Although it is not yet clear exactly how governments might opt to classify covered transmissions, Indonesia, as one example, has already opened up new tariff classifications for online books, music, software, and one called “other.”

The category “other” is particularly worrisome, as there are a wide range of cross-border services that could be captured including everything from online education and webinars to consulting services to cloud-based applications. Given the lack of detail in the original formulation at the WTO, members could be free to decide what sort of categories to include in future duty collection.

Of course, not all (or even many) governments will be interested in or able to implement these procedures. Many governments are parties to bilateral or regional trade agreements like the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) that include a permanent customs moratorium, so no matter what happens in the WTO, members have promised not to impose such policies. Others, like participants in the Regional Comprehensive Economic Partnership (RCEP), have agreed to follow WTO rules which means that if the moratorium falls in the WTO, RCEP participants will be free to impose customs duties.

As Figure 1 shows, 96 existing trade agreements include commitments that mention the moratorium. Some have already pledged to make the moratorium permanent in one or more free trade agreements. Others, like Indonesia and the Philippines, have taken no commitments on the policy beyond RCEP.

WTO members that are currently part of the Joint Statement Initiative (JSI) on Electronic Commerce, a subset forum of 90 economies, have included a commitment to make the moratorium permanent for signatories. However, until the negotiations are concluded, there is still scope for adjustment including to remove or make the JSI language on the moratorium flexible.

Other governments that are not participating in the JSI may decide to open tariff lines for the collection of digital duties. Firms should brace for requests to deliver customs revenue and follow new customs procedures. Those that fail to comply could easily be subject to fines and penalties—now and retroactively.