WTO forges historic digital trade deal despite opposition

Pact advances digital trade rules as India and US stand apart

The WTO has reached a landmark agreement on digital trade rules among participating members, although India and the United States remain outside the pact.

A group of World Trade Organization members agreed on Saturday to progress the world's first agreement on digital trade rules, opting to bring the agreement into force among consenting participants.

The accord aims to create an open environment for digital trade but the efforts of most WTO members to incorporate a digital agreement into the WTO rulebook has been blocked twice by a small minority of members.

However, at the 14th WTO Ministerial Conference in Cameroon, 66 members, representing 70% of global trade reached consensus and made an interim arrangement to activate the deal within their countries, whilst pursuing broader incorporation into the WTO framework.

Ministers hail “historic step”

Japan's State Minister of Economy, Trade and Industry, Yamada Kenji, hailed the agreement as a "historic step" toward global digital trade rules.

UK Business and Trade Secretary Peter Kyle also lauded the deal.

"As the first global digital trade deal, this will make trade cheaper, faster and more secure for businesses around the world," Kyle said.

India has been one of the main countries blocking a deal, arguing that trade agreements should be adopted multilaterally by consensus – an arrangement which effectively provides them with a veto.

The United States is also not among the 66 signatories, with the deal apparently under review by the Trump administration.

Tax regime continues to favour US

The agreement is separate from an e-commerce moratorium which bans customs duties being placed on digital downloads and streaming. This moratorium, which was temporary when it was introduced in 1998, has been a bone of contention ever since.

Countries such as India and South Africa oppose making the ban permanent because as physical media has been replaced by digital, it costs developing nations billions of dollars in customer revenues. India also wants to protect its own digital sector against the US tech giants. However, the tech giants in question have successfully lobbied for years for a minimal and stable global tax regime.