Hosuk-Lee Makiyama and Badri Narayanan
In the wake of some WTO member states discussing the potential possibility of removing moratorium against tariffs on international electronic transmissions, this paper is an analysis conducted by ECIPE (supported by the members of the Global Services Coalition) on the economic losses observed as a result of the removal of moratoriums. The analysis is done using a computable general equilibrium model to capture different macroeconomic indicators like GDP, welfare, and employment due to tariffs. Results indicate that imposing tariffs would be fiscally counterproductive. The damage incurred on a macroeconomic level is several times more than the revenue generated through tariffs. Negative economic consequences like rising prices and a drop in consumption affect GDP growth. Besides, domestic tax revenues take a severe hit showing that tariff collection would be an inefficient tax mechanism.
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