Global tech on edge as WTO weighs e-commerce tariffs

Jun 15, 2022
FILE PHOTO: Optical fiber cables for internet providers are seen running into a Enel Group server room in Perugia

By Philip Blenkinsop and Emma Farge

GENEVA (Reuters) -The global technology industry is pressing the World Trade Organization to exempt data flows from cross-border tariffs, saying a failure to do so would undermine a global recovery already threatened by spiralling prices.

The WTO’s 164 members presented their views on the topic on Wednesday as negotiations at the ministerial conference ran into overtime amid growing pessimism about deals. [L1N2Y20M8]

Keisal Peters, trade minister of St Vincent and the Grenadines, who is leading discussions, said at the conference that divergences remained. As time ran out, WTO members should consider meeting halfway, she added.

The WTO agreed in 1998 to a moratorium on e-commerce tariffs and repeatedly extended it at ministerial conferences, which the Geneva-based trade body normally holds every two years.

Now India, Indonesia, Sri Lanka, Pakistan and South Africa were threatening to block an extension, trade sources close to WTO talks said. This raises the prospect that tariffs could be imposed on such data flows as music streaming and financial transactions.

“Is it fair that the cost of the moratorium is always completely born by the developing countries?” Indian Commerce Minister Shri Piyush Goyal said at the meeting. “This moratorium…needs to be reviewed.” Pakistan said is was foregoing billions of dollars in revenues due to the ban.

Countries’ opposition has prompted 108 tech company associations, including groups from India and Indonesia, to write to the WTO urging members to renew the moratorium, saying failure to do so would be a historic setback for the WTO and would undermine the global recovery.

Small developing countries, they say, would lose the chance to increase their digital competitiveness without a moratorium.

John Neuffer, chief executive of the U.S.-based Semiconductor Industry Association, said tariff-free data flows were essential for countries wishing to attract foreign. They also offered clear benefits to consumers and small businesses, he said.

“We heard alarm bells that things were in trouble, with much more risk of the moratorium not being extended,” Neuffer told Reuters. “The risk is that if one or two go, it sets off a torrent of efforts by other countries to do the same thing” – impose tariffs.

Studies demonstrated that tariff revenue benefits would be outweighed by economic losses, he said.

EU and U.S. officials warned of the costs of lifting the moratorium at Wednesday’s meeting. “This action cannot be in the interest of any WTO member,” European Commission Vice President Valdis Dombrovskis said.

(Editing by Bradley Perrett and Chizu Nomiyama)