WTO To Extend Moratorium On Non-Violation Cases, E-Commerce Taxes

World Trade Organization members reached agreement today to recommend a two-year extension of a moratorium on customs duties on electronic commerce, and a moratorium on challenging other WTO members under intellectual property rules for actions not in violation of the WTO, according to a WTO official.

The recommended extensions will go before the WTO General Council and then to ministers at the 30 November to 2 December WTO ministerial in Geneva. Both moratoriums expire at this month’s ministerial and are recommended for extension to the next ministerial expected in 2011.

The issues were linked by some governments, the WTO official said. One source said these may have included Switzerland, the United States and Brazil. The non-violation issue had been left unfinished at the last meeting of the Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (IPW, WTO/TRIPS, 30 October 2009), with the understanding the Council would convene again on the issue, which happened today on short notice after the e-commerce agreement was reached in the morning, a source said.

The non-violation feature at WTO allows one government to pursue dispute settlement against another if expected benefits did not occur (see WTO explanation webpage here). This has been suspended through a moratorium in the case of TRIPS, and some developed countries like the United States have sought to remove the moratorium.

The newly agreed text on non-violation reads: “We take note of the work done by the Council for Trade-Related Aspects of Intellectual Property Rights pursuant to paragraph 11.1 of the Doha Decision on Implementation-Related Issues and Concerns and paragraph 45 of the Hong Kong Ministerial Declaration, and direct it to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to our next session, which we have decided to hold in 2011. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.”

The e-commerce issue was handled through “dedicated discussions” under the General Council, chaired by Deputy Director General Harsha Vardhana Singh on behalf of the General Council chair. The new text would also require reviews and reports in July and December 2010 and July 2011, the WTO official said, after some members called for more work on the subject.

On e-commerce, the text of the 2005 Hong Kong ministerial states, under Article 46: “We take note of the reports from the General Council and subsidiary bodies on the Work Programme on Electronic Commerce, and that the examination of issues under the Work Programme is not yet complete. We agree to reinvigorate that work, including the development-related issues under the Work Programme and discussions on the trade treatment, inter alia, of electronically delivered software. We agree to maintain the current institutional arrangements for the Work Programme. We declare that members will maintain their current practice of not imposing customs duties on electronic transmissions until our next session.”