The global digital economy faces a critical turning point with the approach of the 14th Ministerial Conference of the World Trade Organization (MC14), to be held from 26-29 March, in Yaoundé, Cameroon. Three fundamental issues converge: the future of the moratorium on customs duties on electronic transmissions, the legitimacy of plurilateral negotiations, and the emergence of alternative models of governance for the digital economy, such as the African Continental Free Trade Area’s (AfCFTA) Digital Trade Protocol (DTP). For developing countries, these issues determine the policy space available for their national development strategies.
The WTO moratorium on electronic transmissions: A nearly three-decade-long stopgap
Since 1998, the WTO has operated under a moratorium that prohibits the imposition of customs duties on electronic transmissions. The moratorium has been renewed every two years. However, at the last two WTO Ministerial Conferences, the consensus needed to confirm this renewal has become increasingly difficult to reach.
Defenders of the moratorium – a heterogeneous group that includes the United States, China, the European Union, and some developing countries with smaller markets, as well as large technology companies – argue that its termination would trigger a fragmentation of the digital market, harm small and medium-sized enterprises, and increase costs for consumers. In parallel, opposition to the moratorium is growing among some developing countries, led by India and South Africa, which argue that the moratorium deprives developing countries of fiscal revenue and regulatory space at a time when investment in digital infrastructure is needed.
The WTO moratorium on electronic transmissions may extend beyond digital products, such as e-books or music downloads. The deliberate ambiguity of the text that makes reference to the moratorium is a strategy: the absence of a precise definition of its scope could allow a maximalist interpretation according to which the moratorium also covers artificial intelligence services, cloud computing, and streaming. Looking at the broader picture, it is also important to consider the relation between discussions on the moratorium and the inclusion of national Digital Services Taxes – essentially designed to tax imported digital services – on the list of barriers investigated by the USTR under Section 301. This is a strong indicator of where the real negotiating scope of the moratorium may lie, giving the possibility to use the moratorium’s ambiguity to challenge DSTs indirectly. What is at stake is not fiscal neutrality. The situation could lead to a permanent tax immunity for AI digital platforms in the global market.
Even if the moratorium is not renewed at MC14, the practical impact of this decision may be limited in the short term, as similar provisions forbidding customs duties on electronic transmissions have already been incorporated into dozens of bilateral trade agreements. However, negotiations on the WTO-wide moratorium remain highly relevant, especially since major emerging markets, such as India and Brazil, have not adhered to the JSI e-commerce plurilateral agreement, as discussed in the following section.
The JSI controversy: Legitimacy, content, and integration into the WTO
The Joint Statement Initiative on electronic commerce (JSI) represented an effort by a group of countries, which eventually involved 91 participants, to negotiate e-commerce rules outside the traditional WTO multilateral decision-making process. Negotiations were concluded in December 2024, and the result – an agreement on electronic commerce – will be on the agenda of MC14. Procedurally, the main challenge is the integration of this agreement into the WTO framework, since it depends on the consensus of all WTO members. Relevant countries chose not to join the negotiations, and some of them, such as South Africa and India, traditionally oppose JSIs as a matter of principle.
Substantively, the final text of the agreement was not endorsed by all JSI participants, including major emerging markets, such as Brazil. The United States also participated in the negotiations but opted not to endorse the final text in order to limit regulatory constraints and preserve policy space. From a development perspective, the text reflects asymmetrical commitments. While there is value in the trade facilitation measures and in the harmonisation of privacy laws proposed by the agreement, the package lacks strong development-oriented provisions. Commitments on development were diluted, offering only aspirational language without binding financing mechanisms. Technology transfer and competition are also absent. The only measure with real impact – including fiscal impact – is the moratorium on customs duties on electronic transmissions, which is made permanent and broad (the text of the agreement does not define the scope of the moratorium, merely adopting the expression “all commerce carried out by electronic means”).
The central question for developing countries is whether it is worth permanently renouncing customs duties on digital products in exchange for trade facilitation measures. This is not just about loss of revenue, but about relinquishing the use of customs as an instrument of industrial and technological policy. In a time of rising protectionism and geopolitical fragmentation, committing to deep and irreversible digital liberalisation, without measures to reduce asymmetries, does not seem strategically sound.
The Work Programme on Electronic Commerce (WPEC): The need for reform
Despite its broad mandate, the WPEC, established in 1998, has produced little beyond generic discussions. In recent years, however, the WPEC gained renewed relevance, and discussions have become more substantive, addressing topics such as the impacts of artificial intelligence on trade, privacy and data flow issues, and the future of the moratorium. The WPEC is one of the few multilateral spaces where developing countries can articulate perspectives without the pressures of formal negotiation.
In spite of this, the WPEC faces an existential challenge, as its renewal has always been linked to that of the moratorium as a political bargain. Developed countries push for developing countries to accept the moratorium in exchange for the continuation of the WPEC. This trade-off becomes profoundly unbalanced, as a discussion forum does not compensate for the permanent loss of policy space.
In MC14, Brazil’s proposal to strengthen the WPEC by formalising it into an E-commerce Committee – similar to other existing committees at the WTO, such as the Committee on technical barriers, intellectual property, and services, for example – should be carefully considered. The formalisation of the WPEC into a permanent space within the Organisation’s structure would be an important step toward updating trade rules to deal with the challenges of the 21st century digital economy. If created, the new committee should have a broad and robust mandate, covering goods, services, and intellectual property. It should count on a diversified expertise and should not be tied to the discussion on the moratorium.
The AfCFTA Digital Trade Protocol: An alternative model
The African Continental Free Trade Area’s Digital Trade Protocol (DTP), adopted in February 2024, represents an ambitious experiment in digital trade governance adapted to the need for development, sovereignty, and regional integration. It is a model that deserves to be a reference for other developing countries due to its key innovations.
First, it seeks to balance openness with digital sovereignty. While agreements like the JSI treat liberalisation and local control as binary opposites, the African Protocol recognises the need for countries to simultaneously integrate into the global digital economy and to develop local infrastructure and capacities. To this end, the Protocol prohibits data localisation or computing facilities requirements as a condition for conducting digital commerce – seemingly aligning with liberalising positions. But it also encourages the establishment and use of computing facilities within signatory states to promote the development of local digital infrastructure. This provision is reinforced in the Annex on Rules of Origin, which requires states to encourage African companies to establish local infrastructure.
This architecture allows free data flows for commerce, avoiding fragmentation of the African digital market, but simultaneously creates incentives for the development of data centres, fibre optic networks, and other critical digital infrastructures within Africa. This is crucial because digital sovereignty without infrastructure is illusory – countries that are entirely dependent on foreign infrastructure lack effective control over their data and the capacity to respond to crises.
The African approach recognises a reality that is often ignored. Mandatory data localisation can be counterproductive for countries with limited digital infrastructure, simply increasing costs without generating benefits. However, completely prohibiting localisation removes tools that states may want to use in the future as their capacities increase. The DTP’s solution – allowing flows but encouraging local development – offers strategic flexibility.
The DTP also adopts substantive data protection standards inspired by the European GDPR, promoting harmonisation that will facilitate intra-African data flows. The treatment of sensitive data is particularly noteworthy, with a regime requiring informed consent and security guarantees.
Finally, it places digital inclusion and development at the centre of its commitments, with an entire section dedicated to micro, small, and medium-sized enterprises, women, youth, and rural populations, requiring states to promote equitable access to infrastructure and digital skills.
Conclusion: The need for a renewed understanding on digital economy and development
The governance architecture of the global digital economy is in dispute. The neoliberal consensus that dominated recent decades – presuming that unrestricted liberalisation automatically benefits all countries – has collapsed under the weight of fundamental geopolitical shifts. We are in an interregnum period, where old certainties have died, but new ones have not yet been fully born.
In this moment, developing countries should display intellectual courage to question dominant narratives about the automatic benefits of digital liberalisation, and leadership to articulate an alternative vision, build coalitions, and invest in the domestic capacities necessary to implement sophisticated digital policies. Africa’s Digital Trade Protocol is a clear bet on an alternative vision.
It is also urgent to rebuild a robust theoretical framework on the relationship between digital trade and development; a framework that recognises the specificities of the digital economy, incorporates dimensions of power and inequality, considers objectives beyond static efficiency, and is empirically grounded.
The digital economy offers extraordinary opportunities for social and economic development. But the realisation of these opportunities is not automatic – it depends on conscious political choices, adequate institutions, and intentionally developed capacities. Digital trade frameworks should facilitate, not obstruct, this developmental agenda.
The crossroads we face demand clear choices. May developing countries choose the path that preserves autonomy, promotes development, and builds a truly inclusive and equitable society.
Authors:
Carolina von der Weid has been a career diplomat since 2004. She holds a Bachelor’s degree in History from UFF and a Master’s degree in International Relations from IRI/PUC-Rio. She is currently Director of the Department of Environment at the Ministry of Foreign Affairs of Brazil.
James Görgen has been a Public Policy and Government Management Specialist since 2008. He holds a Master’s degree in Communication and Information from UFRGS. He is currently an advisor at the Ministry of Development, Industry, Trade, and Services of Brazil and a member of the Brazilian Internet Steering Committee.
Marília Maciel is Director of Digital Trade and Economic Security at Diplo.
*This article reflects the personal reflections of the authors and should not be construed as the official position of the Brazilian Ministry of Foreign Affairs, the Ministry of Development, Industry, Trade, and Services of Brazil, or Diplo.
