The disagreement was that the United States demanded an extension of more than two years, as has been the case since 1998, while other countries – led by Brazil – only agreed to repeat the two-year extension.
The affected goods refer to digital downloads (books, applications), games or streaming music and movies, as well as various services or contracts transmitted online.
After the failure to agree, another group of 66 countries (including the European Union) provisionally accepted the entry into force of an agreement on electronic commerce that affects only the participants and that includes recognizing that the moratorium remains in force, although not permanently, like the first group.
Decisions in the WTO are made by consensus, according to the rules in force, but given the inability to reach agreements among the 166 members, groups of countries advance in groups on issues of interest, in what are known as “plurilateral agreements.”
Among the members that have accepted both of these transitional solutions regarding not applying tariffs to digital transmissions of “dematerialized” goods are Argentina, Costa Rica, Ecuador, Guatemala Mexico, Panama, Uruguay, Peru and Uruguay, in addition to the United States.
The temporary ban or moratorium on the imposition of tariffs on cross-border transmissions of digital content expires this Tuesday, for the first time after its initial adoption in 1998, a period that coincides with the boom of this sector, which includes digital downloads (books, applications), games or music and streaming movies.
This unprecedented event is the result of the failure of negotiations between ministers during a biennial conference of the World Trade Organization (WTO) last weekend in Cameroon, in which it was impossible to reach a middle point between the maximalist demand of the United States to make it indefinite and the position of a group of developing countries that proposed a new two-year extension, as had happened until now.
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Since the late 1990s, the importance of this moratorium has increased because goods that previously physically crossed borders and could be subject to tariffs have now been ‘dematerialized’ and transmitted online.
The Director General of the WTO, Ngozi Okonjo-Iweala, has stated that this is an instrument “that has repercussions throughout the economy” and has indicated that negotiations on this matter will continue in Geneva, where the organization has its headquarters, at the beginning of May.
The countries that led the opposition in Cameroon to an indefinite extension of this moratorium were Brazil and Turkey, which accepted a maximum of two additional years, which was flatly rejected by the United States, which made this issue its top priority at the WTO ministerial conference and which demanded a validity of more than four years.
“I have always been skeptical about the value of the WTO, and this week’s conference has confirmed that this organization will play a limited role in future global trade policy efforts,” said US Trade Representative Jamieson Greer, assessing the outcome of the ministers’ meeting.
“Two members prefer to let (the moratorium) expire after 28 years rather than do what is right for innovation and the digital economy,” he criticized.
Faced with this, Greer assured that his country has obtained “commitments from dozens of countries, and almost all of our main trading partners, not to impose tariffs on US digital transmissions.”
The International Chamber of Commerce, based in France, has noted that millions of small businesses, entrepreneurs and independent creators benefit from the borderless digital economy “to compete, grow and reach customers,” and that losing the moratorium will fragment this sector.
“Open access will be replaced by a patchwork of national standards, the cost of digital tools and services will increase, and it will be SMEs, as well as consumers in developing countries, who would pay the highest price,” the entity said.