The risk of taxing digital goods and electronic transmissions – and potentially shrinking the revenues of global tech giants – was at the centre of trade ministers’ negotiations at the 14th Ministerial Conference in Yaoundé, Cameroon.

The US push for a permanent extension led to a deadlock, with Brazil leading developing countries to block a new two-year renewal. If granted, the extension would have allowed streaming and downloading of digital content to remain untaxed.

Failure to reach a deal meant the expiry of the nearly 30-year e-commerce moratorium. The issue now returns to Geneva at the World Trade Organisation, where negotiations will continue.

Talks before the WTO final plenary ran deep into Sunday night and spilled into Monday. The closing session was suspended several times and finally held at 2am, highlighting the gulf between Brazil and the US. Brazil sought guarantees from Washington to support its push for progress on agriculture in exchange for concessions on e-commerce tariffs.

Stalled talksA diplomat said US concerns were overstated, arguing that even if developing countries imposed duties on electronic transmissions, the revenue gains would be limited. “Evidence shows it is not much,” the diplomat said.

Earlier, Uganda’s Trade Minister Gen Wilson Mbadi told The EastAfrican on the sidelines of the conference that African countries were divided. Some backed the US position, while a majority opposed it, leading 66 members to adopt a plurilateral interim e-commerce agreement instead of a multilateral deal.

Kenya, part of the group of WTO members pursuing a plurilateral e-commerce deal, did not join the splinter decision. Saudi Arabia, Chile, Paraguay, Myanmar and Albania also stayed out. However, Nigeria, Cameroon, Mauritius, The Gambia and Côte d’Ivoire adopted the interim deal, which its backers see as a pathway to a final agreement.“Some African countries that think they have the capacity joined this decision. Yet countries like Morocco, Egypt, Tunisia – which you would expect to support it since they have better infrastructure – put their foot down and actually rejected it,” Gen Mbadi said.“The fact is that WTO is not for us,” he added. “These deals don't favour us. Our goal should be intra-Africa trade, at the AfCFTA (African Continental Free Trade Area) and regional blocs like Comesa (Common Market for Eastern and Southern Africa).”

Key issues in Geneva will include regulation of e-commerce, artificial intelligence, and the type of technical assistance to be provided to countries. Negotiations will also focus on the duration of any new moratorium.

Before Brazil took over in the closing stages, India had led developing countries in pushing for a limited extension until the next ministerial conference in 2028. Australia, Mexico, Norway and Switzerland backed the US position for a permanent extension.

The moratorium, first adopted in 1998 and renewed every two years, bans customs duties on digital products and electronic transmissions.

Tax debate“Ending the moratorium on electronic transmissions does not mean every country will immediately start taxing digital goods like crazy,” said Sofia Scasserra, Strategic Adviser at the Our World Is Not For Sale (OWINFS).“It means countries will finally have the policy space to decide what digitalisation strategy works for them. That is not a threat. That is sovereignty.”In the 28 years since the moratorium was introduced, big tech has become the most profitable sector globally, with five American companies now holding more market capitalisation than most of the world’s economies combined.

Activists argue that when WTO members agreed in 1998 to suspend customs duties on electronic transmissions, digital trade was still marginal.

Today, digital transactions account for more than 60 percent of global GDP. Critics say the moratorium has become an open-ended “tax holiday for big tech”, depriving countries of the ability to decide whether taxing digital goods – such as e-books, streaming content, software or video games – is in their national interest.

Those opposed to the moratorium argue that the global economy, now driven by e-commerce and digital platforms, has changed fundamentally since 1998.

At the time, the internet was nascent, smartphones did not exist, streaming was absent, and digital platforms were not trillion-dollar companies shaping labour markets, tax revenues and industrial policy. Artificial intelligence is now the next frontier.“The real purpose of the moratorium is to pre-empt any country in the future from ever border-taxing AI, which will soon be the biggest value across borders,” said Parminder Jeet Singh, founder of the Just Net Coalition.

High stakesTrade in digitally delivered goods and services, including finance, business, entertainment, IT, education and health, has been expanding at about 6 percent annually. Last year, it was valued at $5.26 trillion, equivalent to roughly 15 percent of global trade, according to the WTO.

WTO economists estimate that artificial intelligence could boost global trade significantly, accounting for up to 40 percent of goods and services trade by 2040.

Adoption of the e-commerce agreement by supporting economies could increase global trade by $2.4 trillion by 2040. It is projected to raise participants’ GDP by 0.43 percent and trade by 0.97 percent.

Globally, GDP and trade are projected to increase by 0.14 percent and 0.58 percent respectively. Conversely, failure to implement the agreement could leave an average of $159 billion in trade unrealised annually, according to a WTO study.

However, with negotiations set to resume in Geneva, a comprehensive deal remains out of reach. Following the expiry of the moratorium in Cameroon, experts have also raised doubts about the interim agreement adopted by 66 countries, representing about 70 percent of global trade and led by Australia, Japan and Singapore.

WTO Director-General Ngozi Okonjo-Iweala said plurilateral agreements among willing members remain the most effective way for the organisation to respond quickly to emerging challenges and opportunities.

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