MC12

Extension of WTO e-commerce moratorium still not settled as MC12 looms

The world’s trade ministers will arrive in Geneva next week with a very full agenda of still-unresolved items in front of them – including the continuation of a longstanding moratorium on charging import duties on digital transactions.

This has become clear after a pre-MC12 meeting of the heads of delegation of the WTO member countries – the General Council – concluded on Tuesday (23 November) with only a limited amount of progress to show for their endeavours.

To the undisguised frustration of most of the organization’s 164 members, a small group of countries, led by India and South Africa, are refusing to give their backing to a motion which would keep the moratorium in place.

The counter-proposal from New Delhi and Pretoria does not call explicitly for the WTO ministerial meeting – known as MC12 – to bring an end to the moratorium.

But it does call for “a reinvigorated work programme” on the topic of e-commerce duties, making no mention of the moratorium at all.

Call for ‘policy space’ on e-commerce duties

This is potentially problematic, because the moratorium – which was first agreed as far back as 1998, and has been rolled over at successive WTO ministerial meetings ever since – needs the unanimous agreement of all WTO members to keep it in place.

At the General Council, India and South Africa claimed that they were losing potential revenue of up to $12 billion – according to their own calculations – as result of the moratorium.

A Geneva-based trade official reported that the two countries had maintained they needed ‘policy space’ on the issue, and had raised the spectre of 3D-printed products being able to evade the duties which would otherwise be payable on such goods.

However, the counter-claim made by supporters of the motion to continue the moratorium was that the economic losses entailed as a result of a lack of business certainty and disinvestment if the moratorium were to lapse would be likely to far exceed any potential lost customs revenue.

Leverage for battles on TRIPS waivers and plurilaterals

It is thought highly unlikely that the moratorium will in fact lapse – but India and South Africa are using the issue as leverage in the other issues on which they are fighting against the global mainstream view.

These notably include the call for a waiver on WTO intellectual property rules for COVID-related goods, and arguments over the legal status of the joint statement initiatives JSIs which were launched at the last ministerial meeting in Buenos Aires four years ago.

On the latter point, it is now accepted that a plurilateral agreement on domestic services regulation will be signed off at MC12, and there will be commitments to conclude negotiations on e-commerce and on investment facilitation by the end of next year.

But India and South Africa continue to oppose the JSIs in principle, stating that the WTO should operate on a multilateral basis, with universal consensus for all decisions taken.

This is however a minority view, according to the Geneva-based trade official, who revealed that only Pakistan, Tunisia and Nepal had spoken up in support of the Indian/South African position.

Mixed outlook for talks on fish, agriculture, TRIPS waiver

Meanwhile, text-based negotiations on key issues such as the move to curb subsidies to the fisheries sector, on trade and health, and on agriculture, are set to continue right up until the MC12 opens on Tuesday 30 November.

“All of these things are likely to go to ministers – they are going to have a lot to decide,” the official commented.

The text on fisheries was reported to be “in much better shape than it was”.

But key outstanding issues, such as the economic threshold for exemption from subsidy eligibility, the definition of “artisanal” fishing, and non-specific subsidies on fuel, will have to be sorted out at the highest level.

The trade and health dossier “remains polarised” over the TRIPS waiver issue in particular – but officials are detecting “genuine intent to try and find a compromise” on the topic.

As for agriculture, all sides now appear resigned to agreeing on a ‘work programme’ to get agreement on the key issues by MC13 as being the only realistic outcome at this ministerial.

Meanwhile, there is said to be no consensus as yet on a proposal to allow least developed countries a grace period of between six and nine years before they lose their various WTO trade concessions when they ‘graduate’ from LDC status.

This point too is likely to require political input from ministers if a decision is to be reached at MC12.

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