US Pushes for Permanent Digital Tariff Ban as India Emerges as Key Hurdle at WTO

At a Congressional hearing, officials said extending the moratorium on customs duties on electronic transmissions is a top priority. The rule has been in place since 1998.

The moratorium bars countries from taxing digital trade such as software, data, and online services.

House Ways and Means Committee Chairman Adrian Smith said the United States seeks outcomes that "benefit American businesses of all sizes." He said the rule should not be used as leverage in negotiations.

Experts warned that failure to extend the moratorium could hurt global trade.

Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation, said "It's vital that America's foremost priority at MC 14 be securing continuation of the WTO moratorium on customs duties on electronic transmissions".

"A lapse in the moratorium would significantly raise the cost of global digital trade and harm US digital exporters," he said.

He added exports could fall "as much as 1 per cent almost immediately".

India was repeatedly named as a key player in this decision-making process.

Kelly Ann Shaw, from the Akin's lobbying & public policy practice, alleged "India in particular has held the e-commerce moratorium hostage for nearly 30 years".

She said the WTO system allows countries to block decisions.

Witnesses said India has linked the issue to other demands. These include public stockholding and farm subsidies.

US experts also warned of risks for India.

Ezell said India's digital economy accounts for "11 per cent of Indian GDP".

"If India ever actually got its way and we lapsed the WTO e-commerce moratorium, it would destroy their digital economy," he said.

He said tariffs on digital flows could disrupt sectors such as semiconductors and data services.

The hearing also focused on agriculture.

Peter Bachmann said global markets are distorted by subsidies.

"American rice farmer isn't competing against an Indian rice farmer. They're competing against the Indian government," he said.

He said India has pushed for permanent exceptions on public stockholding at past meetings.

He warned there is "no reason to believe MC 14 will be any different".

Lawmakers also stressed India's importance as a partner.

They pointed to cooperation in semiconductors, artificial intelligence and clean energy.

Ezell said stronger ties would require alignment on digital trade.

"If they want to be a critical ally with the United States in advanced technology industries," he said, "it's time... for a more mature approach to trade policy making in the global digital economy."

The hearing showed divisions in Washington over the WTO.

Some lawmakers defended it as a rules-based system. Others said it struggles to deliver results.

Shaw said "an organization driven by consensus... is unlikely to be part of that solution".

Bruce Hirsh said the WTO still plays a role. He said its rules and committees help manage trade issues.

The WTO has 166 members and works by consensus.

The digital trade moratorium has been extended many times but never made permanent. Its fate at MC14 will test whether the WTO can respond to the digital economy.

- IANS