Policy: Trade

Where restrictive duties and tariffs, or other trade impediments make game software and consoles prohibitively expensive, the local market suffers along with potential customers. Governments can help grow local markets through policies that welcome entertainment software and related products into the economy. We urge the Canadian government and other nations’ governments to consider the following measures to sustain industry market expansion and healthy e-commerce trade flows:

Extend and make permanent WTO moratorium on e-commerce duties. The moratorium on imposing customs duties on electronic transmissions, adopted by the WTO member states in 1998, should be extended and made permanent. Keeping the Internet duty-free makes the Internet economy more accessible for entrepreneurs in every country.

Eliminate high tariffs on consoles and console software. High tariffs on console systems, console software, and peripherals make it much harder for the market for legitimate entertainment software to take root in foreign markets. The same game title should not cost more to import because it is intended for play on a game console instead of a PC. Yet, that is the case in many markets where console software is burdened by high tariffs but PC software is duty free. Both formats should be duty free.

Classify software appropriately. With many PC game titles, consumers have the option of either downloading the game directly to their PCs or purchasing it on disc from a local retailer. Downloaded software should be treated as a “good” (rather than a service) because it is no different, in substance, from the same software embodied on a game disc. As such, it should receive treatment no less favorable than its physical counterpart.

Online game services are not “audio-visual services,” a category which appropriately describes movies and TV programs. Online game services are first and foremost software, with audio and video elements merely the result of the operation of the software itself. The EU recognized this important distinction when it exempted game services from the EU Audiovisual Media Services Directive.