TRADE UPDATE

Food & Agriculture
May 24, 2022

By Michael Anderson, Vice President of Trade and Industry Affairs

HIGHLIGHTS

  • USMCA: The U.S. filed a USMCA complaint under the rapid response labor mechanism based on a petition from Mexican union SNITIS alleging the Panasonic Automotive Systems de Mexico facility in Reynosa denied workers the right to free association and collective bargaining. The action is the third U.S. request under the USMCA’s rapid response labor mechanism.
  • Indo-Pacific Economic Framework: President Biden announced that 12 countries will be the initial members in the Indo-Pacific Economic Framework. The members are Australia, Brunei, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam, which account for 40 percent of global GDP. The IPEF development reflects a significant step in the U.S. reasserting its influence in the region after former President Donald Trump withdrew the U.S. from the Transpacific Partnership agreement (TPP) four years ago.
  • Food Security: India announced a ban on wheat exports in an effort to protect its domestic supply, citing a risk to food security, partly due to the war in Ukraine and rising prices. Th absence of India’s planned 10 million tons of wheat exports could further exacerbate surging global food scarcity and prices.
  • U.S – UK: House Speaker Nancy Pelosi warned that the U.S. Congress “cannot and will not support a bilateral free trade agreement” with the U.K. if it undermines the post-Brexit Northern Ireland protocol.
  • WTO: WTO members released a joint statement reiterating their commitment to keeping food and agriculture markets free and open. With less than three weeks until the 12th Ministerial Conference in Geneva, Switzerland, food security is emerging a priority agenda item. Meanwhile, an agreement on the TRIPS waiver for COVID vaccine access remains uncertain.

“Some of them, to me, seem as though they impose more harm on consumers and businesses and aren’t very strategic in the sense of addressing real issues we have with China.”

— Treasury Secretary Janet Yellen commenting on section 301 tariffs

USMCA

U.S. files third USMCA labor complaint

Marty Walsh, Secretary of U.S. Labor Department
  • The Office of the U.S. Trade Representative announced filing its third USMCA complaint under the rapid response labor mechanism regarding worker rights in Mexico.  The request to review alleged labor violations comes on the heels of a petition from Mexican union SNITIS alleging the Panasonic Automotive Systems de Mexico facility in Reynosa denied workers the right to free association and collective bargaining. “This announcement demonstrates once again that, when concerns arise, we will work swiftly to stand up for workers on both sides of the border,” said Ambassador Katherine Tai. She continued, “Along with Secretary Marty Walsh and his team at the Department of Labor, we have worked closely with the Mexican government to address Rapid Response Labor Mechanism matters quickly, and I look forward to doing the same on this issue as well.” Tai said she expects a quick resolution of the complaint.
    • The petition alleges that Panasonic fired workers who supported an independent union and tried to intimidate its employees to accept substandard collective bargaining as part of a sham union. Panasonic workers voted overwhelmingly in favor of an independent union, SNITIS. Under USMCA, Mexico has ten days to agree to conduct a review and, if it agrees, 45 days from today to complete the review.
    • The prior two USMC labor complaints involving auto production plants in Mexico, Tridonex and GM facilities, were successfully resolved prior to formal dispute settlement proceedings or tariff action.

Canada’s proposed changes to dairy tariff-rate quota (TRQ) policies

  • Canada published a notice on May 16th that it has removed allocation holder pools under all dairy TRQs and selected distributors are eligible under the Industrial Cheeses TRQ. The Biden administration and the U.S. dairy industry state that these changes will not be in compliance with USMCA. This follows a dispute from January of this year that in which a panel found that Canada violated USMCA by reserving an allocation of dairy TRQs to dairy processors. U.S. Agriculture Secretary Tom Vilsack sand Ambassador Tai expressed disappointment at Canada’s announcement.
    • Vilsack met with Canadian Agriculture Minister Marie-Claude Bibeau during the G7 meetings and emphasized that “there is a need for Canada to make a much better effort than they’re making right now.” “I very forcefully conveyed our significant disappointment in the response to the panel’s discussion under USMCA on the issue of whether or not Canada would open up the TRQ under USMCA for dairy to include their retailers,” Vilsack said according to Agri-Pulse.
    • On March 1st, Canada released its initial proposed policy changes in response to a USMCA panel ruling in favor of the U.S. complaint that Canada is breaching its USMCA commitments by reserving most of the in-quota quantity TRQ in its dairy for the exclusive use of Canadian processors. The changes, which proposed to allocate shares of TRQs to “processors and distributors on a market share basis,” instead of just “processors on a market share basis,” were rejected by numerous U.S. officials and dairy industry stakeholders.

COVID-19

WTO lowers trade forecast

  • The WTO said it now expects merchandise trade volume growth of 3.0% in 2022 — down from its previous forecast of 4.7% — and 3.4% in 2023. The WTO emphasized the forecasts are less certain than usual due to the fluid nature of the conflict in Ukraine.  The WTO noted that while Ukraine and Russia represent a small share of world trade and output, both are “key suppliers of essential goods including food, energy, and fertilizers, supplies of which are now threatened by the war.”  In addition to the military conflict in Ukraine, the WTO said that the COVID-19 related lockdown in China is disrupting ocean freight trade, potentially further exacerbating supply chain constraints and inflation in several markets.

Supply Chains

Senate Finance schedule supply chain hearing

  • The Senate Finance subcommittee on international trade, customs, and global competitiveness  announced a hearing on May 25th at 3:00 pm regarding supply chain resiliency. The subcommittee outlined the purpose of the hearing as follows, “Specifically, the hearing will explore how policymakers and business leaders can address the existing backlogs exacerbated by the pandemic in the short-term and build more resilient supply chains in the long-run to more effectively weather future global challenges.”
    • Scheduled witnesses include Scott Paul, president of the Alliance for American Manufacturing; Orit Frenkel, CEO of the American Leadership Initiative; Doug Potvin, CFO of Trinity Logistics; and Gilman Louie, CEO of America’s Frontier Fund.

Food Security

India bans wheat exports adding to global food security concerns

  • Last week India announced a ban on wheat exports in an effort to protect its domestic supply, citing a risk to food security, partly due to the war in Ukraine and rising prices. Indian officials said that there was no dramatic fall in wheat output this year, but unregulated exports had led to a rise in local prices. “We don’t want wheat trade to happen in an unregulated manner or hoarding to happen,” commerce secretary BVR Subrahmanyam told reporters in New Delhi. The ban may put further pressure on global wheat prices, already at historic highs due in part to the military conflict in Ukraine. Before the ban, India planned to ship a record 10 million tons of wheat in 2022.
    • The announcement invoked concern and criticism from U.S. and other countries focused on global food security challenges. Speaking on the sidelines of the G7 summit in Germany, USDA Secretary Vilsack said the U.S. and its G7 partners understand the India ban is “exactly the wrong thing to do at this point because it really does create additional disruption of the market and can potentially increase prices, which make food inflation and availability significantly worse than they already are. I sincerely hope that India reconsiders that ill-advised decision.”
    • A USDA report on the issue noted that the real impact of the ban may be mitigated should India pursue certain flexibilities. “While these details have yet to be published, most trade sources expect that India’s MY 2022/2023 exports are likely to decline significantly from the last year’s record level, forecasting shipments in the range of 5-6 MMT. Since announcing the ban with exceptions and the additional exception issued on May 17th, the reality is that India has not completely shut down exports,” a USDA GAIN report said.  The report continued, “Indeed, it is conceivable that if MSP procurement picks up to better ensure domestic wheat requirements are met and an acceptable stock level is maintained, the GoI [Government of India] could demonstrate renewed flexibility in terms of exports in the months ahead.”

Baby Formula Shortage

The FORMULA Act

  • The “Fixing Our Regulatory Mayhem Upsetting Little Americans Act” will ease the baby formula shortage in the U.S. by temporarily waiving protectionist trade barriers for six months in order to increase the supply of safe foreign-made formula. In addition, the bill would temporarily waive Food and Drug Administration (FDA) Labeling and Nutrition requirements from certain countries with similar approval standards to the U.S. Introduced by Rep. Chris Stewart (R-UT) and Senator Mike Lee, the bill was backed by Senate Finance committee member Chuck Grassley (R-IA) among other lawmakers. The bill will also allow recipients of the Women, Infants, and Children (WIC) program to temporarily purchase baby formula from any producer.

Operation Fly Formula

  • On Wednesday, President Biden directed the Department of Health and Human Services (HHS) and U.S. Department of Agriculture (USDA) to use Pentagon-contracted commercial aircraft to import foreign infant formula that meets U.S. health and safety standards and bypass regular air freighting routes. The first mission was approved last Thursday after a USDA request to transport the equivalent of 1.5 million 8-ounce bottles of formula from Zurich, Switzerland to Plainfield, Indiana. The second occurred on Sunday from an air base in Germany to Washington Dulles International Airport to fulfill the remainder of the initial USDA request. President Biden also invoked the Defense Production Act to prioritize infant formula manufacturers for key formula inputs before other companies to eliminate production bottlenecks.

Indo- Pacific Economic Framework

12 Indo-Pacific Countries to initially join IPEF

  • The White House announced on Monday that a dozen countries will be the initial members in the Indo-Pacific Economic Framework (IPEF). The members, including the U.S., are Australia, Brunei, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. The participating nations account for 40 percent of the world economy and seven members are also a part of ASEAN. The anticipated news was released in conjunction with President Biden’s meetings over the weekend with President Yoon Suk Yeol, South Korea’s new president, and Japanese Prime Minister Fumio Kishida.
  • Nearly four years since then President Donald Trump withdrew the U.S. from the Trans-Pacific Partnership (TPP), the U.S. has re-established an economic and trade policy approach in the fastest growing region in the world to counterbalance the influence of China. Which countries will participate in each of the four IPEF pillars remains unclear at this stage, but the administration has eschewed tariff reductions as part of the negotiations. Further details regarding the negotiations are expected by late June or early July and the administration hopes to wrap up any agreements within 12 to 18 months. Additional IPEF highlights:
    • President Biden, in announcing the participating countries during his visit to Tokyo said, “We’re writing the new rules for the 21st-century economy.” “We’re going to help all of our country’s economies grow faster and fairer.”
    • The White House announcement noted that “U.S. foreign direct investment in the region totaled more than $969 billion in 2020 and has nearly doubled in the last decade, and we are the leading exporter of services to the region, helping fuel regional growth. Trade with the Indo-Pacific supports more than three million American jobs and is the source of nearly $900 billion in foreign direct investment in the United States.”
    • Jake Sullivan, the White House National Security Advisor, stated that “Taiwan will not be a part of the initial talks” during a press call, despite letters from several senators urging the administration to include Taiwan (see below). After the announcement, the IPEF participants signed a declaration to move forward with negotiations in the key areas of the framework in the coming weeks.
    • Secretary of Commerce Gina Raimondo leading up to the IPEF announcement said of IPEF, “It is by any account the most significant international economic engagement that the United States has ever had in this region,” “I can say that we have a great deal of enthusiasm about this.” “I have spent a lot of time talking to my counterparts in the Indo-Pacific and there is a large demand by them for the United States to be more present and to have an affirmative economic strategy — and that’s what this is about.”   
U.S. President Joe Biden and Prime Minister of Japan, Fumio Kishida

Commerce picks IPEF lead

  • Sharon Yuan, former President of the Asian Group and Obama administration official, will lead IPEF negotiations for the Department of Commerce, according to reports.  Yuan served as deputy assistant secretary for trade and investment policy in the Treasury Department during the Obama administration before joining The Asia Group, a business and strategic advisory firm, in 2015. In her role at the Treasury Department, Yuan advised and coordinated several Chinese economic issues for then Treasury Secretary Timothy Geithner and Jack Lew, and was deeply engage in the annual U.S.-China Strategic and Economic Dialogue.  Announcing her departure from the Asia Group, the CEO and group co-founder, Nirav Patel said, “Sharon has been a vital component of The Asia Group’s growth and success over the last seven years, and it’s been a true privilege to work with her.”
    • The Biden administration has structed the IPEF into four different modules or “pillars” that countries can decide individually whether to join. The Department of Commerce will lead negotiation modules regarding supply chain resilience; infrastructure, clean energy, and decarbonization; and tax and anti-corruption. USTR is charged with leading the fourth module focused on fair and resilient trade. At this writing, USTR has not designated a lead official for the trade module.

Senators to President Biden, include Taiwan in IPEF

  • Prior to President Biden’s trip to Japan, a bipartisan group of over 50 senators urged the President Biden to ensure Taiwan is part of the IPEF. The senators wrote, “As you consult with prospective IPEF partners, we urge you to include Taiwan.” They noted that the US-Taiwan Economic Prosperity Partnership Dialogue covers many of the same issues to  be addressed in the IPEF.
    • “Excluding Taiwan from IPEF would significantly distort the regional and global economic architecture, run counter to US economic interests and allow the Chinese government to claim that the international community does not in fact support meaningful engagement with Taiwan,” the senators continued.
    • “The more economic engagement US and allies and partners have with Taiwan, the stronger our collective resilience against coercion,” the senators wrote. “Russia’s invasion of Ukraine shows the value of tangible economic support by the United States and like-minded allies and partners, and the same is true for Taiwan. Including Taiwan in the IPEF would be an invaluable signal of our rock-solid commitment to Taiwan and its prosperity and freedom.”

The letter was led by Senate Foreign Relations Committee Chairman Bob Menendez (D-NJ) and ranking Republican Jim Risch (R-ID).

Republican Senators press for market access in IPEF

  • In an earlier letter addressed to Ambassador Tai and Secretary Vilsack, 24 republican senators reemphasized the necessity of including market access provisions in the Indo-Pacific Economic Framework. The letter coordinated by Senator John Thune (R-ID), Senator John Boozman (R-AR), and Senate Finance Committee Ranking Member Mike Crapo (R-ID), asserts that “Advancing U.S. economic interests – particularly in the Indo-Pacific region – requires meaningful and enforceable market access commitments.” The senators continue noting the present lack of ambition in the administration’s 2022 Trade Policy Agenda. “The failure to include [market access] commitments puts American exporters, including agricultural producers, at a competitive disadvantage in the global market,” the letter states.
    • Highlighting President Biden’s movement away from traditional free trade agreements, the senators expressed concern regarding the U.S.’s fading presence in the global marketplace. “U.S. farm and food product exports grew from $46.1 billion in 1994 to more than $177 billion in 2021, which was largely due to greater market access opportunities for American exporters,” while, according to the senators, “The [current] administration’s failure to engage on Trade Promotion Authority or find other avenues to open markets means our workers and producers will continue to lose ground to competitors.” Accordingly, the republican lawmakers urged the Biden Administration to include market access in IPEF and “strengthen American trade leadership.”

Ukraine

Ukrainian wheat exports decrease sharply

  • Ukraine reported a significant decrease in grain exports last week, down 64% so far in May compared to the same timeframe last year, according to Ukraine’s agriculture ministry. In 2021, Ukraine accounted for 10% of global wheat exports and Russia supplied 17% of global wheat exports, according to the United Nations.
    • Wheat futures rose to all-time highs this week after India restricted exports on the commodity amid a heatwave, and wheat prices have jumped more than 60% this year, contributing to what the UN estimates is a one-third jump in food prices globally in the last year.
    • The UN estimates about 20 million tons of harvested grain are stuck in Ukraine’s ports which have not operated due to Russian blockades and the invasion.
    • Global hunger is at a “new high,” UN Secretary-General António Guterres said Thursday, estimating “tens of millions” of people worldwide will “edge into food insecurity, followed by malnutrition, mass hunger and famine, in a crisis that could last for years.”

Section 301 Investigations

Yellen makes case for cutting some tariffs

  • Speaking during a press conference in conjunction with the G7 finance ministers meeting, Treasury Secretary Janet Yellen responded to questions regarding her views about the tariffs imposed by President Trump under Section 301 of the Trade Act of 1974. Yellen said some of those tariffs “aren’t very strategic in the sense of addressing real issues we have with China whether it concerns supply chain vulnerabilities, national security issues or other unfair trade practices.” “And so I see a case” for cutting tariffs, she continued, “not only because of inflation but because there would be benefits to consumers and firms from some of the tariffs that some relief could come from cutting some of them.” 
    • Yellen acknowledged the administration is deliberating on tariff actions and not all involved are aligned. “There are a variety of impacts, there are a variety of opinions, and we really haven’t come to agreement on where to be on tariffs.” Yellen emphasized, “I respect the opinions I hear expressed around the policy table. There are a variety of valid concerns.”
    • USTR Katherine Tai has maintained the tariffs are necessary as leverage in tackling the China challenge and its pernicious trade practices. She has consistently opposed efforts to roll back or reduce the section 301 tariffs despite repeated requests by lawmakers and industry groups.
  • Earlier in the month, the Biden Administration announced its mandatory four-year review of the China Section 301 tariffs (e.g. list 1) via a USTR press release.  USTR note that the first step in the process is “to notify representatives of domestic industries that benefit from the tariff actions of the possible termination of those actions and of the opportunity for the representatives to request continuation. If a request for continuation is received, USTR will conduct a review of the tariff actions.”

Section 232 Tariffs

Section 232 tariffs to be lifted from Ukrainian steel

  • Secretary of Commerce Gina Raimondo announced the temporary suspension of 232 tariffs on Ukrainian steel. The tariffs are to be lifted for one year, according to a Department of Commerce press release. Steel is a major industry in Ukraine, “employing 1 in 13 Ukrainians with good paying jobs.” The announcement follows a substantial push from politicians and industry groups, urging the Biden Administration to show American support for Ukraine through tariff reductions.
    • “Steelworkers are among the world’s most resilient—whether they live in Youngstown or Mariupol.  We can’t just admire the fortitude and spirit of the Ukrainian people—we need to have their backs and support one of the most important industries to Ukraine’s economic well-being.  For steel mills to continue as an economic lifeline for the people of Ukraine, they must be able to export their steel.  Today’s announcement is a signal to the Ukrainian people that we are committed to helping them thrive in the face of Putin’s aggression, and that their work will create a stronger Ukraine, both today and in the future,” said Secretary Raimondo in a statement on the suspension of 232 tariffs.

USITC Section 232 tariff investigation

  • As noted earlier, the U.S. International Trade Commission (USITC) announced it will investigate the effects of active Section 301 and Section 232 tariffs on U.S. industries. “The Commission was directed to conduct this investigation, Economic Impact of Section 232 and 301 Tariffs on U.S. Industries, Inv. 332-591, as part of the Omnibus Appropriations Act, which was signed into law on March 15, 2022.” Following the investigation, the USITC will create a report that comprises:
    • “background information on the Section 232 and 301 tariffs and an overview of the tariffs that were in effect as of March 15, 2022; and
    • an economic analysis of the impact of these tariffs on U.S. trade, production, and prices in the industries most affected by these tariffs.”
  • The USITC will conduct a public hearing in connection with the investigation, beginning at 9:30 a.m. on July 21, 2022. Information regarding the hearing will be posted on the Commission’s website no later than June 21st. The USITC will deliver the report to Congress by March 15, 2023.

U.S. – U.K.

U.S. warns that changing Northern Ireland Protocol could undermine trade deal

Nancy Pelosi, Speaker of the House of Representatives
  • House Speaker Nancy Pelosi warned that the United States Congress “cannot and will not support a bilateral free trade agreement” with the U.K. if it undermines the post-Brexit Northern Ireland protocol. Several U.S. lawmakers have consistently maintained that any breach of the Good Friday Agreement would undermine prospects for a bilateral U.S. – UK trade deal.
    • “Negotiated agreements like the Protocol preserve the important progress and stability forged by the Good Friday Accords, which continue to enjoy strong bipartisan and bicameral support in the United States Congress,” she said last Thursday. “[I]f the United Kingdom chooses to undermine the Good Friday Accords, the Congress cannot and will not support a bilateral free trade agreement with the United Kingdom.”
    • Further, tensions between the U.K. and EU continue to rise as the U.K. considers legislation allowing ministers to ignore parts of the protocol, a key part of the Brexit agreement aimed at preserving peace in Northern Ireland.

House lawmaker to discuss trade in UK, EU, and Ireland

  • Separately, House Ways & Means Committee Chair Richard Neal (D-MA) will lead a bipartisan congressional delegation to the UK, Ireland and Belgium for discussions focused on U.S.-EU and U.S.-UK trade relationships. The trip will include “bilateral meetings and discussions focused on strengthening transatlantic trade relations, deepening U.S.-EU and U.S.-UK strategic partnerships, and underscoring the significance of the Good Friday Agreement,” according to reports.
    • “The United States has special, enduring bonds with the European Union, the United Kingdom, and Ireland,” Neal said in the statement. Neal is co-chair of the Friends of Ireland congressional caucus. “Over the next week, our bipartisan delegation will reaffirm our congressional commitment to these important relationships. We are traveling at an opportune time as we, alongside our allies and partners, seek to recover from the pandemic equitably and inclusively, and as we remain united in our condemnation of Russia’s unconscionable war against Ukraine,” Neal added.
    • Other lawmakers in the delegation include, Ways & Means ranking member Kevin Brady (R-TX) and members Ron Kind (D-WI), Dan Kildee (D-MI), Vern Buchanan (R-FL) and Mike Kelly (R-PA) are joining Neal on the trip, along with Reps. Mike Doyle (D-PA), David Joyce (R-OH) and Mary Gay Scanlon (D-PA).

U.S. – EU

U.S. and EU to pursue trade and labor under TTC

  • The U.S. and EU will launch a transatlantic trade and labor dialogue as part of the bilateral Trade and Technology Council (TTC), according to a White House release. Labor, business and government officials will convene monthly discussions under the TTC platform. “By bringing stakeholders with diverse views together and hearing directly from them, this new tripartite dialogue will be an important step forward in continuing to implement a worker-centered trade policy,” Assistant USTR for Labor Joshua Kagan said. “Utilizing this dialogue to promote internationally recognized labor rights is a top priority for us, and we look forward to the opportunities this dialogue will create to deepen transatlantic engagement on issues important to workers.” Discussion topics envisioned include a fair transition for workers and businesses towards a sustainable, green economy and the impact of digital trade on US and EU workforces.

WTO

Members pledge open food and agriculture trade

  • As supply chain issues and concerns about food security continue to rise, a number of WTO members released a joint statement reiterating their commitment to keeping food and agriculture markets free and open. The communication states, “We reaffirm the urgency and importance of maintaining open and predictable agricultural markets and trade to ensure the continued flow of food, as well as products, services and inputs essential for agricultural and food production and supply chains. We also recognise the importance of exercising restraint in excessive stockpiling and hoarding of agricultural products affected by this crisis that are traditionally exported.” Likewise, the countries affirmed their commitment to pursuing emergency measures to help combat food insecurity and improving transparency of food and agriculture trade measures. The statement also mentions that conversation surrounding open food and agriculture markets will continue at the WTO’s 12th Ministerial Conference. Proponents of the joint statement include Albania; Australia; Canada; Chile; Costa Rica; European Union; Georgia; Iceland; Israel; Japan; Republic of Korea; Liechtenstein; Mexico; Republic of Moldova; Montenegro; New Zealand; North Macedonia; Norway; Paraguay; Singapore; Switzerland; The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Ukraine; United Kingdom; and United States.

China opens door for TRIPS waiver resolution

  • China told WTO members it will decline to pursue the flexibilities afforded to developing countries under the TRIPS COVID-19 vaccines proposal – setting the stage for advancing text-based negotiations. However, China tied its position to refrain from using the flexibility to removal of the criteria of export share to define eligible members contained in the text. Ambassador Li Chenggang, China’s trade envoy, said China hopes “our positive movement could be reciprocated with the same level of pragmatism and flexibility from other major stakeholders, so that an outcome that benefits developing members and LDCs in genuine needs could be reached at an earliest date before MC 12.”
  • Earlier, WTO Director-General Okonjo-Iweala released the TRIPS waiver compromise regarding COVID-19 vaccine IP protections agreed upon by the Quad (the EU, India, South Africa, and the U.S.). A WTO news item on the release notes, “In their discussions, the Quad adopted a problem-solving approach aimed at identifying practical ways of clarifying, streamlining and simplifying how governments can override patent rights, under certain conditions, to enable diversification of production of COVID-19 vaccines.” The text allows eligible members to grant usage of patented COVID-19 vaccine IP without the consent of the patent holder.

WTO e-commerce moratorium debate continues

  • Business groups are urging WTO members to avoid a “historic setback” by not extending the moratorium on duties on electronic transmissions, as a few countries continue to raise concerns with continuation of the policy. The e-commerce tax moratorium has been in place since 1998 and has been extended at every ministerial conference to date. Under the moratorium WTO members may not impose customs duties on electronic transmissions. Industry groups adamantly maintain the policy is an essential part of 21st-century business and critical to the COVID-19 recovery, for maintaining supply chain resiliency, and to the vitality of small and medium-sized enterprises.
    • “Allowing the Moratorium to expire would be a historic setback for the WTO, representing an unprecedented termination of a multilateral agreement in place nearly since the WTO’s inception – an agreement that has allowed the digital economy to take root and grow,” nearly 100 industry groups and trade associations said in a May 17 statement. “All WTO members have a stake in the organization’s continued institutional credibility and resilience, as well as its relevance at a time of unprecedented digital transformation.” The debate has taken heightened focus with less than three weeks until the WTO’s 12th Ministerial Conference, set to begin on June 12.
  • USTR Ambassador to the WTO Maria Pagán said, “Ending the moratorium would represent a step backwards for the WTO as many countries are moving forward in the digital space. Extending the moratorium and the Work Program until MC-13 will allow us to continue our discussions on these issues.” She continued, “We are open to reinvigorating the work program to address areas of particular interest to developing countries and MSMEs.”