WTO ministerial spotlights digital trade, revenue concerns for Pacific islands

By Ron Rocky Coloma

As trade officials and civil society groups prepare for the World Trade Organization’s 14th Ministerial Conference, or MC14, Pacific island nations are watching closely, even if they are rarely at the center of the headlines.

MC14, scheduled for late March in Cameroon, comes at a time when global trade rules are under strain and smaller economies are asking whether the system still works for them. That question framed a recent strategic webinar convened by Third World Network, where experts discussed what may be on the table and what it could mean for developing regions, including the Pacific.

“This is a strategy meeting, so we want to be able to speak openly and to brainstorm,” said Yoke Ling Chee of Third World Network, opening the session. She noted that MC14 is expected to take up issues such as WTO reform, e-commerce rules and the renewal of a moratorium on customs duties for electronic transmissions.

For Pacific island countries, the stakes are practical, not abstract. Many rely on tariff revenue as a stable source of government income. Unlike larger economies, they have limited capacity to replace lost tariffs with income or corporate taxes, especially where informal economies remain significant.

One issue drawing attention is the long-standing moratorium on customs duties on electronic transmissions, which prevents governments from taxing digital downloads such as movies, music and software. First adopted in 1998, the moratorium has been renewed repeatedly and is again up for decision at MC14.

Sanya Smith of Third World Network said the shift from physical goods to digital consumption has real consequences for developing economies.

“In the old days, governments collected tariffs on DVDs, books and software at the border,” she said. “Now those products are downloaded, and that revenue is disappearing.”

Smith cited estimates showing billions of dollars in annual tariff revenue losses for countries such as India, Thailand and Mexico. While Pacific island economies are smaller, similar dynamics apply, especially as digital services become more widespread.

The broader concern, raised by trade analyst Abhijit Das, is the direction of WTO reform itself. Das warned that proposals led by major powers, particularly the United States, could shift the organization away from multilateral decision-making toward plurilateral agreements negotiated by smaller groups of countries.

“What is being pushed is a system where powerful countries move ahead in smaller clubs,” Das said. “That risks marginalizing weaker members and making development concerns secondary.”

For Pacific island nations, which already struggle to be heard in global forums, that shift could narrow their policy space even further. Issues such as food security, fisheries management and digital development are often priorities for island states but may receive less attention in plurilateral settings.

There are also questions about how bilateral trade deals outside the WTO could affect negotiations. Several Asia-Pacific countries have entered into trade frameworks with the United States that include commitments on digital trade. Observers at the webinar said these deals could weaken collective positions at MC14.

Jane Kelsey, a professor of law from New Zealand, cautioned that much of the real action may happen outside the formal agenda.

“What happens in the ministerial hall may be less important than what is being launched on the sidelines,” she said, pointing to possible initiatives on digital trade, environment or critical minerals.

For Pacific island countries, MC14 may not deliver dramatic breakthroughs. But the discussions leading up to it are shaping the rules that will govern trade, revenue and development options for years to come. As Chee put it, the challenge is ensuring that small economies are not left to adjust to decisions made without them.

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