MS pushes ‘no net taxes’ message for Seattle WTO

Microsoft's objective for the World Trade Organisation meeting in Seattle next week was confirmed in Brussels today when European chairman Bernard Vergnes said that "Ministers should agree that customs duties shouldn't apply to the Internet". He wants this to be a permanent and binding move set in concrete by WTO rules rather than the temporary moratorium on e-commerce duties that governments have agreed at the moment. Microsoft, co-chair with Boeing for the Seattle meeting arrangements, is pulling out all the stops in the hope of getting the agreements it wants, which is free trade. Some developing countries are opposed, because they would like to raise taxes on electronic trade. Vergnes also noted this morning that "Software has an American origin so if you apply tariffs on software outside the US you are discriminating against foreigners who have to pay a higher price." This remark precisely identified the problem that the WTO ministerial round is having: there is a grave suspicion that Americans wish to use the WTO for globalisation purposes, enforcing global trade rules - as happened in the banana wars and the hormone-injected American beef. Vergnes also expressed concern that if there were local taxes, piracy would increase and e-commerce development would be held back - two important marketing issues for Microsoft. So far, the preparations for the talks have gone very badly. WTO ambassadors failed to agree on an agenda earlier this week, after a great deal of argument. Nor has it proved possible to agree on a director-general, so the NZ and Thai candidates will probably alternate in some way. On the US side, the forthcoming presidential election has caused the US focus to be on domestic policies, while in Europe, the resignation of the Commission earlier this year over corruption scandals has not helped. At the moment it seems that the only attendees who are prepared are the 700 or so pressure groups, known as NGOs or non-governmental organisations, and they certainly know what they're against. Clinton has had almost no success in persuading heads of state to attend, to give the talks any stature. There is concern that the WTO round could end like the OECD talks on investment that were abandoned last year, mostly as a result of NGO pressure. Whether it will prove possible to keep the Internet tax-free - one of many issues to be discussed - is far from certain. It is quite possible that the issue will not be discussed because other arguments will take up the time, but it could be that the moratorium would be extended. For once at least, most people are likely to be on the same side as Microsoft. ®