The U.S. and more than a dozen other countries including Japan, South Korea, Singapore and Australia on Thursday launched their own pact to not impose duties on e-commerce after no agreement was reached to end deadlock with Brazil, a document showed.
Brazil upheld its opposition to a four-year extension of a global deal at World Trade Organization talks in Geneva which concluded on Thursday. However, Turkey, which had previously been against it, dropped its opposition, a WTO spokesperson said.
Failure at a high-level WTO meeting in Yaounde, Cameroon, in March to renew the long-standing moratorium on duties for cross-border streaming and downloads marked another setback for the WTO, as business groups said it raised serious concerns about the ability of the organisation to set global trade rules.
The moratorium, agreed in 1998 and regularly renewed since, bars duties on cross-border electronic transmissions such as streaming music or films and downloading software.
WTO members with large digital economies - including the U.S., the European Union, Canada and Japan - argue it provides predictability for global digital trade and want it made permanent.
On Thursday, 19 countries, including the U.S., Japan, South Korea, Singapore, Australia, Norway and Argentina, announced the pact, agreed among themselves, not to impose duties on electronic transmissions for an unspecified period.
The final text confirmed that it would come into effect on May 8, while expressing disappointment at the lapse of the multilateral moratorium.
"Nonetheless, this group of Members remains committed to do what we can to provide to businesses and consumers a measure of predictability and certainty in the absence of the multilateral E-Commerce Moratorium," the document, dated May 7, said.
The document invited other members to join the agreement.
'SERIOUS QUESTIONS ABOUT WTO RELEVANCY'
While this agreement among 19 members marked a pathway forward, the failure to secure a multilateral agreement was deeply concerning, Sabina Ciofu, the international policy and strategy lead at techUK, the trade association representing 1,200 companies in the UK technology industry, told Reuters.
"If WTO members cannot maintain consensus around one of the longest-standing and most widely supported rules underpinning digital trade, serious questions will continue to grow about the organisation's relevance," Ciofu said.
The head of the International Chamber of Commerce said the pact was a welcome sticking plaster, but that the lapse of the globally agreed moratorium was a worrying signal at a time when businesses needed real certainty, instead of patchwork fixes.
"No one should pretend this is a substitute for a clear WTO-wide agreement," said ICC Secretary General John Denton, adding that governments should use it as a bridge back to a full restoration of the multilateral moratorium.
The U.S. ambassador to the WTO, Joseph Barloon, told delegates during the General Council meeting the U.S. was launching the plurilateral agreement to provide more certainty and predictability.
"The U.S. efforts on reform and e-commerce do not close the door to multilateral engagement. But the United States will not sit idly and wait for 166 Members to agree on common-sense solutions to respond to the needs of our stakeholders," Barloon told delegates.
