YAOUNDÉ, March 30 (Reuters) – World Trade Organization negotiations ended on Monday without any agreement on a reform plan or even on extending a moratorium on electronic commerce, increasing pressure on the trade body that finds itself increasingly marginalized by economic nationalism.
Four-day ministerial talks in Yaoundé, the capital of Cameroon, ended in the early hours of the morning with Brazil blocking a proposal from the US and other countries to extend a moratorium on customs fees for electronic transmissions, such as digital downloads and streaming.
“This marks yet another crack in the foundations of the WTO system,” said Andrew Wilson, deputy secretary-general of the International Chamber of Commerce, urging delegates to renew the moratorium before states impose new fees on digital services.
Expectations of progress were low before the negotiations, but there were hopes that the moratorium — which has been renewed regularly since 1998 — would at least be extended.
Ultimately, this proved impossible. Trade ministers were unable to agree to extend it beyond two years, which was not enough for the United States, diplomats said.
US officials and business groups expressed frustration, and UK Business and Trade Secretary Peter Kyle called the failure to reach consensus a ‘major setback for global trade’.
Continues after advertising
The talks were seen as a test of the WTO’s relevance after a year of major trade turmoil and more recent disruptions due to the US and Israeli war against Iran.
Still, a subset of 66 members agreed to bypass previous hurdles to initiate the world’s first framework agreement on digital trade rules among participants.
‘SPAGHETTI BOWL’
Efforts to rebuild predictable WTO trade terms are creating “a spaghetti bowl of free trade agreements, bilateral and plurilateral initiatives,” said Dmitry Grozoubinski, executive director of think tank Geneva Trade Platform.
Agreeing to a moratorium on electronic commerce was considered essential to ensure US support for the WTO, which, under President Donald Trump, has distanced itself from global multilateral bodies.
WTO Director-General Ngozi Okonjo-Iweala said the trade body hoped the moratorium could be restored and that Brazil and the US were trying to reach an agreement on this.
Continues after advertising
The WTO said progress has been made on a reform roadmap, and discussions on issues such as revamping its rules to make the use of subsidies more transparent and facilitate decision-making are expected to continue in Geneva.
The US and the European Union argue that China, in particular, has taken advantage of the current rules.
US RESPONSE
Continues after advertising
Diplomats worked throughout Sunday to close the gap between Brazil’s initial two-year proposal on the moratorium and that of the US, which wanted a permanent extension, devising a plan for a four-year extension with a one-year transition period.
Brazil then offered a four-year extension with an interim review clause, but did not receive sufficient support.
Developing countries that oppose a long extension argue that the moratorium denies them potential tax revenue.
Continues after advertising
A US official said that Brazil had opposed a ‘quasi-consensual document’, stating that ‘it is not the US against Brazil. It’s Brazil and Turkey against 164 members’. A Brazilian diplomat said that ‘the US wanted the sky’ and that it was not prudent to seek a longer extension given the rapid evolution of digital trade.
Another diplomat said US Trade Representative Jamieson Greer made delegates ‘uncomfortable’ by suggesting there would be ‘natural consequences’ if an extension of the long-term moratorium was not agreed.
A US official said Greer explained that the WTO would become less relevant without this agreement and that digital trade discussions would take place outside the organization.
Continues after advertising
Keith Rockwell, a trade analyst at the Hinrich Foundation and former WTO director, said Brazil’s efforts to leverage e-commerce to seek concessions in agriculture failed because the U.S. was no longer as committed to the WTO.
“In the past, because Americans felt responsible for the system, they would have had to swallow hard and suffered a blow,” he said. ‘But now they won’t do that anymore.’
He said the impasse would boost alternative frameworks like the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, a trade deal that encompasses 12 countries including Japan, the United Kingdom, Canada, Mexico and Australia — but not the United States.
“Now what you’re going to see is a lot more energy and momentum in things like CPTPP,” Rockwell said.
