The moratorium on the imposition of customs duties on e-commerce transactions put in place by the World Trade Organization (WTO) is a necessary, but insufficient step for women traders to benefit from the worldwide growth of digital trade.
The WTO E-Commerce Moratorium
The 1998 WTO Ministerial Declaration on Global Electronic Commerce recognized that the growth of e-commerce was creating new opportunities for trade. This growth encompasses all forms of commerce that has been enabled electronically, however the final product or service is eventually delivered. On the Amazon e-commerce site, for example, all transactions are initiated electronically; however, a purchased book may be physically shipped to the buyer or delivered digitally as an e-book. The WTO Moratorium commits its members to refrain from imposing customs duties on digitally delivered transactions that occur across borders.
The Moratorium has been periodically extended, the last time at the 12th WTO Ministerial Conference in 2022. At that time, however, WTO Members also agreed to intensify discussions on the scope, definition, and impact of the Moratorium. It is expected that the Moratorium will again come up for review at the 13th WTO Ministerial Conference (MC13) scheduled for February, 2024.
At stake are two competing concerns. On the one hand, there is the revenue being lost by countries’ inability to tax these transactions. On the other hand, reliance on digital tools proved to be the lifeblood of companies during the global lockdown resulting from the covid pandemic. The businesses and entrepreneurs that survived were those that were able to pivot, using digital tools such as apps or services that helped them to communicate with and sell to clients. Think – zoom, or google docs, for example. Or think of the tools we can now find as we shop online to help us to buy the correct size. The TradeExperettes series that applies a gender lens to the moratorium shared, for example, how a designer of custom-made dresses modified a similar app and used it to remotely take the measurements of her clients, allowing her to continue her business during the lockdown.
The majority of women-owned businesses are micro or small-to-medium-sized (MSMEs). For them, any new cost is a threat to their existence. Can they absorb the added cost of a tax on these tools? In fact, is the Moratorium itself an adequate condition for them to not only survive but to thrive?
Caribbean Women and Digital Trade
The digital economy is expected to reach 25% of global GDP by 2030 and will become one of the main sources of growth and job creation. The average woman-owned business is unaware of the extent to which it has been benefitting from the Moratorium. In fact, many women business owners in the Caribbean, and other developing markets, are still struggling to understand the digital economy and how best to capitalize on its promise.
A study conducted by Caribbean Women in Trade (CWIT) explored this issue with members in the agrobusiness sector. The members reported differing levels of ease with the relevant technology. All the women had built company websites which were being used primarily to share information about products and services. However, as companies had evolved beyond their initial concepts or offerings, the websites were now essentially outdated. Old or inaccurate information about the companies severely reduced the ability to effectively promote their goods and services.
Operating in the digital economy raises the challenges of digital payments and the reality of poor merchant banking support. CWIT members reported their struggles with this issue. Imagine participating in a trade show and having secured a sale, then facing the issue of how to get paid. Wire transfers are an expensive and lengthy option. For most Caribbean entrepreneurs, getting paid via an e-commerce platform requires a PayPal account linked to a U.S. bank account, not an option widely available. Thankfully, some creative non-banking solutions have begun to emerge to fill that gap. However, merchant payment solutions to support e-commerce, including for the service sectors which are not very well understood, are needed.
Then there is the challenge of the underlying technological infrastructure, beginning with access to the Internet. The highest penetration rates in the Caribbean were in the Dominican Republic and Trinidad and Tobago at 79.8% and 77.3% of the population, respectively, at the start of 2022. In 2019, 40% of the population in the member states of the Organisation of Eastern Caribbean (OECS) had no access at all, and affordability presented a challenge for many who did. Barbados has the highest broadband speeds in the region, but it is also among the costliest in the world to use. Other Caribbean countries fall somewhere in between and have their own challenges regarding penetration rates and connection speeds. To better support growth of the digital economy, countries need to strengthen the underlying digital infrastructure, improve access to digital financial services, and encourage digital skills and literacy.
In sum, the WTO Moratorium on E-Commerce is a necessary, but insufficient condition for women traders in the Caribbean and developing world to fully benefit from the growth of digital trade. The Moratorium needs to be extended at MC13, with emphasis placed on the goal of leveling the playing field in the critical areas so that women in the developing world can participate as equal players in the digital economy.
I am a seasoned international trade and customs attorney, and policy adviser for various companies and governments with a demonstrated history of successfully developing and implementing sustainable and dynamic trade programs. I am experienced in creating partnerships with various business-support organizations to drive compliance and growth in the international market.