End of digital trade moratorium must irk tech bros

THE last meeting of the World Trade Organization (WTO) was decidedly low-key. Nonetheless, it was consequential. Brazil and Turkey blocked a US-led attempt to extend WTO’s moratorium on customs duties on electronic commerce, including on digital downloads and streaming.

For the first time since the early days of the Internet, members now have the right, under WTO rules, to tax digital transmissions, including software updates as well as video and music streaming services such as Netflix and Spotify.

In the run-up to WTO’s 14th Ministerial Conference (MC14) in Cameroon’s capital Yaounde, advocates for a tax-free Internet commerce argued that this moratorium, in place since 1998, had enabled digital trade to flourish. If each country now decided on its own tax rates for e-commerce, the result would be complexity and higher costs for both sellers and buyers, it was argued. For instance, any company wanting to update its software for, say, its invoicing system would now potentially be liable to pay a tax. It will add to business costs.

True, but then the old rules-based global trade system is disintegrating before our eyes. In the past, Washington used to set the agenda on easing trade restrictions. It had been doing this since the 1947 General Agreement on Tariffs and Trade, the original treaty that established the rules and principles of international trade.

Sadly, that era of US diplomacy is over. In recent years, successive US administrations have shown disdain for multilateral organisations. The current administration has gone further, pulling out of at least 60 such entities, even one as apolitical as the World Health Organization.

The WTO has fared no better. Its 164 members are treaty-bound to treat other members equally so they can all benefit from each other’s lowest tariffs, highest import quotas and fewest trade barriers, under the principle known as Most Favoured Nation treatment.

All such rules and restrictions were tossed overboard in 2025 when US President Donald Trump launched a trade war on Washington’s trade partners.

Past US administrations, Democrats and Republicans alike, have seen it fit to stymie the global trade arbiter, even to the extent of blocking appointments to WTO’s appeals court. Washington attempted to block the appointment of WTO’s director-general in 2020. Yet in late 2025, the US quietly paid the US$25 million in overdue membership fees owed to the organisation. It was undoubtedly a calculated move to ensure that the crucial e-commerce decision would go Washington’s way.

Other countries saw that holding back agreement on e-commerce was a chance to enhance their own negotiating positions: Brazil wanted a better deal for its agricultural goods; some nations wanted to collect taxes on digital products to help improve their own digital ecosystems.

Still, the cause of digital free trade is not totally lost. A subset of 66 members agreed to sidestep WTO hurdles for a minimalist arrangement on digital trade. Delegates from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – which includes Singapore – met their European Union counterparts on the sidelines of the Yaounde talks to hammer out a deal.

US Trade Representative Jamieson Greer lamented the end of the moratorium and threatened nations that dared to tax digital trade. Silicon Valley’s tech bros must be very unhappy. They would all be better off if Washington had joined in the CPTPP-EU digital trade negotiations instead.