MOSCOW (Pakistan Point News / Sputnik - 23rd November, 2020) The burgeoning digitalization of global economy may not only bring benefits and new opportunities, but may also lead to new tensions between countries, sparked by protectionist measures and unfair competition, the World Trade Organization (WTO) said in a new World Trade Report released on Monday.
"While, in many instances, digital markets enhance competition and generate positive spillovers for the rest of the economy, the Report also warns that the winner-takes-all characteristics of certain digital industries could lead to policy responses that raise tensions between countries and introduce unnecessarily high market barriers. Here, international cooperation could play a particularly valuable role in limiting negative spill-overs," the WTO deputy director-generals said, as quoted in a report.
The potential tensions can be avoided through international cooperation, aimed to achieve understanding on data transfer, localization and privacy as such "would make international markets function more predictably," the organization noted.
For that to happen, the WTO framework needs to be updated to meet the new challenges and demand of the digital economy, according to the report.
The WTO calls come amid G20 efforts to reach an agreement on digital taxation. It seeks to tax tech giants that avoid paying duties in jurisdictions where they generate income by locating their operations in low-tax countries, such as Ireland or Luxembourg.
While France and the United Kingdom have been vocal proponents of the digital tax, the United States has opposed those plans, saying that they unfairly target the US tech giants. The US opposition has reportedly stalled the negotiations as Washington vowed to impose retaliatory duties on those who apply taxes on its digital giants.
