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WTO May Extend E-Commerce Import Duty Moratorium
Pig Hogger writes "A meeting of World Trade Ministers would seem to propose an
18 month extension of the duty break that currently applies to cyberspace.
But the fact is, the duty break only applies to what is transmitted electronically, so therefore imposing duties on such would essentially be unenforcable by customs officials...
However, it is being proposed by the US that such a duty exemption be extended to the 'physical equivalent' of goods such as digital music and software. Can you spell MEDIA?" The story's from Fox News.
For the first time, we're seeing governments act intelligently. They don't know what is happening with the Internet, so they are taking a wait and see attitude. Catalogs had the opportunity to eliminate Brick-and-Mortar, they didn't.
A long-term decision would be unwise. Nobody knows what the future will bring for Cyberspace, and decisions can always be reversed. A 1.5 year decision is unlikely to be revisited until it is time to discuss an exemption. This allows the WTO to revisit the issue as the transistions are taking place.
In the long run, the Internet MAY make sales/VAT taxes irrelevant as geography becomes silly. On the other hand, if localities eliminate the tax advantage of E-businesses by eliminating VAT/sales taxes, then we may see a long term vision which involves both brick-and-mortar and E-businesses. The WTO is wise to take a wait and see approach.
There is a bunch of information at this site and many others regarding the WTO and why there is a formidable protest being organised for the meeting in Seattle. Some folks down here in Dallas are organizing a demonstration to show solidarity with the Seattle protesters, we are few, but if you're interested and in Dallas, swing by the bulletin board at this site and hook up with us. It'd be great to see some people in different cities doing the same if they are unable to get to seattle.
There is more than e-commerce law at stake here. The WTO also rules on patent and intellectual property law.
Take a look at a list of financial supporters for the upcoming meeting in Seattle, and do a little research.
WTO/SEATTLE HOST ORGANIZATION
SUPPORTERS LIST (as of November 1, 1999)
Emerald Level ($250,000)
=======================
Allied Signal/Honeywell
Deloitte & Touche
Extreme Networks
Ford Motor Company
General Motors Corporation
Microsoft Corporation
Nextel Communications
State of Washington
The Boeing Company
U S WEST
Diamond Level ($249,999-$150,000)
=================================
Activate.net
United Parcel Service
United Technologies Corporation
Weyerhaeuser Company
Platinum Level ($149,999-$75,000)
=================================
AT&T
Bank of America
Columbia Resource Group
Expeditors International
Hewlett-Packard Company
Joseph E. Seagram & Sons
Preston Gates & Ellis
Procter & Gamble
The Production Network
The Workshop
Gold Level ($74,999-$25,000)
============================
Active Voice Corporation
APCO Associates
Business Wire
Caterpillar
Cisco Systems
Digital Seattle
Federal Express Corporation
Frank Russell Company
IBM
Lucent
Lufthansa
PACCAR
Port of Seattle
Skyway Luggage Company
U.S. Bank
Silver Level ($24,999-$10,000)
==============================
APL Limited
Bethlehem Steel
Gray Line of Seattle
Intel Corporation
Northwest Airlines
Northwest Horticultural Council
Perkins Coie LLP
Port of Tacoma
Sandler, Travis & Rosenberg, P.A.
Seattle Chocolate Company
Thistle Press
Washington Wine Commission
United Airlines
Xerox Business Services
Bronze Level ($9,999-$5,000)
============================
American Electronics Association
American Vintners Association
Atlas Air
Chase Manhattan Bank
Chukar Cherry Company
City University
Homelands International Company
Horizon Airlines
Lane Powell Spears Lubersky LLP
Muckleshoot Casino
Renaissance Madison Hotel
S. Martinelli & Co.
Starbucks
Union Bank of California
Union Square Limited Partnership
Washington Software Alliance
*click* *click*
I'm outside the US!
*click* *click*
Now I'm back in!
*click* *click*
Outside the US again!
What are you gonna do, tell my legions of electrons to stop at the router for an inspection? You'll find they're largely negatively charged from being spammed alot, but little else...
--
Actually, where a deal takes place is pretty well defined, as the law has had to deal with telex and fax for many years; a deal takes place and is subject to the law where acceptance is received. In English Law the classic example is the case Entores v Miles Far East Corporation - dates back to 1955!
I presume the same general principles of contract law applies to Internet transactions.
Donte Alistair Anderson Roberts - hi son!
Karma: Chameleon
Historically duties and sales taxes comes from the ancient marketplace. The sellers would pay a small fee to the market which would help to promote it and, crucially, guarantee and enforce a certain standard and a consistent set of rules for trade. (Big) Government has taken over the role as the overseer of trading standards and as the guarantoor of the order of the "marketplace". It has also taken the market tax.
However, in the internet age this approach is looking increasingly strange. I, as a consumer, can buy goods anywhere at the click of a mouse, and the government can not hope to regulate all and every market. And even if I knew the physical location of the seller (not a trivial thing) and even if the local government enforced a reasonable set of trading standards (obviously not true everywhere), it would be very difficult and expensive for me to actually seek redress in a local court.
The solution, in my opinion, is to return to the medieval market arrangement. Let us have private markets which regulate themselves, and let the consumers decide which markets to deal in. It is not a completely alien idea: most stock markets operate in this way (even if they are not exactly free from government regulation) and most of the online markets (e.g. e-bay, amazon, ...) have at least some rules and attempts at consumer protection.
The bad news for govenrment is that it will loose a lot of revenue. But it will also loose some of the responsibility (if it can ever give up power!) and therefore, presumably, costs. In the future governments will increasingly have to rely on taxing immobile value like land and buildings. Trade and people are both becoming too mobile.
Incidently the UK has a funny half-way house where I as a consumer can choose to sue my UK credit card company instead of the retailer for any disputes over a purchase. Interesting: as money become increasingly a branded commodity is this the way forward?
Hi!
Help me understand this one: I'm a Danish citizen who dials my UK ISP from Germany to read my e-mail on a Californian server (I'm not making this up!) : where "am" I, for the purpose of the law? Does it make a difference if I download the e-mail to my laptop before/after reading it?
I'm not a lawyer so I'm confused.
Hi!
This is just a prime example of how traditional concepts in industry are clashing with Internet culture/concepts. It seems to me that with more and more things coming online, people have brought with them their traditional concepts about country boundaries, transporting of goods, etc., and they are experiencing a "culture shock" in a sense.
For example, they try to draw an analogy between "exporting" or "importing" of "goods". First of all, there is no physical object being moved from one place to another, it's merely an electronic transmission of some data. As long as the source machine agrees to send it to the destination, this transfer can take place without needing to physically carry the data across the country. The analogy between "goods" and a data stream is fuzzy -- would downloading a README file constitute an "import of goods" or do you need to download the entire package before it's considered a unit of "goods"?
Then, on the Internet, the boundaries are not physical -- the only boundaries are connectivity and accessibility of the data on the remote host. Sounds like a lot of these concepts -- import, export, the definitions of "goods" must be rethought to fit in with the Internet medium.
Another example (probably offtopic :-) is how traditional concepts of proprietary software are so ingrained that people just don't "get" the Open Source idea.
And yes indeed, hopefully this is a first step, not only for people to realize the Internet cannot be regulated, but even more so, for people to realize that the Internet is a completely different medium with rules that are quite different from traditional rules. New rules need to be developed that fit in the Internet's context, not merely old rules shoe-horned (imposed) on top of the Internet as though the net were the same as the physical world.
mikre he sophia he tou Mikrosophou.
Fundamentally what is a tax? A forced contribution to provide for public benefits which would be too difficult to charge for directly. E.g. laws/regulation, self-defense, public health information. etc. There are a couple of problems with taxing the internet, unlike federal roads computer networks are essentially privately owned (ignoring the academic/government bits) and (AOL/MSN/Yahoo notwithstanding) market forces have compelled players to interoperate, if only to get a slice of a larger pie.
Secondly, governments, despite their perception of gross stupidity, are not ignorant about the economic benefits of IT. Any one government that wants to put a tarriff/tax on IT traffic will find itself in a comparative disadvantage as firms immediately relocate their services offshore and land their fibre cables elsewhere. How many country towns disappeared due to newly created highways bypassing their locales?
Thirdly is what exactly is there to be taxed? Can you demand 20% of all the bits flowing along a wire? Can you have half a promise (essentially what money has now devolved to)? Much of the information that flows nowadays are transactions, or essentially bookkeeping activities between firms or internal transfers between business units of the same company. Calculating a dollar cost is a complex task. For its 10% GST impost, the Australian government tried to figure out a value-added-tax formula for financial transactions but gave up in the end.
As for juristiction, that is another whole can of worms that nobody wants to touch due to the headaches (and politics) involved. There will always be the odd-ball country that will refuse to play along (why do you think international tax havens exist?). Even if the US government unilaterally imposed the ol' greenback on the rest of the world with all the associated legal baggage, some smart cookie will find a solution to avoid confiscatory measures like establishing extra-territorial oil platforms beyond national maritine borders to host electronic services. Identities and paper corporations can be created faster than any countermeasure to crack down so it becomes a losing game. One can only look at corporations like Fox/News to see how shifting costs between countries can add extra value to the bottom-line.
As one wag used to say, he doesn't think the government is that efficient that its worth giving them more than the minimum required by law. Perhaps the only solution is to become rich then let public pressure and social stigma require individual voluntary contributions to non-profit causes.
LL