After failing to get a desired period of extension on moratorium on taxation of cross border digital transmissions at the just concluded 14th Ministerial Conference of World Trade Organisation (WTO), the US has said it would now work towards a plurilateral e-commerce moratorium and invited its trading partners to join this initiative.
“If the WTO cannot achieve this commonsense aim, the US will work outside of the WTO with all interested partners to get it done. To that end, the US invites all trading partners to commit to a plurilateral, e-commerce moratorium agreement,” US Trade Representative Jamieson Greer said in a statement
At the just concluded 14th MC the US first entered the discussions with a proposal for indefinite extension of the moratorium. At Yaounde in Cameroon during discussions it brought its demand for extension down to four years.
Some countries were willing to go along with the US proposal but Brazil and Turkiye were not agreeing to the extension of the moratorium beyond two years – a usual practice. This led to no decision on the fate of the moratorium which expired on March 31, 2026 after 28 years.
What are plurilateral agreements?
Plurilateral agreements at the WTO are resorted to when the entire membership cannot be convinced to agree to a common initiative agreement. Plurilateral agreement is a deal negotiated by a smaller group of members who want to move faster or go deeper on specific trade topics.
The US is the biggest beneficiary of the e-commerce moratorium with the biggest portion of the digital content being consumed worldwide originating from there. The expiry of the moratorium enables countries to impose duties on sale of content digitally across borders.
“Fortunately, the United States has secured commitments from dozens of countries—and nearly all of our major trading partners—not to impose tariffs on US digital transmissions,” Greer said.
However, even the plurilateral agreements take time. While countries willing to join it can move fast, it requires approval of all members of the WTO to get it included in the architecture of the WTO. The Investment Facilitation for Development (IFD) agreement that was first floated in December 2017 has not become part of WTO despite the backing of 128 countries.
The differences over e-commerce moratorium also led to postponement of conclusion of discussions on the other agenda items to the 14th MC including draft Ministerial Declaration on WTO Reform and Work Plan, Moratorium on TRIPS Non-Violation and Situation Complaints and the least developed country (LDC) package.
The unfinished agenda of the ministerial conference would be taken up by the General Council (GC) of the WTO in Geneva. GC is the highest decision making body at the WTO and comprises ambassadors of all 166 members of the WTO.