India willing to extend e-commerce moratorium by two years
India has signaled that it might withdraw its opposition to extending a global agreement to not impose tariffs on electronic transmissions such as digital downloads, although it is still far from accepting the U.S. proposal to make this agreement permanent, diplomats said.
On Thursday, Indian Trade Minister Piyush Goyal cast doubt on U.S. efforts to permanently extend the moratorium – which is set to expire this month – at a World Trade Organization meeting in Cameroon this week, stating that it should be “carefully reconsidered.”
However, on Friday night, India informed WTO members that it would accept a two-year extension, according to two senior diplomatic sources, the first sign of a shift in its position ahead of the WTO meeting on the issue on Saturday.
It is, however, uncertain whether a short-term extension would satisfy the United States. U.S. Trade Representative Jamieson Greer said on Thursday that Washington was not interested in a temporary extension of the ban, but only in a permanent extension.
Business leaders believe that an extension is essential to ensure predictability, as they fear tariffs could be introduced if the agreement expires.
Two senior diplomats said that the positions of the United States and India remained very far apart.
Of the four formal proposals made by members, the group of African, Caribbean, and Pacific (ACP) countries suggested extending the moratorium by two years, while the United States sought a permanent extension.
A third senior diplomat said that members were seeking to find a middle ground by extending the moratorium beyond the next ministerial meeting – between five and ten years. It is uncertain whether the United States or India would accept an interim solution, they added.
The extension of the e-commerce moratorium at the WTO meeting in Yaoundé is seen as a test for the relevance of the global watchdog, after a year of trade turbulence fueled by tariffs and major disruptions in maritime transport, energy prices, and supply chains due to the conflict in the Middle East.
“For some countries, I think it’s crucial to extend the moratorium for a significant period,” said Norwegian Foreign Minister Espen Barth Eide, adding that this would help show that ministers could 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 like Amazon, Microsoft, and Apple to benefit from a stable regulatory environment, without fearing and bearing the costs associated with certain countries imposing tariffs that could impact cross-border digital trade.
John Bescec, Director of Customs and Trade Affairs at Microsoft, said that companies are already facing uncertainty regarding cross-border digital services and need predictability.
“In the digital economy, uncertainty is not synonymous with flexibility. Uncertainty means hesitation to invest,” he said.
Some developing countries argue that the e-commerce moratorium deprives them of potential tax revenues that they could reinvest in their country.
Sofia Scasserra from the Transnational Institute think tank said that the moratorium has failed to support digital economies in developing countries and called for its expiration to allow for a new agreement that would help them compete with American tech giants.
“The moratorium did not create a rising tide that lifted all boats. It created a protective ocean, sheltering the few who already own the biggest boats,” she said.
