At the G20 summit in Buenos Aires, the United States, Mexico and Canada signed one of the largest and most important trade agreements in American history, according to President Donald Trump on his Twitter account.
“I just signed one of the most important, and largest, trade agreements in the history of the United States and the world. The United States, Mexico and Canada worked well together in putting together this great document. The terrible NAFTA will soon be gone. The USMCA will be fantastic for everyone!” he wrote.
USMCA and digital trade
The relevant thing in digital commerce matter, is that the USMCA agreed to prohibit the application of customs duties on both import and export and other discriminatory measures to digital products distributed electronically , the e-books, videos, music, software, games, among others. They also ensured that data can be transferred transnationally and that restrictions on where data can be stored and processed are kept to a minimum, thereby strengthening and protecting the global digital ecosystem. Limiting the civil liability of Internet platforms that host third-party content outside the scope of intellectual property enforcement measures, thereby increasing the economic viability of these growth engines that depend on user interaction and content.
This agreement symbolises a very precise vision regarding digital trade. The clear determination of the non-application of customs duties puts us in a position to rethink what the point of intention is regarding an international trade that is increasingly based on an internet platform.
China and digital trade
China and the United States are the largest exponents of the global digital economy: they together account for 12 trillion dollars in 9 (see Report of the Fifth World Internet Conference) and are engaged in a trade war (with a truce since the G2017 for 20 days) that also affects their position in digital trade. While the United States maintains a position of prohibiting customs duties for this digital trade mechanism, China considers it essential to modernize its Internet infrastructure, in order to achieve greater cybersecurity and a more prosperous network culture.
Both powers in the field of digital trade have a supportive view of its growth and this symbolises that digitalisation in international trade should not be restricted, on the contrary, it should receive the greatest attention to ensure its orderly growth, facilitating the new subjects that turn out to be the great drivers of this type of marketing.
Internet and international trade
The Internet itself was the creator of these so-called subjects “digital natives” And these very users, who were born, raised and educated without considering a life without this phenomenon possible, have driven international trade through global interaction, leading to the current figures that are surprising according to the reports of the last World Internet Conference.
The USMCA agreement does not escape the presence of the "new spatial domain" that the Internet has created. And this agreement recognizes this, establishing a precise regime with the non-application of customs duties for imports and exports. But this does not mean that greater and better regulations should not be created to facilitate the genuine purpose of lawful trade. Hence, China's view that the basis for this is to increase greater levels of security and promote the transparent and cultural practice of this new active platform for international trade.
The absence of customs duties does not represent the removal of proper controls in any way, because in fact we are dealing with a new "cyber" spatial area that generates large volumes of international traffic. merchandise, in many cases new in the field of marketing. Bringing to the point that the Internet has also given birth to the possibility of transporting these goods by means of a new means of transport and this must be admitted and authorized as a possibility.
Customs and digital trade
Control is difficult to understand if we align it with an analogue customs system, such as the one currently held by nations such as Argentina. The focus should then be on the transformation of old and bureaucratic customs into modern and digital ones and not on the collection of customs duties. This change will enable the proper exercise of international traffic. that grows more and more every day, on a platform which conceives a new customs spatial area, with a new form of transport, new subjects and new goods.
Argentina, committed to change
Argentina, in light of the fact that G20 members recognize the potential for economic growth and social well-being that digital transformation brings, recommending that countries develop digital strategies, has expressed its intention to join the Organization for Economic Cooperation and Development (OECD), with the aim of improving public policies and for a greater insertion of the country in the global scene. Based on this, the necessary requirements are being fulfilled to deepen its participation in said Organization through a concrete action plan whose objective is to reach standards of OECD countries. In this sense, Argentina has adhered to the Declaration of the Ministerial Meeting of the Digital Economy of the OECD, signed in the city of Cancun, Mexico in 2016, in which the ministers and representatives of 41 countries and the European Union They pledged to work together to preserve the openness of the Internet, narrow digital divides, promote digital skills and deepen the potential of the digital economy. Thus, through decree 996 of 2/11/2018, a work plan called: Argentine Digital Agenda is established.
Contradictions: Export rights for services
Among these modifications, there is a clear intention to apply them in customs matters, which is applauded, but customs control should not be confused with taxation. Prior to announcing the application of export duties through Decree 793/18, the Argentine Government indicated that as of January 2019, duties would be imposed on the export of services, leaving a degree of uncertainty for the entire universe of companies, many of them entrepreneurs, that are growing and have opted for this new "cyber" area of foreign sales. It is not yet known exactly what will happen with this measure, but certainly the USMCA has set a starting point in the vision regarding customs taxation in the area of digital international trade and merchandise that this Internet medium makes possible to market and transport, including services, and should perhaps be accepted by Argentina.
Modernizing Customs, bringing it to full digitalization, and accompanying these changes by conceiving the Internet as a new customs area and means of transport, are essential and of great need. Trying to impose customs duties, rather than making these structural and customs changes, is stopping time and once again missing opportunities that the most powerful economies on the planet are giving us with their vision.
Finally, the motto of the last World Internet Conference is of great value, as it undoubtedly sums up the vision that should be taken with respect to international digital marketing: “Creating a digital world for mutual trust and collective governance, towards a community of shared future in cyberspace.” It clearly shows that States must accompany this evolution of digital trade, adapting technological, legal, administrative and customs systems, without disrupting its growth.
By: Dr. Guillermo Felipe Coronel, Member of the Institute of Customs Law and International Trade of the Argentine Association of Constitutional Justice
Aduana News is the first Argentine customs newspaper to launch its digital version. With 20 years of experience, its publications and initiatives aim to provide the most relevant knowledge on customs issues in order to contribute to safe trade in the region.
