The WTO needs a more fair and inclusive approach to digital trade. Even the leader of WTO said that the old global trade order is fading. Thus, it doesn’t make sense to try to make permanent rules based on ideas from decades ago. — Annu Kumari

The moratorium on customs duties on electronic transmissions was designed as a temporary measure to nurture the internet economy. The WTO members have agreed not to impose customs duties on electronic transmissions since 1998 which covers everything from software and e-books to streaming services and cloud data. Today, digital trade is worth trillions of dollars but a few companies, many of which are American, like Google, Amazon and Netflix, control it. Around 70% of digital exports come from developed economies and most developing countries mainly import these services. Due to this imbalance in digital trade, countries like India, Brazil and South Africa are opposing the permanent moratorium. As the moratorium on customs duties on electronic transmissions has now become a structural constraint for developing economies. 

The United States strongly pushes to make the moratorium permanent. As per the United States, internet could breakdown into parts if taxes put on digital goods. It warns that this could create barriers and lead to digital protectionism. However, a few big companies control most of the internet today which are mainly based in America. These companies shape the rules and systems. So, if there would never be any taxes then this imbalance would continue forever. Therefore, the developing countries support the customs duties on electronic transmissions as a truly open internet should be fair. Due to this moratorium, the value mostly flows in one direction, while control stays with a few players today. Moreover, the U.S. supported permanent moratorium on the grounds of predictability for businesses. But the America has ignored global trade rules when it suited its own interests. It has used tariffs on its own terms and applied trade rules selectively. The basic WTO principles have not always been followed by the America such as equal treatment of countries. Thus, the American demand for a permanent moratorium sounds weak. Why should developing countries accept strict and lasting rules when the most powerful country treats rules as flexible? The big tech U.S. companies seek certainty for their businesses but developing countries need flexibility to make their own policies as things change. Thus, the permanent moratorium will limit choices for the future of developing countries.

The global growth is also one of the reasons of permanent moratorium as per the United States. The tax-free digital trade increases the global growth due to which the digital economy achieved significant growth, but the benefits are not shared equally. Most of the digital exports come from developed countries, especially the United States. While developing countries mainly act as large consumer markets. Basically, the developing countries get lower value in return although these countries create demand and provide data. This leads to a one-way flow where data goes out of these countries while profits come back to richer nations which is not a fair system. Without taxes or proper rules, developing countries risk becoming passive markets rather than active producers. In a nutshell, it can be concluded that data is taken from the Global South, value is created in the Global North, and profits return there with very little benefit to local economies. Thus, this global growth with tax free digital goods raises inequality.

The United States warns that ending the moratorium could lead to trade wars and countries putting taxes on each other’s digital goods. Though it is a strong argument, but it also shows the fear of losing its advantage. Developed countries already have many ways to control digital markets. With the help of strong intellectual property rules, set technology standards and dominate major platforms the developed countries control the digital market. Whereas, for developing countries, tariffs are one of the few options available to control the digital market. With tariffs, developing countries can protect the dominance of developed countries in digital world. Moreover, the United States itself has not always followed free trade principles. The U.S. has imposed tariffs and supported its own industries when required which shows that it values flexibility when it benefits its own economy. But in digital trade, where the US is already ahead, it asks others to accept strict and permanent rules. It can be called as the selective multilateralism, where rules are applied differently depending on who benefits.

India’s Shifting Stance: Strategic Pragmatism or Policy Drift?

India has long been one of the strongest critics of the WTO’s digital moratorium. It has argued that a rule made in 1998 cannot govern today’s fast-changing digital economy. At many meetings, including the December 2025 General Council of the World Trade Organization, India clearly stated that the moratorium should not continue as it reduces the government revenue, limits policy freedom and increases the global inequality. This is why the recent statement by Commerce and Industry Minister Piyush Goyal is surprising. He suggested that India may accept a slightly longer extension of the moratorium to give businesses more certainty. However, this shifted stance of India for a longer temporary extension can weaken India’s position. Consequently, India’s stand appears less clear at a time when developing countries need to stay united. It seems also that India indirectly supported the view of the United States. When developed countries are already pushing for a permanent rule, if India softens its stand, it may lose its bargaining power. India has rightly put that digital trade rules must change with time. So, the focus should be on reforming the system, not just extending the same rule again. The shifted stance of India could weaken its strong position on the moratorium on custom duties on electronic transmission at a crucial moment.

Time to Challenge the Narrative

Should yesterday’s rules govern tomorrow’s economy? For developing countries, the permanent moratorium means a permanent imbalance, while flexibility gives a fair chance to grow. If the World Trade Organization wants to stay relevant, it must change with time. The WTO needs a more fair and inclusive approach to digital trade. Even the leader of WTO said that the old global trade order is fading. Thus, it doesn’t make sense to try to make permanent rules based on ideas from decades ago.           

Annu Kumari: Assistant Professor, Sri Aurobindo College (Evening), University of Delhi