The moratorium, agreed at the dawn of the internet, lapsed for the first time in 28 years after World Trade Organization countries failed to agree on a routine extension.

Four days of talks among trade ministers in Cameroon’s capital Yaounde broke up in the early hours of Monday with Brazil and Turkey blocking a bid to extend the e-commerce moratorium, which including on digital downloads and streaming.

Countries also failed to agree on a path to reform.

U.S. Trade Representative Jamieson Greer said in a statement that he has secured agreements from dozens of countries, including nearly all major trading partners, not to impose tariffs on U.S. digital transmissions. He vowed that if the WTO fails to restore the moratorium, “the United States will work outside of the WTO with all interested partners to get it done.”

Greer, who is the architect of U.S. President Donald Trump’s multi-front tariff assault on global trading partners, said he was disappointed that the meeting ended in an impasse. He said some countries demonstrated a “lack of seriousness” in WTO reform by not sending their trade ministers to Cameroon.

“I have always been skeptical of the value of the WTO, and this week’s conference confirmed that this organization will play only a limited role in future global trade policy efforts,” Greer said.

Increasingly sidelined by economic nationalism

The WTO has been increasingly sidelined by economic nationalism in the past decade, and its 14th ministerial conference in Cameroon will further that trend, analysts said.

The talks tested the WTO’s relevance after a year of huge trade turmoil and more recent disruptions in the Middle East.

Still, a subset of 66 members did agree to sidestep previous hurdles to ‌usher in the world’s first baseline deal on digital trade rules among participants.

The parties of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — 12 countries including Australia, Britain, Canada, Japanand Mexico but not the U.S. — met with the EU on the sidelines of the WTO talks.

As diplomats pursue a mix of agreements between two or larger subsets of countries, they risk creating a complex “spaghetti bowl” of agreements, said Dmitry Grozoubinski, executive director of the Geneva Trade Platform.

WTO Director-General Ngozi Okonjo-Iweala said the trade body hoped the moratorium could still be restored, adding that Brazil and the U.S. were trying to reach agreement on it.

— Additional reporting by Emma Farge in Geneva and Lisandra Paraguassu in Brasilia and David Lawder in Washington, D.C.

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The four-day ministerial talks in Cameroon’s capital Yaounde ended in the early hours with Brazil blocking a bid by the U.S. and others to prolong a moratorium on duties for electronic transmissions like digital downloads and streaming.

“It marks another crack in the foundations of the WTO system,” said Andrew Wilson, Deputy Secretary General of the International Chamber of Commerce, urging delegates to renew the moratorium before states hit digital services with new charges.

‘Major setback for global trade’

Expectations for progress had been low before the talks but there were hopes the moratorium – which has been regularly renewed since 1998 – would at least be extended.

That ultimately proved impossible. Trade ministers could not agree to extend it for more than two years, which was not enough for the United States, diplomats said.

U.S. officials and business groups voiced frustration, and Britain’s Business and Trade Secretary Peter Kyle called the failure to reach consensus a “major setback for global trade.”

The talks were deemed a test of the WTO’s relevance after a year of huge trade turmoil and more recent disruptions due to the U.S.-Israeli war on Iran.Still, a subset of 66 members did agree to sidestep previous hurdles to ‌usher in the world’s first baseline deal on digital trade rules among participants.

Changes looked for

Prior to meetings, three items were expected to dominate talks wrote Jane Kelsey, an emeritus professor of law with the University of Auckland, in an article for the Conversation.

Those were:

• Decision making: reformers proposed a “responsible consensus” model rather than the current multilateral model, which gives all states an equal voice.
• Development and industrialization: this proposed to limit countries’ ability to define their own level of development, Kelsey wrote. “Special and differential treatment” would give them more time to adopt rules applied to more developed countries.
• Leveling the playing field: this was “essentially about China,” wrote Kelsey, which the U.S. says has gained an unfair advantage since joining the WTO. The U.S. wanted rules to restrict state support for industry and to limit application of “most-favoured-nation treatment.”

‘Spaghetti bowl’

Efforts to rebuild the WTO’s predictable trade terms are creating “a spaghetti bowl of free trade agreements, bilateral initiatives, and plurilaterals,” said Dmitry Grozoubinski, executive director of the Geneva Trade Platform think tank.

Agreeing on an e-commerce moratorium was seen as key to securing U.S support for the WTO, which under President Donald Trump has retreated from global multilateral bodies.

WTO Director-General Ngozi Okonjo-Iweala said the trade body hoped the moratorium could be restored and that Brazil and the U.S. were trying to reach agreement on it.

The WTO said progress was made on a reform roadmap, and discussions on issues like reworking its rules to render subsidy use more transparent and facilitate decision-making are expected to continue in Geneva.

The U.S. and the European Union argue China in particular has taken advantage of current rules to their detriment.

Impasse could boost CPTPP

Diplomats worked throughout Sunday to close the gap between Brazil’s initial two-year proposal on the moratorium and the U.S., which wanted a permanent extension, by drafting a plan for a four-year extension with a one-year sunset buffer.

Brazil then offered a four-year extension with a mid-term review clause, but it lacked sufficient support.

Keith Rockwell, a trade analyst at the Hinrich Foundation and former WTO director, said Brazil’s efforts to leverage e-commerce for concessions on agriculture had failed because the U.S. was no longer so invested in the WTO.

“In the old days because they felt responsibility for the system the Americans would have swallowed hard and taken a hit,” he said. “But now they won’t do that anymore.”

He said the impasse would boost alternative structures like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade deal encompassing 12 countries including Japan, Britain, Canada, Mexico and Australia – but not the U.S.

“Now what you’re going to see is a lot more energy and momentum into things like the CPTPP,” Rockwell said.

— Additional reporting by Emma Farge in Geneva

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Observers say reforms at the 30-year-old trade watchdog are urgently needed, with some believing the future of the organization is at stake. The WTO did not immediately comment.

Gridlocked negotiations

In particular, the consensus rule whereby all 166 members must agree to pass new trade deals has gridlocked negotiations for years, blocking even those that enjoy near universal support.

Norway’s WTO ambassador Petter Olberg wrote in the December 12 document seen by Reuters that the range of ideas for reforming decision-making meant that the issue cannot be resolved at a ministerial meeting in March 2026. However, he said progress was being made and ministers meeting in Yaounde, Cameroon should agree on a framework to move forward.

The U.S. voiced frustration in a communication sent to members that blockages in the consensus-based system were stopping members from joining plurilateral agreements. These deals allow groups of interested members to strike deals among themselves, with an option for others to sign on later.

It warned that this threatened the organization’s viability and could drive countries to negotiate new deals outside it.

Most Favoured Nation reform

The U.S. also called for reform discussions to address one of the WTO’s core principles – Most Favoured Nation (MFN) – which requires members to treat others equally. It said MFN was designed for an era where trade partners were expected to adopt open, market-oriented trade policies.

“That expectation was naive, and that era has passed,” it said in a statement.

“If the WTO does not reform by making tangible improvements in those areas that are central to its mission, it will continue its path toward irrelevancy,” the U.S. said in the communication.

A diplomatic source cautioned that the U.S.’ position was not widely supported by members.

“The U.S. views on WTO reform are far from those of most members and even challenge the WTO’s purpose and core principles. Simply put, without MFN, there’s no real multilateralism,” the source told Reuters.

Since U.S. President Donald Trump began imposing higher import tariffs this year on most trading partners, the share of global trade conducted under the WTO’s Most-Favoured-Nation terms is down from about 80 per cent to 72 per cent, WTO data shows.

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The U.S. will cut extra tariffs it imposed on Chinese imports in April this year to 30 per cent from 145 per cent and Chinese duties on U.S. imports will fall to 10 per cent from 125 per cent for the next 90 days, the two sides said on Monday.

The accord does not include the “de minimis” exemptions for low-value e-commerce shipments from China and Hong Kong, which the Trump administration terminated on May 2, according to a source familiar with the negotiations. The duties are also still higher than before U.S. President Donald Trump announced a raft of tariffs on April 2.

‘Very positive’ news for economies

However, the deal went further than many analysts had expected following weeks of confrontational rhetoric on trade.

“This is better than I expected. I thought tariffs would be cut to somewhere around 50 per cent,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.

“Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term,” Zhang added.

Wall Street stocks jumped and the dollar rose, while gold prices fell on the news, which helped allay concerns about a downturn triggered by Trump’s escalation of tariffs aimed at narrowing the U.S. trade deficit.

“Both countries represented their national interest very well,” U.S. Treasury Secretary Scott Bessent said after talks with Chinese officials in Geneva. “We both have an interest in balanced trade, the U.S. will continue moving towards that.”

Bessent was speaking alongside U.S. Trade Representative Jamieson Greer after the weekend talks in neutral Switzerland in which both sides hailed progress on narrowing differences.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”

The tariff dispute had brought nearly $600 billion (C$839.7 billion) in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.

The Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since Trump returned to power and hit China particularly hard with his global tariff blitz.

China’s Vice Premier He Lifeng, speaking to reporters at China’s mission to World Trade Organization late on Sunday, described the talks as “candid, in-depth and constructive” on issues of concern to both countries.

“The meeting achieved substantial progress, and reached important consensus,” He said.

More discussions to come

Since taking office in January, Trump had hiked the tariffs paid by U.S. importers for goods from China to 145 per cent, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.

China hit back by putting export curbs on some rare earth elements, vital for U.S. manufacturers of weapons and electronic consumer goods, and raising tariffs on U.S. goods to 125 per cent.

Bessent told U.S. media that there was still much work to do, but neither the place nor time for a next meeting had been set.

“We got a lot done over two days. So I would imagine that in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” he told CNBC.

“Over the next 90 days we have a mechanism to meet with the Chinese trade delegation,” he told MSNBC in a separate interview. “We will be discussing tariffs, non-tariff trade barriers, currencies and their subsidies of labor and capital, and how we can open up China to American businesses.”

He said Chinese officials had understood the importance of addressing the fentanyl crisis and for the first time appeared to be working to halt the flow of pre-cursor drugs into the U.S.

Trump levied the tariffs in part after declaring a national emergency over fentanyl entering the United States.

— Additional reporting by Andrew Silver in Shanghai and Lisa Barrington in Seoul

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The speech late on Thursday by Roberto Azevedo, who stepped down as director-general in 2020 during Trump’s first term, was summarized by trade sources who attended a WTO anniversary event.

He said a loss of appetite for shared global trading rules could encourage the creation of a replacement for the WTO that would exclude some current members, adding, according to his team: “If we don’t change, we are dead.”

The current WTO director-general, Ngozi Okonjo-Iweala, told members that a reform process must begin in Geneva ahead of a ministerial meeting in Cameroon next year.

“We need to formulate the right questions to be answered … and put in place a member-owned process to drive it,” she said.

Global markets were ending the week as they began, in turmoil, despite a brief respite on Wednesday after Trump paused duties above 10 per cent for most countries except China.

Until now, talks on updating WTO rules have struggled partly because all 166 members must agree by consensus. Efforts to fix its top appeals court, paralyzed by Trump in his first term, have failed.

Supachai Panitchpakdi, director-general from 2002-2005, said members must reform the WTO urgently.

“It’s either that or we go into a big recession … even worse than the last 2008 financial crisis, because this time it will be trade-led … And then there’s no way to pull out,” he told Reuters.

He proposed to trade delegates on Thursday a month of tariff talks among members, followed by short discussions to reduce barriers and establish new trade rules.

At the same event, a group of 39 states including China, Canada and Britain voiced support for the WTO and called for “bold, collective action” to ensure it remains the bedrock of a free, fair and rules-based system.

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