Asian Forum on Information and Communication Technology Policies and e-Strategies, 20-22 October 2003

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Session Summary

Session II - Globalization and WTO: ICT, Trade and Competitiveness

Chair: Dr. Mai Liem Truc, Standing Vice-Minister, Ministry of Posts and Telematics of Vietnam
Resource Person: Dr. Susan Teltscher, Economics Affairs Officer, UNCTAD, Geneva
Panel/Discussants:

1.	H.E. Sharad Chandra Shah, Vice-Chairman, Information Technology High-Level Commission, Nepal
2.	Mr. Xuan Zengpei, Chief, Information, Communication and Space Technology (ICSTD), UNESCAP, Thailand
3.	Mr. Khalid Saeed, Federal Secretary, Ministry of Information Technology, Pakistan

Note: The Roundtable was assisted by a facilitator who posed 11 "Key Questions and Issues" to all the participants.

POINTS AND ISSUES RAISED

-	Addressed recent developments on the international trade-and-ICT agenda and discussed the policy environment that fosters ICT growth and exports in developing countries.
-	Issues: 1)The WTO work programme on electronic commerce, including the customs moratorium and the classification of digitized products; 2) The ICT producing sectors, including the ITA (Information Technology Agreement), trends in international trade in ICT goods and services, and investment in the ICT sector; 3) Trade in ICT-related services and business process outsourcing.
-	ICTs play an important role as an enabler for economic development, affecting international trade and investment, and creating new market opportunities for companies in developing countries.
-	Growth in ICT goods and services trade has been higher than growth in total trade; and it remains high despite an overall global slow down.
-	ICTs enable trade in other sectors by enhancing market access and broadening the customer base, facilitating customs, transport and logistics.
-	ICTs create new services and goods that can be traded online, such as those in the entertainment sector and the cultural industry. Trade in the ICT sector has shown significant growth rates during the past decade, both for ICT goods and ICT services.
-	Cyberspace is tariff and tax free - especially since it is delivered online instead of the old stream (books, music, movies); we need to determine if they are to be classified as goods or services. Implications - different rules apply and potentially will lead to custom revenue losses for developing countries based on digital trade.
-	High growth of some segments of the ICT industry, combined with the recent liberalization of the sector in the context of the WTO ITA (Information Technology Agreement), has provided companies from developing countries with opportunities for exports
-	Policies aimed at creating an enabling environment for the development and deployment of ICT at the domestic level need to address issues of trade, investment, industry development and e-business in general.
-	Calculations on the potential fiscal implications of the electronic delivery of digitized products show that the revenue losses would be significantly higher in the developing countries (due to higher tariff rates) but small in relation to total government revenue (less than one percent).
-	In some developing countries, the level of tariff protection applied to ICT goods remains relatively high, especially in least developed countries. This is an obstacle for companies in these countries to access technology at reasonable costs.
-	Business Process Outsourcing (BPO) is expected to play an increasing role - more traditional industries located in developed countries will outsource parts of their services (finance, retail, energy, transportation, and manufacturing sectors)
-	BPO will trigger an increase in international trade in services (business processes will be outsourced to foreign providers - these human-capital intensive services offer a great potential to developing countries with low-cost labour, providing them with increasing opportunities to develop their exports in certain services)
-	WTO work programme on e-commerce has been focused on the classification of digitized products, and whether they should fall under the GATT (as goods) or the GATS (as services).
-	Extension or suspension of the moratorium has no major economic impact, since no countries impose customs duties on e-commerce (yet). At this stage, the technical feasibility of collecting tariffs and taxes on e-commerce remains to be seen.
-	Issues of licenses will remain on the international agenda for some time in spite of the increase in uptake of open source as a means to go around licensing issues.

THE WAY FORWARD: SHARED EXPERIENCES/ PROPOSED SOLUTIONS

-	Should have a strategy framework for trade and e-commerce - policy areas must be identified to enhance countries and companies' capability to compete globally. Streamlining and re-assessment of national development strategy to capitalize on ICT-related trade and business opportunities.
-	National ICT strategy and policies should consider tax and investment incentives (e.g. tax breaks) to attract foreign investors in the ICT sector and facilitate a stable and secure environment.
-	To take full advantage of the opportunities offered by the new technologies, the tariffs levied on related products need to be reassessed.
-	E-business requires adequate regulatory frameworks and bodies to be in place to facilitate the growth of ICT and e-commerce.
-	Need to develop competent and skilled knowledge workers. Capacity building is critical.
-	A decision on the moratorium should wait until the classification issue is solved. Should digitized products be classified as services (which seems to be the tendency), the moratorium becomes obsolete, given that no customs duties are currently imposed on services.
-	In order for developing countries to increase their e-services exports (e.g. BPO) requires open markets in the potential importing countries. This would require commitments under the GATS on market access (for example, the removal of quantitative restrictions) and national treatment (for example, the removal of discriminatory taxation). Countries need to decide their approach to such requests and demands of the global economy, in particular with respect to mode 4 of the GATS.
-	Some nations have called for greater equity in international trade discussions, as they feel that there exists a need for developing countries to protect their local boundaries/ software industry in the formative stages of ICT development and as such be exempted from international expectations of trade tariffs.

Last modified 2004-05-25 03:31 PM