Tariffs on electronic transmissions would hit the global semiconductor industry hard

The 12th WTO Ministerial Conference will be held in Geneva in mid-June. Recently, the Semiconductor Industry Association (SIA) weighed in on tariffs on electronic transmissions. That's when tariffs on electronic transmissions, the 25-year-old basis of global digital trade, will be settled within a week

The SIA argues that the WTO has not imposed tariffs on electronic transmissions since 1998. By creating duty-free zones for cross-border data flows, duty-free supports the rapid growth of global trade in Internet-related services, entertainment and goods

According to the SIA analysis, while tax exemptions are vital to the global economy and must be expanded, the suspension of tax policy poses serious risks as some opponents of the WTO claim they need to increase taxes. Some WTO members could opt for the tax route, imposing tariffs on almost anyone who crosses borders digitally, including streaming music, software, social media and financial transactions

SIA believes that the imposition of tariffs on electronic transmissions, in the context of the spread of the pandemic, inflation and the Russia-Ukraine conflict, would deal a major blow to the economy and be detrimental to trade liberalization

Tariffs on electronic transmissions would hit the global semiconductor industry hardSingapore Airlines pointed out that if tariffs were required for digital transmission, the US manufacturing industry and the entire global economy would suffer. Take the SEMICONDUCTOR industry in the United States. Semiconductors are the world's most complex products to develop, design and manufacture. It relies on the seamless flow of semiconductor research, design, software and other data that constantly flows across national borders. Without the tax-free data flow of the last 25 years, we would not have the innovation that allows the semiconductor industry to pack more than 50 billion transistors into a small chip and sell them to the global market like any other advanced industry, The semiconductor industry can only succeed and be competitive in an environment that allows the protection and seamless cross-border flow of RESEARCH and development, design, engineering and manufacturing data. If the tax increase is chosen, it could seriously undermine progress made following the passage of competitiveness legislation currently before Congress

The benefits of taxing digital streams are likely to outweigh the drawbacks. According to an OECD report, countries that impose tariffs on data streams would lose more in terms of consumer welfare and export competitiveness than they would gain from new tariff revenues. Another report by the European Centre for International Political Economy (ECIPE) found that "a report by the Centre for European Political Economy studies (ECIPE) states; The loss of economic growth and reduced tax revenues from tariffs on electronic transmissions outweigh the additional tariff revenues they generate.

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