"Is Digital Content a Good or a Service?"... K-Content 'Tense' as Duty-Free Trends Shake

While K-content is enjoying its heyday in the global market, analysis suggests that it is urgent for the domestic content industry to prepare countermeasures as the international duty-free trend for digital content begins to shake. With an international consensus still underway regarding whether to view digital content as a "good" or a "service," the future imposition of tariffs is emerging as a variable for the global scalability of K-content.

The Gray Area of Digital Trade: The 'Goods vs. Service' Debate and the Moratorium on Duties

According to a video from the 'Trade Interview' show on the Trade Lounge YouTube channel, digital trade is currently undergoing rapid changes. In the past, purchasing online content such as streaming or digital downloads was considered borderless consumption, but this strictly falls within the category of trade. However, an international definitive conclusion has not yet been reached on whether to classify digital content as "goods" like physical objects or as "services."

Noh Chang-hee, director of the Digital Industry Policy Research Institute and a participant in the program, explained, "Digital trade is an area that is not standardized and continues to change," adding, "Because the approach changes completely depending on whether it is a good or a service, conflicts or adjustments of interests between nations can occur." Currently, centered around the WTO, a 'moratorium' (suspension) trend of not imposing tariffs on digital content has been maintained since 1998, but recently, voices are emerging, centered around some countries such as India or South Africa, to break this practice and impose tariffs.

Noh cited 'national identity' and 'data sovereignty' in addition to economic purposes as the background for these movements. He analyzed, "Trade involving media and culture is also related to challenges to a nation's identity," and "If a specific digital platform monopolizes market share, the control over that country's personal information may be weakened, which is why governments take this sensitively."

The Weakness of K-content is the 'Absence of Platforms'... Concerns of Blow if Tariffs are Imposed

Regarding the impact on the K-content industry if the imposition of tariffs begins in earnest, Noh suggested that a multi-dimensional approach is necessary. While K-content currently possesses high competitiveness, the fact that it has not secured platforms (such as OTT) that lead the global market is pointed out as a fatal weakness.

Noh diagnosed, "The weakness of K-content is the point that it is not entering the global market through platforms," and "The revenue currently being earned in Southeast Asia and other regions appears to be a collection of individual success stories, rather than having established a systematic market." He further predicted, "If the moratorium is abolished and tariffs are imposed, it is highly likely to be disadvantageous to us."

In particular, he added a warning to be cautious of the movements of countries that could grow into potential competitors in the future. Noh said, "Southeast Asian countries such as Thailand are increasing their content competitiveness, and if the imposition of tariffs is allowed simply because they are currently inferior to us, it could act to our practical disadvantage in the future." Ultimately, the analysis suggests that to gain the upper hand in the fight for leadership in digital trade, securing allies through FTA, revising domestic tax laws, and strengthening independent platform innovation capabilities must be carried out in parallel.