WTO members yesterday agreed to renew for six months a 20-year moratorium on placing tariffs on digital trade, allaying fears that people would have to pay duties on e-books and software for the first time.
The moratorium on digital trade worth an estimated US$225 billion a year has been in place since 1998, but was due to expire this month and required unanimity at the WTO for renewal.
“Members agree to maintain the current practice of not imposing customs duties on electronic transmissions until the 12th Ministerial Conference,” the General Council’s decision said, referring to a WTO meeting in Kazakhstan in June.
The decision came after talks ran late into Monday evening, two trade officials said.
Several countries, including India and South Africa, have expressed interest in lifting the moratorium as they develop their digital economies and seek to recuperate lost customs revenue as more trade becomes digital, but some said that this could lead to tit-for-tat tariffs on the Internet.
International Chamber of Commerce secretary-general John Denton welcomed the decision, saying that it indicated “the continued value of the WTO as a forum for multilateral trade policy making” after members failed to resolve a crisis at its top court on Monday.
However, US disruption of the global economic order reached a major milestone yesterday as the WTO lost its ability to intervene in trade disputes, threatening the future of the Geneva-based body.
Two years after starting to block appointments, the US finally paralyzed the WTO’s Appellate Body, which acts as the supreme court for international trade, as two of three members exited and left it unable to issue rulings.
Major trade disputes, including the US conflict with China and metal tariffs imposed by US President Donald Trump, can no longer be resolved by the global arbiter.
Stephen Vaughn, who served as general counsel to the US Trade Representative during Trump’s first two years as president, said that many disputes would be settled by negotiations.
Critics have said that this means a return to a post-war period of inconsistent settlements, problems that the WTO’s creation in 1995 was designed to fix.
The EU ambassador to the WTO told counterparts in Geneva on Monday that the Appellate Body’s paralysis risked creating a system of economic relations based on power rather than rules.
The crippling of dispute settlement comes as the WTO also struggles in its other major role of opening markets.
The WTO club of 164 has not produced any international accord since abandoning “Doha Round” negotiations in 2015.
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