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Info Service on WTO and Trade Issues (Mar26/38) Yaounde, 26 Mar (D. Ravi Kanth) — The Jamaican minister-facilitator overseeing the “e-commerce work program and moratorium” at the World Trade Organisation’s 14th ministerial conference (MC14) is expected to convene the first small-group meeting on 26 March, as unbridgeable differences persist among members and the United States pressures others to agree to a permanent moratorium, according to people familiar with the development. The facilitator, Ms. Kamina Johnson Smith – Jamaica’s foreign minister and vice-chair of MC14 – has called key members to a small-group meeting at the main conference center in Yaounde, said people familiar with the matter. The US Trade Representative (USTR), Ambassador Jamieson Greer, in a statement to be made on 26 March, has called for a permanent moratorium on customs duties on electronic transmissions, without addressing the unresolved issues related to restoring the two-tier dispute settlement system or agriculture – including a permanent solution for public stockholding (PSH) programs for food security, said people familiar with the development. In the lead-up to MC14, members remained sharply divided over the e-commerce moratorium and the creation of a digital trade committee, as proposed by Switzerland and a few other countries at the 10 March General Council meeting, said participants familiar with the discussions. Unbridgeable differences and deep divisions surfaced over the future of the organization’s work on digital trade – including whether to create a Committee on Digital Trade and to make the longstanding moratorium on customs duties on electronic transmissions permanent – according to the discussions at the 10 March General Council meeting. The debate took place under GC agenda item 2, which included a report by the facilitator on the Work Programme on Electronic Commerce. Three competing proposals remained on the table just weeks before MC14. Ambassador Richard Brown of Jamaica, who was facilitating the discussions at the WTO, acknowledged that consultations among proponents have failed to produce convergence, meaning that ministers may ultimately have to grapple with multiple competing options at MC14. “There are some areas of convergence,” Ambassador Brown said, noting broad agreement that the WTO should continue to serve as a forum for discussions on trade-related aspects of e-commerce. The facilitator also warned that “substantive differences remain,” particularly over how the work programme should be structured and how long the moratorium should last. At issue are three proposals, with members weighing three competing approaches, said participants who asked not to be quoted: The ACP Proposal: The African, Caribbean, and Pacific (ACP) Group has proposed extending the moratorium only until the next ministerial conference while reinvigorating the existing 1998 Work Programme with a stronger development focus. The US Proposal: A second proposal, led by the US and 18 co-sponsors, calls for an open-ended extension of the moratorium, effectively locking in the current moratorium permanently. The proposal also sought to bring a new dimension into electronic transmissions based on electromagnetic signals that “could effectively open the gateway to new technologies, particularly AI (Artificial Intelligence), that were never part of the 1998 e-commerce decision under which moratorium for not levying customs duties is continuing biennially at every ministerial conference,” said participants who asked not to be quoted. The Swiss Proposal: A third proposal from Switzerland, Canada, and other co-sponsors would establish a Committee on Digital Trade, institutionalizing the work programme while also extending the moratorium. As members could not agree on a consolidated text, the facilitator said all three proposals will be transmitted to ministers at MC14 alongside a factual summary of the state of play, said people familiar with the matter. “The political fight that failed to be settled in Geneva may now land squarely on ministers’ desks in Yaounde,” said participants who asked not to be quoted. MAJOR PLAYERS DIG IN Several key players used the General Council meeting on 10 March to underline just how far apart members remain, said participants preferring not to be quoted. The US argued that failing to adopt a permanent moratorium on customs duties on electronic transmissions risks opening the door to “complex and costly regulatory structures” affecting digital trade, reinforcing its push to make the measure open-ended. India took the opposite position, reiterating that it does not support extending the moratorium. It also pushed back against the proposal to create a Committee on Digital Trade, warning that it represents a structural change to the WTO architecture introduced without adequate prior consultations among members, said participants who asked not to be quoted. Brazil signaled its willingness to maintain the e-commerce moratorium but stressed that any outcome must preserve policy space to address issues such as fiscal revenues, industrial policy, and the development implications of digital trade, said participants who asked not to be quoted. Brazil also indicated it could only support establishing a digital trade committee if its terms of reference are agreed simultaneously and firmly anchored in development concerns. Separately, Brazil expressed support for making the moratorium on TRIPS non-violation and situation complaints permanent, stressing that the two moratoria address distinct issues and should not be treated as a package, said participants who asked not to be quoted. A recent Draft Ministerial Decision on Electronic Transmissions by the US and 18 other countries (JOB/GC/ WPEC/1/Rev.3) seeks to make the moratorium on customs duties on electronic transmissions permanent, including the “content of the transmission” in the scope of the moratorium. This can be extremely dangerous for India as well as the Global South. A noted digital trade expert said: “With Artificial Intelligence (AI) being delivered through electronic transmissions and used across all services, including IT, financial, professional, healthcare, and education services, the moratorium on customs duties on electronic transmissions does not only lead to huge potential revenue losses for the Global South but can also pose critical national security concerns as well as seal the dominance of exporters of AI transmissions like US, China, Germany, South Korea and France over the Global South.” According to the expert, “developing AI capabilities has become a necessary condition and is no longer a policy choice for countries like India and South Africa. India is rapidly losing its export competitiveness in coding services as these services are being replaced by AI. Algorithms are becoming too important and need to be regulated. There is a need to apply customs duties on electronic transmissions from the Cloud Platforms, like Google Cloud or Amazon Web Services, in order to provide a level playing field to infant digital economies of the Global South.” The expert said that India has played a leadership role along with South Africa and Indonesia in preventing the moratorium from being made permanent in the past and has again opposed it in its recent statements. “But India needs to become a leader and build coalitions with other developing countries like Brazil, Indonesia, South Africa and other key African countries, and take this opportunity at MC14.” +
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