Business Bayani PH

The International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), the World Bank, and the World Trade Organization (WTO) have jointly unveiled a comprehensive report on December 7. Titled “Digital Trade for Development,” the report delves into the opportunities and challenges awaiting developing economies in the realm of digital trade.

The report, presented at UNCTAD’s eWeek during a high-level ministerial roundtable on digital trade, seeks to use the expertise of global organizations to illuminate the current state of digital trade. 

Johanna Hill, deputy director-general of WTO, emphasized the report’s significance, saying, “This report leverages the respective expertise of all five international organizations to shed light on where things stand with digital trade and what policymakers can do to make it a stronger force for growth and development.”

The report shows remarkable growth in cross-border digital services, making it the fastest-growing part of global trade. Since 2005, the value has nearly quadrupled, growing at an average annual rate of 8.1%, outpacing goods exports (5.6%) and other services (4.2%). Together, they now make up 54% of total services exports, creating new trade possibilities for farmers and small businesses.

The report emphasizes the potential benefits of digital trade for various groups, including least developed countries , women, MSMEs (micro, small, and medium-sized enterprises), and young people. 

At the same time, it emphasizes the need to close the digital gap and strengthen developing economies for digital trade benefits. The report calls for more global financial and technical support to improve connectivity and skills. It also urges increased international cooperation to regulate essential aspects of digital trade.

Addressing the ongoing WTO moratorium on customs duties for electronic transmissions, the report says it does not greatly affect government revenue. There is uncertainty about the moratorium’s scope and the definition of electronic transmissions. Revenue estimates from tariffs range between 0.01% and 0.33% of overall government revenue for developing economies. 

Interestingly, the report hints that, with current tax structures and the right investments, value-added tax could generate more revenue than tariffs for taxing electronic transmissions.

The report warns about tariffs harming digital trade, leading to fewer benefits and affecting the competitiveness of firms, especially MSMEs and women-owned traders. It stresses the importance of global solutions for overseeing cross-border data flows, competition policies, and consumer protection.

The report emphasizes the need for worldwide teamwork to make the advantages of digital trade available to small businesses, women, young entrepreneurs, and consumers in all economies. 

It urges international organizations to strengthen their collaboration with governments, stakeholders, and each other, presenting this joint effort as a significant step in that direction.◼