EXPLAINER-What is the World Trade Organization e-commerce moratorium?

By Olivia Le Poidevin

YAOUNDE, March 28 (Reuters) - The e-commerce moratorium is a global agreement among World Trade Organization members which bans customs duties being applied to electronic transmissions such as digital downloads and streaming.

The policy was first adopted in 1998 at the WTO's Second Ministerial Conference in Geneva as part of a declaration to encourage early digital trade growth.

It covers cross-border transmissions such as software downloads, e-books, music and movie streaming and video games.

Originally intended to be temporary, the tariff moratorium has been renewed roughly every two years at each WTO ministerial conference, and was most recently extended for two years at the 13th conference in 2024.

It is set to expire this month at the 14th WTO ministerial conference in Yaounde, Cameroon.

ARGUMENTS FOR EXTENSION

WTO members with large digital economies such as the U.S., the EU, Canada and Japan want the moratorium permanently extended because they say it ensures predictability for global digital trade.

The ⁠U.S. wants ​major American tech businesses such as Amazon, Microsoft and ​Apple to have a stable regulatory environment without the fear and costs of countries introducing duties that could impact ​cross-border digital trade.

More than 200 global business organisations signed a joint statement calling for an extension of the moratorium.

Its lapse would raise costs, fragment the internet and hinder the ability of businesses to participate in cross-border digital trade, the International Chamber of Commerce says.

ARGUMENTS AGAINST EXTENSION

Some developing nations, including India which has long opposed the moratorium, contend its extension would deprive them of tariff revenue to fund infrastructure and close the digital divide.

Sofia Scasserra of the Transnational Institute think tank said the moratorium has failed to bolster digital economies in developing countries, and instead entrenches dominance by U.S. and other advanced Big Tech giants.

A United Nations Conference on Trade and Development (UNCTAD) research paper in 2019 estimated that developing countries faced a potential tariff revenue loss of $10 billion in 2017 from the moratorium.

However, an OECD study found the potential revenue loss could largely be offset by value added tax or goods and services tax applied to imported digital services.

COUNTRIES' POSITIONS AT THE CAMEROON MEETING

Four formal proposals have been submitted for the e-commerce moratorium at the Cameroon ministerial conference.

The African, Caribbean and Pacific Group proposes extending the moratorium until the next ministerial conference. The U.S. wants a permanent extension.

A group including Switzerland proposes a permanent extension and establishing a committee on digital trade, and a Brazil plan proposes extending until the next conference and creating a digital trade committee.