Negotiations to extend the moratorium – which is set to expire in March – by four years plus an additional buffer year to 2031 are stuck, even though a broader reform package appears close to a deal, a senior diplomat and two diplomats told Reuters.
The talks at a World Trade Organization meeting in Cameroon include efforts to bridge differences between the U.S. and Brazil over extending the e-commerce moratorium, which was first adopted in 1998 to help encourage early digital trade growth.
In what is seen as a test for the WTO’s relevance, after a year of tariff-fuelled trade turmoil and major disruptions due to the Iran war, three diplomats told Reuters that ministers are stuck on extending the moratorium beyond more than two years following objections from Brazil.
“Brazil’s opposition is probably linked to a number of issues, including tense relations with the U.S.,” a senior diplomat said.
Washington initially imposed tariffs up to 40% last year. They have since come down to 10% for some sectors, 25% for steel and 0 in other areas.
Ecommerce deadlock
“The U.S. wanted the sky,” a Brazilian diplomat told Reuters, adding that Brazil wanted to stay prudent in renewing the moratorium by two years, like in previous ministerial conferences.
“In four or five years’ time, no one will be able to predict what e-commerce will be about, and this has an influence on a number of countries’ policies,” they added.
Diplomats had been working throughout Sunday to close the gaps between Brazil and the U.S. Earlier in the week, the U.S. Trade Representative Jamieson Greer said Washington wanted a permanent extension, while India said it would support a two-year extension.
A draft document seen by Reuters proposed support for developing country members concerned about losing out on tax revenues, as well as a review clause.
Business leaders say an extension is vital to guarantee predictability, fearing duties could otherwise be introduced. It is also seen as key to securing U.S. support for the WTO.
“If the moratorium does not get extended, the U.S. will use it as an excuse to beat the WTO on the head,” a senior diplomat said.
Draft reform plan takes shape
After initial resistance from some WTO members, a new draft of the reform roadmap, seen by Reuters, that provides a timeline for progress and sets out the key issues to address is close to being agreed, three diplomats said.
Those include improving decision-making in a consensus-based system that has long been stymied by a few countries, and the trade benefits extended to developing countries.
The reform debate comes amid efforts to rework WTO rules to render subsidy use more transparent and make decision-taking easier. The U.S. and European Union argue China in particular has taken advantage of current rules to their detriment.
