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WTO members form duty-free pact after e-commerce moratorium lapses

The United States and 18 other World Trade Organization members have moved to create a separate pact pledging not to impose customs duties on electronic transmissions, after members failed to renew the wider WTO e-commerce moratorium.

According to the document cited in the report, the group includes the United States, Ja p an, South Korea, Singapore, Australia, Norway, and Argentina. The 19 members said they would not impose duties on electronic transmissions for an unspecified period and expressed disappointment that the multilateral moratorium had lapsed.

Members of the group said they remained committed to providing businesses and consumers with a measure of predictability and certainty in the absence of the WTO-wide moratorium. They also invited other WTO members to join the arrangement.

First agreed in 1998 and renewed repeatedly since then, the moratorium prevents WTO members from imposing customs duties on cross-border electronic transmissions, including streaming, downloads and software transfers.

At MC13 in March 2024, WTO members adopted the most recent ministerial decision on the issue, extending the practice of not imposing customs duties on electronic transmissions until the 14th Ministerial Conference or 31 March 2026, whichever came earlier.

Its lapse followed failed efforts to extend the arrangement, with Brazil maintaining its opposition to a four-year renewal.

US Ambassador to the WTO Joseph Barloon told delegates that Washington was launching the plurilateral agreement to give businesses and consumers greater certainty and predictability. He said the move did not close the door to multilateral engagement, but that the United States would not wait for all WTO members to agree before responding to stakeholder needs.

Business groups warned that the failure to preserve a WTO-wide moratorium would raise concerns about global digital trade. Sabina Ciofu of techUK said the 19-member pact offered a way forward but that the absence of a multilateral agreement was worrying. At the same time, International Chamber of Commerce Secretary General John Denton described the pact as a temporary fix rather than a substitute for a WTO-wide deal.

Why does it matter?

The lapse of the WTO e-commerce moratorium weakens one of the longest-standing global understandings underpinning digital trade. A 19-member pact may preserve duty-free treatment among participating economies, but it also points to a more fragmented environment in which rules for electronic transmissions could increasingly depend on partial arrangements rather than WTO-wide consensus.

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WTO Ministerial: Members diverge on digital trade outcomes

At the 14th WTO Ministerial Conference in Yaoundé, Cameroon, two parallel tracks concerning digital trade took centre stage, each with distinct outcomes. The first was the long-standing moratorium on customs duties on electronic transmissions, a temporary ban renewed every two years since 1998, which expires on March 31, since members were unable to agree on a new extension.

The second was the plurilateral Agreement on Electronic Commerce concluded in 2024 by the Joint Statement Initiative on e-commerce (JSI), aiming to establish digital trade rules, including a prohibition on e-commerce duties. While the moratorium lapsed without a multilateral consensus, a coalition of countries decided to move forward with implementing the plurilateral e-commerce agreement.

Moratorium on customs duties on electronic transmissions

The Ministerial Conference concluded without a final declaration and without an agreement on the moratorium, leading to its lapse on March 31. Negotiators were unable to reach a consensus on the length of a new extension, with differing views among members preventing a deal.

The outcome also meant that a broader set of discussions on WTO reform, which had been politically linked to the approval of the moratorium, remained unresolved. Discussions on both fronts, as well as about the future of the Work Programme on e-commerce (WPEC), are expected to continue at the next General Council meeting in May.

At the heart of the impasse were differing perspectives on how long the moratorium should be extended. While some members, particularly the US, sought a longer-term solution, others have traditionally advocated a shorter renewal, reflecting a desire for caution given the rapid pace of technological change and the need to preserve policy flexibility for the future.

During MC14, Brazil was the leading voice, emphasising the importance of caution in light of developments such as AI and 3D printing, suggesting that a shorter extension with room for review would allow members to reassess as the digital landscape evolves. Efforts to find a middle ground ultimately fell short as time ran out.

This is not the first time that the moratorium lapses; it happened at the 1999 Seattle ministerial, before the moratorium was reinstated at Doha two years later. The current expiry of the moratorium does not mean tariffs will automatically be imposed.

Still, it creates policy space for some countries to consider introducing tariffs if they are not bound by trade agreements that prohibit customs duties on electronic transmissions.

Plurilateral Agreement on E-commerce will be implemented on an interim basis

A coalition of 66 WTO members announced they would move forward with implementing the JSI e-commerce agreement through interim arrangements. Australia, Japan, and Singapore, serving as co-convenors, confirmed that the pact, which aims to facilitate digital trade and prohibit duties on e-commerce transactions, will enter into force once 45 members have formally notified their acceptance.

In the meantime, JSI members will continue to seek inclusion of the Agreement under the WTO legal architecture. Upon the entry into force, the signatories of the Agreement, which excludes major economies, such as the United States, Brazil, and India, will be bound by a moratorium on customs duties on electronic transmissions, offsetting some of the impact of the expiry of the WTO-wide moratorium.

The initiative received support from WTO Director-General Ngozi Okonjo-Iweala, who noted that participating economies are helping establish a shared regulatory framework that can lower costs and unlock new opportunities. However, the path for other plurilateral efforts remains uncertain, as India registered dissent against the incorporation of the agreement achieved within another plurilateral negotiation, on Investment Facilitation for Development, into the WTO rulebook.

The country argued that incorporating such frameworks into the WTO rulebook risks eroding the organisation’s foundational principles. It asked for a discussion of guardrails and legal safeguards before integrating any specific plurilateral outcome into the WTO.

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E-commerce agreement expected to move forward on an interim basis at WTO Ministerial

Signatories to the E-Commerce Agreement, negotiated under the WTO Joint Statement Initiative (JSI), are planning to implement the deal on an interim basis despite continued opposition. At least 70 of the 72 countries that endorsed the agreement are expected to sign a declaration to that effect at the next WTO Ministerial Conference (MC14) in Yaoundé.

The move comes as JSI members seek to advance the agreement despite the lack of consensus among the full WTO membership for its incorporation into the Organization’s Annex 4, a step that would require the support of all WTO members. The interim arrangement would take the form of a legally binding treaty among the signatories, expiring upon formal integration into the WTO framework.

The E-commerce Agreement, finalised in July 2024, includes provisions on trade facilitation (e-signatures, paperless trade, single window), personal data protection, and a commitment to refrain from imposing customs duties on electronic transmissions. The latter clause would ensure the continuation of duty-free e-commerce among signatories regardless of the outcome of the broader WTO moratorium on customs duties on electronic transmissions.

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WTO report notes AI’s potential benefit to trade if divides are addressed

The WTO launched the 2025 World Trade Report, titled ‘Making trade and AI work together to benefit all’. The report argues that AI could potentially boost global trade by up to 37% and GDP by 12–13% by 2040, particularly through digitally deliverable services.

It notes that AI can lower trade costs, improve supply-chain efficiency, and create opportunities for small firms and developing countries. Still, it warns that without deliberate action, AI could deepen global inequalities and widen the gap between advanced and developing economies.

The report underscores the need for investment in digital infrastructure, energy, skills, and enabling policies, highlighting the importance of IP protection, competition frameworks, and government support.

A newly developed indicator, the WTO AI Trade Policy Openness Index (AI-TPOI), revealed significant variation in AI-related trade policies across and within income groups.

It assessed three policy areas relevant to AI diffusion: barriers to services trade, restrictions on trade in AI-enabling goods, and limitations on cross-border data flows.

Stronger multilateral cooperation and targeted capacity-building were presented as essential to ensure AI-enabled trade supports inclusive, sustainable prosperity rather than reinforcing existing divides.

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WTO faces crucial test amid Trump’s tariff gambit

The World Trade Organization (WTO) recently marked its 30th anniversary in a subdued ceremony, overshadowed by a growing threat to the global trade system – Donald Trump’s tariff policies. The US president’s plan to impose ‘reciprocal’ tariffs has unsettled global markets, causing the WTO to warn that international trade could shrink significantly.

Economists fear that Trump’s preference for bilateral deals over multilateral cooperation risks dismantling the rules-based system the WTO was designed to protect. WTO Director General Ngozi Okonjo-Iweala has called the situation an opportunity to reform and modernise the organisation, emphasising the urgent need to strengthen global trade rules.

While some countries are tempted to negotiate directly with Trump to shield their economies, experts like Dartmouth’s Robert Staiger stress that coordinated, multilateral action is the only way to preserve the integrity of the global trading framework. Past failures like the Doha Round haunt such efforts, but today’s crisis might spur the collective will needed for serious reform.

Inside the WTO, countries are exploring responses, from informal consultations to calls for emergency meetings. Meanwhile, China has seized the moment to bolster its standing as a defender of multilateralism, rallying other nations and filing formal complaints against US tariffs.

However, divisions persist, with some countries already negotiating separately with the US, undermining hopes for a unified front. The uncertainty surrounding America’s future in the WTO continues to loom large.

Though US funding is frozen and debates about membership persist, the appointment of a new US representative suggests Washington isn’t abandoning the body just yet. As Trump’s tactics force tough choices on the global community, experts warn that capitulating to bilateralism could permanently wreck the multilateral system – a risk the world can scarcely afford to take.

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WTO: How e-commerce can bridge the digital divide

WTO’s discussion on e-commerce and development highlighted the following activities for overcoming digital divides: investment in digital infrastructure, capacity building for new skills, and updating outdated legislation.

In addition, modern payment systems are critical for enabling seamless e-commerce transactions and participation in the digital marketplace.

National initiatives were shared as part of efforts to close the digital divide. These include support for regional digital economy studies, developing online systems to reduce business operation costs, and promoting inclusive digital ecosystems.

Programmes were noted to improve internet access in underserved regions, secure internet usage, digital literacy, and skills development—especially for women and vulnerable groups.

Ambassador Richard Brown of Jamaica emphasised that while digital infrastructure access is necessary, it must be complemented by robust legal and regulatory frameworks addressing consumer protection, privacy, data protection, and cybersecurity to establish trust in digital transactions.

On an international level, WTO can contribute through the Information Technology Agreement and the e-commerce moratorium.

Other organisations, including the OECD, International Trade Centre, and International Telecommunication Union, can play an important role.

UNCTAD’s work on e-commerce and the digital economy is critical for overcoming digital divides and fostering inclusive e-commerce.

EU files WTO complaint against China’s patent practices

The European Commission has filed a complaint with the World Trade Organization (WTO) against China, accusing the country of ‘unfair and illegal’ practices regarding worldwide royalty rates for European standard essential patents (SEPs). According to the Commission, China has empowered its courts to set global royalty rates for the EU companies, particularly in the telecoms sector, without the consent of the patent holders.

The case focuses on SEPs, which are crucial for technologies like 5G, used in mobile phones. European companies such as Nokia and Ericsson hold many of these patents. The Commission claims that China’s actions force European companies to reduce their royalty rates globally, providing Chinese manufacturers with unfairly low access to European technologies.

The European Union has requested consultations with China, marking the first step in WTO dispute resolution. If a resolution is not reached within 60 days, the EU can request the formation of an adjudicating panel, which typically takes about a year to issue a final report. This case is linked to a previous EU dispute at the WTO concerning China’s anti-suit injunctions, which restrict telecom patent holders’ ability to enforce intellectual property rights in courts outside China.

WTO members agree on digital trade rules, US holds back

Around 80 countries have agreed on global digital commerce rules, including recognising e-signatures and protections against online fraud. Despite five years of negotiations led by Australia, Japan, and Singapore, the United States did not endorse the final text, citing the need for further work on essential security interests.

The European Union hailed the agreement as ‘historic,’ while Britain called it ‘groundbreaking.’ The agreement commits participants to digitalising customs documents and processes, recognising e-documents and e-signatures, and implementing legal safeguards against online fraud and misleading product claims. It also addresses limiting spam, protecting personal data, and supporting least developed countries.

Although 91 of the World Trade Organization’s 166 members, including China, Canada, and Saudi Arabia, participated in the negotiations, the US and other countries like Brazil, Indonesia, and Turkey expressed reservations. Making the accord a formal WTO agreement may be challenging due to the need for consensus, with India and South Africa particularly critical of deals excluding certain members.

WTO Joint Initiative on e-commerce close to finalising negotiations

The co-conveners of the Joint Initiative (JI) on e-commerce – Australia, Japan and Singapore – have published a stabilised text of an “Agreement on Electronic Commerce“. The publication represents a significant milestone, and comes after almost seven years of discussions and negotiations.

The text proposes rules on a range of substantive issues, including:

Openness and electronic commerce, which includes commitments on customs duties on electronic transmissions; open government data; and access to and use of the internet for electronic commerce.

Trust and electronic commerce, which covers online consumer protection;
unsolicited commercial electronic messages (spam); personal data protection; and cybersecurity.

Telecommunications, which presents a revised version of the Telecommunications Reference Paper
Cross-cutting topics related to transparency, cooperation, and development.
Exceptions, including for security, prudential reasons, data protection, and preferences for indigenous peoples.

The current draft text has been published by the co-conveners on behalf of 82 out of 91 JI members. Some countries, notably Brazil, Colombia, El Salvador, Guatemala, Indonesia, Paraguay, Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Türkiye and United States are still undertaking domestic consultations on the text.

Why this is important

The regulation of e-commerce and digital trade has taken place so far within preferential trade agreements (PTAs), celebrated bilaterally or plurilateraly among countries. Nevertheless, there is no specific agreeemnt on this issue in the context of the WTO.

An e-commerce agreement would be an important step towards promoting global harmonisation of norms. Although the participation of LDCs and of some regions, such as the Caribbean, is still limited, the JI counts on the participation of a significant number of WTO members, which account for approximately 90% of global trade. While topics under ‘enabling electronic commerce’ carry special importance to development, consumer protection and privacy help to put individuals at the center of the digital economy.

In addition, the text of the “Agreement on Electronic Commerce” enshrines a commitment not to impose customs duties on electronic transmissions (to be reassessed after five years). Currently, a moratorium on customs duties on electronic transmissions is in place among all WTO members, exempting digital products, such as online films, music, and software from tariffs (customs duties) as they cross borders. Nevertheless, this WTO-wide moratorium is likely to expire at the next WTO Ministerial Meeting. The inclusion of a moratorium in the e-commerce agreement means that the status quo – the non-application of custom duties – would continue to be the rule among most WTO members, regarless of the expiration of the wider moratorium.

Finally, the agreement also presents extensive provisions aiming to cater to the specific needs of developing countries and LDCs. Nevertheless, there are doubts with regards to whether these provisions would be fit for purpose, since most of them are formulated in a ‘best effort’ language, and they do not follow the model of the Trade Facilitation Agreement (TFA), which links implementation with the existing capacity, and with “mandatory” technical assistance.

What is missing

The JI officially began negotiations with an ambitious agenda, which included enabling issues, customs duties and market access, as well as a wide range of digital policy issues, such as data flows, localisation, access to the source code, and cybersecurity.

Negotiations on some of the most ‘digital’ issues, such as data flows and source code, halted when the United States decided to withdraw its support for these areas in order to preserve domestic policy space. Although data flows are the lifeblood of the digital economy, it seems unlikely that rules on this issue will be harmonised on a multilateral basis anytime soon. The co-conveners simply state that “participants recognise that some issues of importance to digital trade have not been addressed in this text. Participants will discuss the inclusion of these issues in future negotiations”.

The mechanism to include a future agreement on e-commerce in the WTO legal architecture is also an open issue. The members of another Joint Initiative on Investment Facilitation for Development (IFD) have not managed to secure the inclusion of the agreed text under Article 4 of the Marrakesh Agreement, which deal with WTO Plurilateral Agreements. Such an inclusion requires a hard-to-achieve consensus among WTO Members, given the explicit opposition by some countries. This raises questions on the path forward towards the incorporation of the outcomes of other JIs, including on e-commerce.

The negotiations at WTO JI will continue pending endorsement by several countries. According to the United States, “the current text falls short and more work is needed, including with respect to the essential security exception”.

Is this a last renewal of the WTO e-commerce Moratorium?

On 1 March, during the extra day of negotiations, WTO Members gathered in Abu Dhabi for the 13th Ministerial Conference agreed to extend the current Moratorium on Customs Duties on Electronic Transmissions until the next ministerial meeting, or until 31 March 2026, whichever is earlier. In spite of that, this could be the beginning of the end of the Moratorium: this is likely to be the last renewal.

A new blog-post from Digital Watch Observatory expert Marilia Maciel, in which she explains the dynamics and the outcomes of the 13th World Trade Organization (WTO) Ministerial Conference (MC13) held from 26-29 February, 2024 in Abu Dhabi, United Arab Emirates

The negotiating positions on the Moratorium ranged from, on the one hand, OECD countries, some developing countries, and China, aiming to make the Moratorium permanent and, on the other hand, some developing countries led by India, Indonesia, South Africa and Indonesia requesting the end of the Moratorium.

In 2022, an extension was granted until MC13, but fears of another postponement of the Ministerial led Members to call for an explicit renewal by Ministers or by the WTO General Council if the Ministerial got delayed beyond 31 March 2024. This would prevent the Moratorium from sliding into permanence, revealing that the idea of non-renewal was by that time strongly held by some members.