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TWN
Info Service on WTO and Trade Issues (Sep25/02) WTO:
US & allies revive plurilateral E-com moratorium amid deadlock Geneva, 2 Sep (D. Ravi Kanth) --The co-sponsors of the controversial "Joint Statement on the Moratorium on Customs Duties on Electronic Transmissions" on 1 September launched another proverbial salvo at the World Trade Organization in their bid to legitimize their plurilateral initiative for a permanent waiver on customs duties on electronic transmissions. The move follows the failure to reach an agreement on the e-commerce moratorium - which would maintain the practice of not imposing customs duties on electronic transmissions - at the WTO's 14th ministerial conference (MC14) in Yaounde, Cameroon, earlier this year. In the aftermath, the United States, along with the European Union and several other industrialized countries, introduced a controversial plurilateral initiative at the WTO calling for a permanent moratorium, as opposed to an extension every two years. To recall, at MC14, the US unilaterally demanded a permanent moratorium as its central negotiating position, but many countries opposed Washington's proposal. Subsequently, in the face of stiff opposition, the US scaled back its position, demanding instead an extension of the moratorium for a period of four years - a move opposed by Brazil and Turkiye. However, Ankara later dropped its objections, leaving Brazil as the sole holdout insisting on the continuation of the current practice of a two-year extension of the moratorium. This renewed push comes after Washington failed to secure consensus on its preferred four-year extension of the moratorium. In what several trade envoys described as a display of frustration after MC14, the US built a coalition of willing countries and declared that it would proceed with a plurilateral arrangement - bypassing the core procedural requirements set out in paragraph 9 of Article X of the Marrakesh Agreement that established the WTO in 1995, according to several trade envoys. Paragraph 9 of Article X of the Marrakesh Agreement explicitly states: "The Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide exclusively by consensus to add that agreement to Annex 4. The Ministerial Conference, upon the request of the Members parties to a Plurilateral Trade Agreement, may decide to delete that Agreement from Annex 4." Yet on 26 May, the US and its allies chose to sidestep these stipulated conditions and instead unilaterally announced their arrangement - an act that several trade envoys, speaking on condition of anonymity, described as a flagrant violation of the WTO rules. Worse still, according to trade envoys who declined to be named, in what is supposed to be a rules-based organization, the US, the EU, and several other developed countries now appear to be embracing a dangerous new playbook: turning the 166-member global trade body into "a lawless arena" where violations seemingly go unpunished. REVISED PROPOSAL Against this backdrop, the US, the EU, and their traditional allies - barring Canada - circulated their fourth revised proposal to revive their initiative, said people familiar with the development. In the latest revised proposal (WT/GC/286/Rev.4), circulated on 1 September, the co-sponsors - comprising Argentina, Australia, Costa Rica, Ecuador, European Union, Guatemala, Honduras, Iceland, Israel, Japan, Korea, Malaysia, Mexico, New Zealand, North Macedonia, Norway, Panama, Paraguay, Peru, Singapore, Switzerland, Chinese Taipei, the United Kingdom, the United States, and Uruguay - again expressed disappointment "at the lapse of the long-standing WTO e-commerce moratorium at the 14th Ministerial Conference (MC14) in Yaounde, Cameroon." Nonetheless, the co-sponsors stated that the above 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." Starting from 8 May 2026, the co-sponsors said, "we will continue to not impose customs duties on electronic transmissions among ourselves." They explained that "for the purposes of this communication, "electronic transmission" means a transmission made using any electromagnetic means and includes the content of the transmission." The US-led co-sponsors encouraged "all WTO Members who seek the benefits of trading under these stable conditions to join this commitment at any time with the aim of eventually securing a multilateral commitment, building upon that which had been consistently agreed upon by all Members since 1998." One trade envoy, who requested anonymity, questioned the logic: "If they are fine with their stated arrangement, then why appeal for other members to join their controversial pact?" Further confusion persists over the reference to the 1998 agreement on the e-commerce moratorium - renewed every two years since - and whether Washington is now willing to accept a two-year extension of the moratorium instead of the four-year extension it was seeking, according to people familiar with the development. ECA Earlier, the US did not join another controversial agreement - the Agreement on Electronic Commerce (ECA) - which was endorsed by the WTO's Director-General, Ms Ngozi Okonjo-Iweala, at MC14. Later, the DG announced that the WTO would act as a depository for the agreement's instruments of acceptance - an apparent violation of the Marrakesh Agreement. During a General Council meeting in July, the DG appeared to fail to offer a credible defence of her decision to serve as depository for the contentious "Agreement on Electronic Commerce," as sharp objections were raised separately by India and Pakistan - later joined by the US and other members - according to people familiar with the proceedings. The discussions at the General Council meeting exposed deepening rifts within the WTO and what several delegates described as the global trade body's accelerating drift into "institutional lawlessness", said people familiar with the development. During the General Council debate on the DG's decision to act as depository for the ECA, a broad coalition of members, including India, Pakistan, and the US, sharply questioned whether the DG can act on her own in a member-driven and rules-based organization without prior multilateral consensus. As previously reported, the DG read a lengthy written statement justifying her role as an international civil servant under paragraph 4 of Article VI of the Marrakesh Agreement. The DG, according to part of her statement posted on the WTO's website, said: "The Director-General replied that Secretariat resources devoted to the ECA are limited and transparently reported, and that if any additional support were required, participants would need to consider how to manage that." Further, according to the statement, the DG said: "The decision to act as depositary of the ECA, at the request of participants, is consistent with international law, WTO practice and precedent." She said that written replies to questions would be provided and stressed that broader institutional, legal and governance questions relating to the ECA are for WTO members to resolve. India has asserted that the DG "shall not seek or accept instructions from any government or any other authority external to the WTO," according to a document (WT/GC/W/1004) circulated by India, said trade envoys present at the meeting. India further questioned the rationale behind a budgeted expenditure of 1 million Swiss francs for servicing the ECA. The DG apparently did not respond to India's query, according to another trade envoy, who asked not to be identified. Ms. Okonjo-Iweala appeared to respond somewhat defiantly, asserting that she acted in accordance with her role as an international civil servant - though her statement appears to be factually questionable when the full import of paragraph 4 of Article VI of the Marrakesh Agreement is considered, said people familiar with the discussions and a trade envoy who participated in the meeting. Paragraph 4 of Article VI of the Marrakesh Agreement states: "The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties." "Nothing prohibits her from acting as depository due to her position as International [Civil] Servant," the DG is understood to have said, according to one trade envoy who asked not to be named. The DG also reportedly stated that how to take the agreement forward is a matter for members to decide, the same envoy added. Regarding the central legal question - whether the DG's decision complied with the critical requirement set out in paragraph 9 of Article X of the Marrakesh Agreement - another trade envoy, who preferred to remain anonymous, noted that the DG remained silent on this issue. That paragraph explicitly states: "The Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide exclusively by consensus to add that agreement to Annex 4. The Ministerial Conference, upon the request of the Members parties to a Plurilateral Trade Agreement, may decide to delete that Agreement from Annex 4." "She would not or could not demonstrate how the e-commerce agreement can be legally considered a "WTO agreement" on an "interim basis" without meeting the requirement of Article X:9 of the Marrakesh Agreement," said an Asian trade envoy, who asked not to be quoted. The DG is expected to offer a written submission on the above issue of acting as a depositary for the ECA sometime in October, said a trade envoy, who asked not to be quoted. +
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