India signals shift on e-commerce tariff moratorium

India has signalled it may drop its opposition to the extension of a global ​agreement not to impose tariffs ⁠on electronic transmissions such as digital downloads, though it remains far from agreeing to a ‌US push to make it permanent, diplomats ‌said.

India’s Commerce Minister Piyush Goyal had on Thursday cast doubt on US efforts to permanently extend the moratorium - set to expire this month - during a World Trade organisation meeting in Cameroon this week, saying it warranted “careful reconsideration.”

However, India late on Friday night indicated to WTO ‌members it would agree to an extension of two years, two senior diplomatic sources said, in the first sign of an ⁠opening in its position, ahead of the WTO meeting on the matter on Saturday. It is unclear, however, if a short-term extension would be satisfactory to the United States. US Trade Representative Jamieson Greer said on Thursday Washington was not interested in a temporary extension to the ban, only a permanent one. “This is the lowest of low-hanging fruit,” he told delegates at the opening of the conference.

Business leaders say an extension is critical to guarantee predictability, fearing duties could be introduced if the agreement ​lapses.

Two senior diplomats said US and Indian positions were still far apart.

Among the four formal proposals made by ‌members, the African, Caribbean and Pacific (ACP) Group has suggested extending the moratorium by two years, while the US seeks a permanent extension.

A third senior diplomat said that members are trying to forge a middle path of extending the moratorium beyond the next ministerial meeting - between ⁠five and 10 years. It was uncertain if the US or India would accept a middle ground, they added. The extension of the e-commerce moratorium during the WTO meeting in Yaounde is being seen as a key test for the global watchdog’s relevance, following a year of tariff-fuelled ​trade turmoil and ‌major disruption to shipping, energy prices and supply chains due to the Middle East conflict.

“I think for some countries it’s ‌actually quite existential to prolong the moratorium for a significant time,” Norwegian Foreign Minister Espen Barth Eide said, adding it would help demonstrate that ministers were able to deliver something concrete at the meeting in Yaounde.

Extending the moratorium permanently would give the US confidence to “remain fully engaged” ‌in WTO as it ‌would demonstrate its relevance in today’s economy, US Ambassador Joseph Barloon told ⁠Reuters in the lead-up to talks.

For nearly three decades the e-commerce moratorium has ‌been extended until the next ministerial conference.

The US 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.

John Bescec, Director, Customs and Trade Affairs at Microsoft, said businesses already face uncertainty around digital services ​across borders and require predictability.

“In the digital economy, uncertainty does not mean flexibility. Uncertainty means hesitation to invest,” he said.

Some developing countries believe the e-commerce moratorium deprives them of potential tax revenue which they could invest back into ⁠their countries.

Separately, a moratorium on customs duties on electronic transmissions could be heading towards a fresh extension after India lifted its veto, two sources close to WTO negotiations in Cameroon said Saturday.

World Trade Organization members generally apply tariffs to imported goods and services but in 1998 they agreed not to impose them on e-commerce.

The moratorium, which has been renewed every two years since then, is highly important for developed countries -- notably for the United States which is calling for it to be made permanent rather than kept under regular review.

So far, only India has openly voiced disagreement with renewing the moratorium when it expires at the end of this month.

Since all WTO agreements are made by consensus, India’s opposition has raised the possibility that duties could begin raining down on e-commerce trade starting next week.

But a source close to the talks at the WTO’s ministerial conference in the Cameroonian capital Yaounde -- its biennial supreme decision-making body -- suggested India was now open to a two-year extension.

“We have at this moment ... all members supporting the renewal of the moratorium,” another source, who asked not to be named, told AFP.

Agencies