exist about the scope of the moratorium and the definition of electronic transmissions, but notes that existing estimates of the potential revenue that could be collected using tariffs on electronic transmissions vary between 0.01 per cent and 0.33 per cent of overall government revenue on average for developing economies, with higher losses for a handful of economies.

The report also notes that while tariffs and value-added taxes (VAT) are not mutually exclusive, recent evidence shows that, for most economies, given current rate structures and with appropriate investment in the capacity of tax administrations, VAT could generate higher revenue from taxing electronic transmissions compared to hypothetical tariffs.

Moreover, tariffs on electronic transmissions would reduce digital trade and its benefits and might also impact the competitiveness and participation of firms in trade, especially MSMEs and women-owned trades, the report adds.

Fibre2Fashion News Desk (DS)