Global Agreement on E-Commerce Norms: New Rules, Taxation Moratorium, and Future Implications

Global Agreement on E-Commerce Norms: New Rules, Taxation Moratorium, and Future Implications

After five years of intensive trade negotiations, 91 nations have reached a landmark agreement on new e-commerce norms, including the extension of a moratorium on the taxation of cross-border electronic transmissions. This milestone is part of the Joint Statement Initiative on Electronic Commerce.

Moratorium on Electronic Transmissions

The moratorium on taxing electronic transmissions, which encompasses nearly everything that passes over the internet (video, audio, and content), continues to be in effect. The agreement specifies that "No Party shall impose customs duties on electronic transmissions between a person of one Party and a person of another Party." Although no such duty has been imposed before, the document emphasizes the benefits to small-to-medium businesses when data flows freely, making such tariffs unlikely.

Internal Taxes and Big Tech

The agreement, however, does leave room for "internal taxes, fees, or other charges on electronic transmissions" in the future if a state chooses to impose them. This is particularly relevant in light of ongoing efforts to make Big Tech pay for the traffic it generates, which carriers argue imposes an unfair capital investment burden on them. The agreement includes measures to prevent carriers from creating network bottlenecks.

Impact on Social Networks and Local Journalism

The idea of internal taxes is also significant in the context of requiring social networks and search engine operators to pay taxes that support local journalism, a proposition Meta notably opposes.

Key Provisions

• Net Neutrality: The agreement mandates that signatory nations allow access to the internet without blocking or slowing down traffic for unfair commercial advantage, resembling a net neutrality requirement.
• Small Business Support: It highlights the electronic exchange of data as a facilitator for cross-border e-commerce, reducing bureaucratic obstacles for small businesses.
• Government Data: Signatories must make government data available in machine-readable formats at reasonable costs.
• Cybersecurity and Spam: The agreement includes provisions to combat spam and enhance cybersecurity.
• Support for Less-Developed Nations: There is also a focus on providing assistance to less-developed countries.

Future Outlook

The initiative was spearheaded by Australia, Japan, and Singapore, who are considered to have done a commendable job. However, the moratorium on taxing electronic transmissions has only been extended for two years, with a review to follow. Some issues were glossed over to finalize the document, indicating that more international discussions and negotiations are anticipated.