India has indicated it could drop its opposition to extending a global deal not to impose tariffs on digital transmissions such as digital downloads, although it is far from accepting the U.S. proposal to make the deal permanent, diplomats said.
On Thursday, Indian Commerce Minister Piyush Goyal had cast doubt on U.S. efforts to permanently extend the moratorium – due to expire this month – at a World Trade Organization meeting in Cameroon this week, saying it needed to be “carefully reconsidered.”
However, on Friday evening, India told WTO members it would accept a two-year extension, according to two top diplomatic sources, the first sign of a softening in its position ahead of the WTO meeting on the issue on Saturday.
It is, however, unclear whether a short-term extension would satisfy the United States. U.S. Commerce Representative Jamieson Greer said on Thursday that Washington was not interested in a temporary extension of the ban, only a permanent extension.
Business leaders believe an extension is essential to ensure predictability, as they fear tariffs may be introduced if the deal expires.
Two top diplomats said the positions of the United States and India are still far apart.
Among the four formal proposals put forward by members, the group of African, Caribbean, and Pacific countries (ACP) proposed extending the moratorium by two years, while the United States is seeking a permanent extension.
A third top diplomat said members were trying to find a middle road by extending the moratorium beyond the next ministerial meeting – between five and ten years. It is unclear whether the United States or India would accept an intermediate solution, they added.
The extension of the e-commerce moratorium at the WTO meeting in Yaoundé is seen as a test of the relevance of the global watchdog after a year of trade turmoil fueled by tariffs and major disruption in shipping, energy prices, and supply chains due to the conflict in the Middle East.
“I think for some countries, it is essential to extend the moratorium for a significant period,” said Norwegian Minister of Foreign Affairs Espen Barth Eide, adding that it would help demonstrate that ministers would be able to deliver something concrete at the Yaoundé meeting.
COMPANIES FEAR UNCERTAINTY
For over thirty years, the e-commerce moratorium has been extended until the next ministerial conference.
The United States wants major American tech companies such as Amazon, Microsoft, and Apple to benefit from a stable regulatory environment, without having to fear and bear the costs associated with some countries imposing tariffs that could impact cross-border digital trade.
John Bescec, director of customs and trade affairs at Microsoft, said companies were already facing uncertainty about cross-border digital services and needed predictability.
“In the digital economy, uncertainty doesn’t mean flexibility. Uncertainty means hesitation to invest,” he said.
Some developing countries believe the e-commerce moratorium deprives them of potential tax revenues that they could reinvest in their countries.
Sofia Scasserra, from the think tank Transnational Institute, said the moratorium had failed to support the digital economies of developing countries and called for its expiration to allow for a new agreement that would help them compete with American Big Tech giants.
“The moratorium didn’t create a rising tide that lifted all boats. It created a protective ocean, sheltered for the few people who already own the biggest boats,” she said.
