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Free Trade and the Internet

© Bryan Johnson

As the Internet has grown, as a popular place to do business, it did not take long for government's to figure out they wanted to tax it. Indeed, there are several pending laws in the U.S. aimed at taxing commerce on the Internet. The federal government wants its piece of the action, the states want theirs, and even cities like New York are watching the debate, waiting to grab their share once it is settled.

But a related issue is the idea of erecting tariffs and duties on e-commerce. Not only would this provide another source of revenue for countries, but also it would help governments monitor activities of their citizens, and of the types of businesses being conducted across their borders. Apparently, some countries think taxing e-commerce would be a good way to censor their citizens in the areas of pornography and even political discourse.

The World Trade Organization imposed a temporary moratorium on the imposition of tariffs on the Internet, pushed mainly by the U.S. The Clinton Administration has pursued a position of a permanent moratorium on Internet taxation (while championing more conventional censorship vehicles like the Communications Decency Act). However, recent complaints from the tax-heavy European Union and others, have compelled the Clinton Administration to back of its demands for a tax free Internet.

U.S. Trade Representative Charlene Barshefsky recently said, "The question of permanence is of somewhat less concern to us than the question that a rollover occurs, that a working party be established." Many countries she believes increasingly understand the "ill-advisedess of imposing duties on e-commerce".

In the short term, Barshefsky wants to work the Internet tax issue into the current financial services and telecommunications agreement. She believes that not all countries see the merits of free trade on the Internet because their regulatory policies in financial services and especially telecommunications prevent their citizens from accessing the Internet (she uses Japan as an example where Internet access is prohibitively expensive to most Japanese and where usage lags other developed countries).

While the WTO works out whether to extend the current moratorium or reach an entirely new agreements won't be decided any time soon. What will become increasingly clearer is how taxing the Internet is seen by governments as not only a potential source of revenue, but also a way to censor citizenry.

And of course, there will always be those organizations like the United Nations that are pushing a plan to tax everyone's e-mail, yours, mine, theirs, everyone's, to pay for computers for less developed countries. Now there's something to ponder.

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