What Value Does the U.S. See In an E-Commerce Duty Moratorium in the Absence of Effective Enforcement through the DSU?
One of the big issues the U.S. is pushing at MC14 is a permanent extension of the WTO's moratorium on customs duties on electronic transmissions. In a recent statement at a General Council meeting related to preparations for MC14, the U.S. said:
Intervention on the Moratorium on Customs Duties on Electronic Commerce
Approving an open-ended moratorium at MC-14 will deliver stability and predictability for all traders, while demonstrating that the WTO can deliver tangible results for consumers and businesses.
Failure to do so would create uncertainty in digital commerce as Member governments could at any time erect a complex and costly regulatory structure that would stifle growth and innovation.
Such a failure, in addition, would further undermine confidence that the WTO can deliver meaningful results.
We all have an opportunity to deliver a big win in Yaounde for our consumers, for our businesses, and for the WTO. Let us seize that and not let it pass us by.
This might sound like a silly question, but why exactly does the Trump administration care so much about this issue? With the Appellate Body no longer functioning, and the U.S. not a party to the MPIA, enforcement of WTO rules by the U.S. through WTO dispute settlement isn't likely to be very effective. The U.S. could still file a complaint and get a panel ruling, but then the losing party could appeal into the void. So why bother with the moratorium effort when the administration would have such difficulty enforcing the moratorium through WTO complaints?
One possible answer is that it's just about getting the principle established in international rules. If the principle exists there, it can then be cited in various different contexts, both political and legal. For example, when a government such as Indonesia is considering imposing duties on electronic transmissions, U.S. companies and diplomats can push back by citing the WTO moratorium and argue, publicly or privately, that Indonesia shouldn't violate international law. These arguments could have an impact on whether the Indonesian government decides to go through with the duties.
Another answer may be that if rules exist in a trade agreement, Section 301 provides additional remedies beyond the enforcement provisions of that agreement, and thus Section 301 could be invoked instead of filing a WTO complaint. Specifically, the "mandatory" provisions of Section 301 can be used here, as they cover situations where (as set out in the statute) (1) rights in a trade agreement are being denied, (2) benefits of the agreement are being denied, or (3) there are violations of the agreement.
At the same time, it's worth noting that the "discretionary" provisions of Section 301 could apply regardless of whether any trade agreement rules exist. Under these provisions, USTR can investigate whether "an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce," and take action in response. How much value is there in broadening the scope of the Section 301 provisions that might apply here, so that both the "mandatory" and the "discretionary" provisions are options? Maybe enough that the Trump administration thinks this is worth the effort?
Other possible explanations for the thinking behind the U.S. strategy here are: (1) when the functionality of WTO DS is restored some day, the rule will become useful, so this is about laying the foundation for that future; (2) the rule would be effective now as between Members that are parties to the MPIA, so there could be at least some enforcement, even if the U.S. isn't doing the enforcing; or (3) some Members have enacted domestic procedures that allow them to initiate rebalancing on the basis of a panel report alone (regardless of any appeal into the void), which, again, will provide for some enforcement possibilities. I don't think these last three are likely to have been at the core of the U.S. thinking, but I suppose there's a chance someone involved in the strategizing had these things in mind.
At a recent House Ways and Means Committee Trade Subcommittee hearing, the issue of the moratorium came up frequently, and members of Congress and the witnesses all seemed to agree that the moratorium was an important U.S. objective for MC14. If there is a future Congressional hearing on these issues, though, I'd love to see members of Congress probe witnesses or U.S. government officials on what exactly they see as the practical value of the moratorium, given the continuing Appellate Body appointments crisis.