WTO suffers fresh blow after trade reform push hits wall in Cameroon

YAOUNDE, March 30 - World Trade Organization talks broke up on Monday with no agreement on reform plans or even on extending a moratorium on e-commerce duties, piling more pressure on the body that finds itself increasingly sidelined by economic nationalism.

The deadlock after four days of talks in Cameroon's capital Yaounde could give added impetus to groups of countries seeking deals among themselves outside the WTO, analysts said, potentially further weakening the global system it underpins.

The meeting ended in the early hours with Brazil blocking a bid by the U.S. and others to prolong a moratorium on duties for electronic transmissions including digital downloads and streaming.

RISK OF A 'SPAGHETTI BOWL' OF DEALS

"It marks another crack in the foundations of the WTO system," Andrew Wilson, Deputy Secretary General of the International Chamber of Commerce, said. He urged delegates to renew the moratorium before states hit digital services with new charges.

Expectations for progress had been low before the talks, but there were hopes the moratorium - which has been regularly renewed since 1998 - would at least be extended.

Trade ministers could not agree to extend it for more than two years, which was not enough for the United States, diplomats said. One said the WTO's future was being jeopardized.

U.S. officials and business groups voiced frustration, and Britain's Business and Trade Secretary Peter Kyle said the outcome was a "major setback for global trade".

The talks tested the WTO's relevance after a year of huge trade turmoil and more recent disruptions in the Middle East.

Still, a subset of 66 members did agree to sidestep previous hurdles to usher in the world's first baseline deal on digital trade rules among participants.

Svitlana Taran of the European Policy Centre think tank said the talks' failure would likely boost interest in pursuing accords between limited groups of countries, rather than in trying for global deals.

The parties of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership - 12 countries including Japan, Britain, Canada, Mexico and Australia, but not the U.S. - met with the EU on the sidelines of the WTO talks.

As diplomats pursue a mix of agreements between two or larger subsets of countries, they risk creating a complex "spaghetti bowl" of agreements, Dmitry Grozoubinski, executive director of the Geneva Trade Platform, said.

E-COMMERCE TEST

Agreeing on an e-commerce moratorium was seen as key to securing U.S. support for the WTO, which under President Donald Trump has retreated from global multilateral bodies.

WTO Director-General Ngozi Okonjo-Iweala said the trade body hoped the moratorium could still be restored and that Brazil and the U.S. were trying to reach agreement on it.

She said progress was made on a reform roadmap, and talks on issues like making subsidy use more transparent and facilitating decision-making are expected to continue in Geneva.

The U.S. and the EU argue that China in particular has taken advantage of current rules to their detriment. China has long dismissed accusations that it flouts trade rules and said it supports the multilateral system, including the WTO.

Diplomats worked through Sunday to close the gap between Brazil's initial two-year proposal on the moratorium and the U.S., which wanted a permanent extension, by drafting a plan for a four-year extension with a one-year sunset buffer.

Brazil then offered a four-year extension with a mid-term review clause, but it lacked sufficient support.

Developing countries opposing a lengthy extension argue the moratorium denies them potential tax revenue.

A U.S. official said Brazil had opposed a "near-consensus document". A Brazilian diplomat said "the U.S. wanted the sky," and that a longer extension was not prudent given rapid developments in digital trade.

Another diplomat said U.S. Trade Representative Jamieson Greer made delegates "uncomfortable" by warning of "natural consequences" if a long-term extension was not agreed.

A U.S. official said Greer explained the WTO would become less relevant without that agreement and that digital trade discussions would take place outside the organisation.

Keith Rockwell, a trade analyst at the Hinrich Foundation and a former WTO director, said Brazil's efforts to leverage e-commerce for concessions on agriculture failed because the U.S. was no longer so invested in the WTO.

"In the old days because they felt responsibility for the system the Americans would have swallowed hard and taken a hit," he said. "But now they won't do that anymore." REUTERS