U.S. pushes to make digital trade tariff ban permanent as India resists ahead of WTO meeting

WASHINGTON — U.S. lawmakers are pressing to make permanent a longstanding global ban on tariffs on digital products, but India’s opposition is emerging as a major obstacle ahead of the World Trade Organization’s next ministerial conference.

At a recent congressional hearing, officials and policy experts said extending the WTO moratorium on customs duties on electronic transmissions — in place since 1998 — remains a top priority for the United States. The rule prohibits countries from imposing tariffs on digital goods and services such as software, data flows, and online platforms.

House Ways and Means Committee Chairman Adrian Smith said the U.S. is seeking outcomes that “benefit American businesses of all sizes,” adding that the moratorium should not be used as a bargaining tool in broader trade negotiations.

Trade experts warned that allowing the moratorium to lapse could disrupt global commerce and raise costs for businesses and consumers.

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

“A lapse in the moratorium would significantly raise the cost of global digital trade and harm US digital exporters,” he said, adding that exports could decline “as much as 1 per cent almost immediately.”

India has been repeatedly cited as a key holdout in negotiations. Kelly Ann Shaw, an attorney with Akin’s lobbying and public policy practice, said “India in particular has held the e-commerce moratorium hostage for nearly 30 years,” noting that WTO rules allow individual countries to block consensus decisions.

Witnesses at the hearing said India has linked its position on digital tariffs to other priorities, including public stockholding programs and agricultural subsidies.

U.S. experts also cautioned that abandoning the moratorium could have unintended consequences for India itself. Ezell noted that the country’s digital economy accounts for about 11 percent of its gross domestic product.

“If India ever actually got its way and we lapsed the WTO e-commerce moratorium, it would destroy their digital economy,” he said, warning that tariffs on digital flows could disrupt sectors such as semiconductors and data services.

The hearing also touched on agricultural trade tensions. Peter Bachmann said global markets are heavily influenced by government subsidies, arguing that “American rice farmer isn’t competing against an Indian rice farmer. They’re competing against the Indian government.”

He added that India has consistently pushed for permanent exemptions on public stockholding in past WTO negotiations and is likely to maintain that position at the upcoming ministerial meeting.

Despite the disagreements, lawmakers emphasized India’s importance as a strategic partner, particularly in areas such as semiconductors, artificial intelligence, and clean energy. Experts said deeper cooperation in these sectors will require closer alignment on digital trade policy.

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

The debate also highlighted broader divisions in Washington over the effectiveness of the WTO. Some lawmakers defended it as an essential rules-based system for global trade, while others questioned its ability to deliver timely outcomes.

Shaw said “an organization driven by consensus… is unlikely to be part of that solution,” while trade expert Bruce Hirsh argued the WTO still plays a vital role through its rules and committees.

The WTO, which has 166 member countries and operates on a consensus basis, has repeatedly extended the digital trade moratorium but has never made it permanent. Its fate at the upcoming ministerial conference will be a key test of whether the organization can adapt to the demands of the modern digital economy. (Source: IANS)