World Trade Organisation (WTO) discussions ended in a deadlock on Monday as Brazil blocked a bid by the U.S. and other countries to extend a moratorium on customs duties for electronic transmissions.
WTO Director-General Ngozi-Iweala said the e-commerce moratorium has expired, meaning countries could apply duties on electronic goods such as digital downloads and streaming. However, she said the WTO hoped to restore the moratorium and that Brazil and the U.S. were trying to reach an agreement on this, but they were short on time.
Expectations were low before the start of the meeting, but the failure to even agree to an extension of the e-commerce moratorium is a serious setback for the WTO, which has been struggling to remain relevant as countries begin to work around it.
The talks were seen as a test for the WTO’s relevance after a year of trade turmoil and major disruptions due to the war in West Asia. Ministers could not agree to extend the moratorium more than two years following objections from Brazil, diplomats said.
Permanent Vs Temporary Extension
The WTO discussions are expected to continue in Geneva, according to the conference chair, Cameroon Trade Minister Luc Magloire Mbarga Atagana. They will take place in May, WTO officials said.
Diplomats worked through Sunday to close the gap between Brazil, which originally sought a two-year extension, and the U.S., which proposed a permanent one, by drafting a proposal for a four-year extension with a one-year sunset buffer, concluding in 2031.
Brazil later proposed a four-year extension, with a review clause mid-way through, which was rejected, diplomats told Reuters.
Developing countries have opposed a lengthy extension, arguing that the moratorium denies them potential tax revenue that they could invest back into their countries. According to a U.S. official, Brazil had opposed a “near-consensus document,” adding that, “It’s not U.S. vs Brazil. It’s Brazil and Turkey vs 164 members.”
Meanwhile, a Brazilian diplomat said “the U.S. wanted the sky,” and that Brazil wanted to be prudent in reviewing the moratorium by only two years, as in previous ministerial conferences, given rapid changes to digital trade.
Another diplomat stated that the U.S. trade representative, Jamieson Greer, made delegates “uncomfortable” as he suggested there “would be consequences” if the U.S. did not get a long-term moratorium extension.
Business leaders lamented the outcome of the talks, with International Chamber of Commerce Secretary General John Denton saying it was “particularly concerning at a time of real strain on the global economy.”
Plan For WTO Reform
The talks at the meeting in Cameroon did make progress on drafting a plan for broader reform of the organisation, but agreements are still pending.
A draft of the reform roadmap that provided a timeline for progress and set out key issues to address was close to being passed in Cameroon, according to diplomats, before the talks ran out of time. Discussions in Geneva will continue on improving decision-making in a consensus-based system that has long been stymied by a few countries, and the trade benefits extended to developing nations.
The reform debate comes amid efforts to rework the WTO rules to render subsidy use more transparent and ensure decision-making is easier. The U.S. and the European Union argue that China, in particular, has taken advantage of the current rules.
(With inputs from Reuters)
