WTO accessions
A Handbook on Accession to the WTO
This guide has been prepared to assist public understanding of the process of accession to the WTO. The WTO Ministerial Conference and the General Council have the exclusive right to adopt interpretations of the Marrakesh Agreement Establishing the WTO and its Multilateral Trade Agreements. This guide is not intended to and does not provide a legal interpretation of WTO provisions.
The WTO and the Changing State of the Global Economy
The world economy is showing signs of recovery after several years of lacklustre performance although major policy uncertainties may easily upset this fragile trend. To jumpstart economies and trade after the financial crisis of 2008–9 governments across the world employed a traditional mix of fiscal monetary and structural policies. These efforts helped to prevent a deeper crisis but fell short of pulling the world out of a period of stagnation in 2012–16. Trade in particular slowed relative to its historical performance and to overall economic growth. Meanwhile political and social pressures have led to inward-looking policies in large countries. Other challenges – from civil and military conflicts to scattered terrorism – have also contributed to this inward turn. Against this background this chapter discusses the need for a new and more flexible global economic architecture. It would require reforms at all levels starting with revamping the structural foundations for growth and trade applying solid ground-level macroeconomic policies in individual countries and rebuilding the upper floors of multilateral cooperation i.e. upgrading it and making it more adaptable and responsive to the requirements of the twenty-first century. In the trade area key pillars to support this structure include innovative mechanisms of trade liberalization in both new and traditional areas increased inclusiveness of trade recognition and financing of adjustment costs effective communication on trade a redefined role and functions for the WTO upgraded multilateral rules and strong leadership. With radical changes needed WTO accessions have already contributed and could contribute even more to each of these pillars.
Transforming Accessions Data into Knowledge
Accessions to the World Trade Organization (WTO) generate large amounts of data accumulated during accession negotiations and subsequent domestic reforms. Owing to differences in the structure of acceding economies accession commitments vary across recently acceded or Article XII members in the number of tariff lines bound the level of bindings and the various accession-specific commitments and obligations. The depth of commitments and extent of post-accession implementation influence the effectiveness of benefits derived by new members from WTO accession. In spite of the generally positive economic performance exhibited by all Article XII members disparities exist in their country-specific economic performance in terms of trade foreign direct investment (FDI) and gross domestic product (GDP) growth. This chapter analyses the impact and depth of accession commitments to assess the economic effects of WTO accession. It explores how the data from accessions acquis can assist policy-makers in implementing structural reforms and integrating their countries into regional and global value chains. An Accession Commitment Index is proposed as a basis for a statistical exploration of the impact of WTO accession on a series of variables related to economic growth. Using an extension of the difference-in-difference methodological approach the chapter finds that WTO accession generally has a positive and significant impact on the acceding economy’s trade and economic performance. The results also show that the impact of WTO membership on the trade/GDP ratio in developing countries is significantly higher than in previous studies.
Are there different rules for least-developed countries in a rule-based system?
In July 2012 the WTO General Council agreed on a set of new and improved guidelines to facilitate and accelerate negotiations on the accession to the WTO of least-developed countries (LDCs). The process of acceding to the WTO is complex time-consuming and resource-intensive for candidate countries and for LDCs which have limited institutional and administrative capacity in particular. The WTO accession process is very much a political process and requires countries to undertake far-reaching domestic reforms in order to be in a position to implement WTO rules from day one of membership as well as to benefit from MFN market access from WTO members and vice versa. The prolonged accession process is designed to enable acceding LDCs (and others) to acquire the knowledge and expertise to negotiate not only the terms and conditions for their membership but also to function as viable members of the rules-based system. This chapter examines the enhanced guidelines and asks whether the WTO needs to improve the procedures for the benefit of LDCs and of the WTO. It examines how the WTO accession process and procedures as well as the scope of the reforms it requires compare to EU considerations in the process of its enlargement and argues that while the enhanced LDC accession guidelines have made an important contribution some additional steps may need to be contemplated in the future. However before a further enhancement is contemplated it must be understood that the accession process and the substance of WTO accession negotiations in all serious institutions are based on a partnership. This is a fundamental lesson from all successfully completed accessions and enlargement processes. The process is neither unilateral nor automatic.
WTO accession and the private sector: The nexus of rules and market opportunities
A country’s bid for WTO membership can promote a feeling of challenge and uncertainty among members of the private sector as the long-established methods of conducting business are susceptible to undergoing considerable change. In order to overcome the potential resistance to this change acceding governments have responded to the concerns of their businesses by adopting strategies to raise awareness of the long-term benefits of reform during the negotiating period. In this chapter we document some of the benefits related to trade and investment for Article XII members that have undertaken awareness raising strategies and necessary reforms during their accession processes. This chapter underlines that accession commitments which are critical to bringing about domestic policy and regulatory reforms need to be implemented in the right spirit to develop business competitiveness in the long run.
Domestic framework for making and enforcing policies
A core objective of accession results is to establish a legal foundation for the conduct and management of trade policy based on the rule of law. Implementation of accession commitments hinges on the existence of an effective domestic framework for making and enforcing policies. Customarily this is described in the third chapter of working party reports. Twenty-eight of the members that acceded pursuant to procedures in Article XII of the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement) have undertaken a total of fifty-five accession-specific commitments in this regard. The uniquely definable pattern that has emerged from WTO Accession Protocols confirms the uniform applicability of the WTO Agreement throughout and across the entirety of the customs territory of the new member the exclusive authority of central governments to implement and enforce WTO rules the strengthening of due process and the rule of law and the precedence of ratified international treaties over domestic legislation in many instances. These commitments are integral to the WTO Agreement and are enforceable under the WTO Dispute Settlement Understanding. Although normative and standard they confirm the long-standing accession practice that a range of original members have not confirmed and from which several deviate. This chapter studies the specific accession-specific commitments in the domestic framework for making and enforcing policies. It also investigates the relationship between Accession Protocols and domestic legal systems and asks whether original members undertook similar obligations.
WTO Accession Negotiations from a Negotiator’s Perspective
This chapter considers political commercial and legal aspects of accession negotiations and the compromises by all parties involved to make accession to the World Trade Organization (WTO) a reality. Using the negotiations on the accessions of the Russian Federation and Samoa as case studies this chapter analyses how political constraints economic interests and legal commitments affected the course of the negotiations. In the case of the Russian Federation the focus was on certain investment programmes in the automotive industry that were deemed inconsistent with the Agreement on Trade-Related Investment Measures (TRIMs). Agreement on these measures required prolonged negotiations including at ministerial levels to find a satisfactory solution for all parties involved. In the case of Samoa attention was focused on the appropriate level of flexibility to be granted to a least-developed country (LDC) as the expansion of LDC membership is a priority for the Organization in accordance with the Guidelines on LDCs’ accessions. The chapter concludes that the experience of accession negotiations has helped to define domestic reform in acceding members clarify the application of WTO provisions in practice upgrade regional integration frameworks and counter negative political pressures. These lessons can be used in negotiations by other acceding economies and constitute important building blocks of the upper floors of the international trading system.
Export duty commitments: The treaty dialogue and the pattern of commitments
This chapter focuses pursuant to Article XII accession-specific commitments on the evolving disciplines on export duties distinguished from the broader setting of export restrictions. From a rules angle export duties were not subject to disciplines in contrast to import duties that have classically been bound in schedules of concessions and commitments on goods since GATT 1947. Pursuant to Article XI:1 of the General Agreement on Tariffs and Trade (GATT) 1994 (rules for ‘quantitative restrictions’) prohibitions or restrictions on imports and exports such as bans quotas and restrictive licences are generally prohibited except for duties taxes or other charges. In economic operations export duties with price discrimination effects between domestic and foreign producers have resulted in efficiency losses and anti-competitiveness and have undermined economic welfare. In accession negotiations the establishment of disciplines and improvement in economic welfare has framed the treaty dialogue. This dialogue has made evident a range of issues that are systemic and that have involved questions on international economic cooperation revolving around the broader use of export restrictions and their overlap with export duties. This chapter reviews the substance of the treaty dialogue on export duties and identifies the extent and pattern of specific obligations on export duties in the Article XII Accession Protocols deposited thus far. The analysis shows that fifteen Article XII members have accepted accession-specific obligations on the application of export duties. These obligations range across ‘abiding’ by the provisions of the WTO Agreement; ‘binding and/or fixing’ applied export duty rates; and ‘reducing’ ‘eliminating’ or ‘foreclosing’ on the use of such duties. Of precedential value is the modification of the classical 1947 architecture of the GATT Goods Schedule to create a Part V on Export Duties in the context of the WTO accession commitments of Russia in its Goods Schedule. This chapter argues that accession-specific commitments have deepened and extended original WTO rules governing export duties as an instrument of trade policy. The overall systemic effect has been positive namely to constrain reduce eliminate and/or bind hence contributing to clarity and predictability of the rules with pro-competitive effects enhancement of market access opportunities and improvements in economic welfare. The chapter argues that WTO accession-specific obligations for export duties have set the multilateral standard for disciplines in this area. Nevertheless it is worrying that even as the disciplines on export duties are being formulated and strengthened via Article XII members the facts suggest the higher use of such export duties by original members over the period from 2003 to 2009.
Afghanistan’s Accession: Challenged by Conflict
WTO membership has long been an integral part of the overall strategic objectives of Afghanistan. For a post-conflict landlocked and least-developed economy joining the WTO was perceived as an opportunity to achieve economic stability improve regional security and cooperation alleviate poverty and achieve peace. Afghanistan has been on an eleven-year journey to integrate into the multilateral trading system. Its WTO accession process described in this chapter was a learning experience in which Afghanistan’s governmental and academic institutions private sector and civil society all upgraded their capacity using this accession as a catalyst to accelerate structural reforms and strengthen market instruments. The enormous reforms accomplished in this process have allowed Afghanistan to build a more favourable trade and investment regime with effective laws and trade policies based on the WTO agreements. This chapter sheds light on the accession process and the accomplished domestic transformation and identifies ways forward to maximize the benefits of Afghanistan’s WTO membership as a tool for cementing its long-standing commitment to an open economy rule of law good governance and international cooperation.
Accession Protocols and the Private Sector
Although the private sector is not in most cases directly involved in negotiations for accession to the World Trade Organization (WTO) its needs and positions are addressed through consultative mechanisms organized at the national level by WTO members. These mechanisms represent a two-way information channel: the relevant authorities can obtain the foundations to formulate and defend national negotiating positions while the private sector has an avenue to present sectoral interests as well as any relevant trade concerns. In acknowledging the influence of the private sector the objective of this chapter is to examine the existing public-private consultation mechanisms in selected WTO members as well as the evidence of private sector interests in recent reports of accession working parties. The analysis suggests that the influence of the business sector is embedded in accession protocols. Accession agreements include results obtained through trade policy consultation mechanisms which vary in the degree of formality and sophistication. Ideally the consultation and outreach mechanisms established by acceding governments to promote support for WTO accession should be strengthened throughout the WTO membership. Such mechanisms should continue to function once accessions have been completed to support the implementation of commitments set further negotiating priorities and participate in trade policy reviews and dispute settlement. The support and contributions of the private sector were instrumental to successfully achieve recent multilateral results notably the Trade Facilitation Agreement and the expansion of the Information Technology Agreement.
The structural reform implications of WTO accession
This chapter looks at the relationship between the WTO accession process and structural reforms in developing countries. It finds that developing economies that are in the process of acceding to the WTO commit to more policy reforms (proxied by prior actions in the context of the World Bank’s development policy lending) than developing countries that are already members of the WTO or that have not applied to become members. It also finds that for almost all developing economies acceding to the WTO the country risk measured by a composite indicator of political financial and economic risk called the International Country Risk Guide and the policy and institutional indicator measured by the World Bank Country Policy and Institutional Assessment significantly improve when a country achieves WTO membership compared with at the beginning of the WTO accession process.
Driving Economic Growth through Trade Policy Reforms and Investment Attraction in the Open World Economy: The Experience of China
China achieved a great leap forward in its economic development in the last thirty years supported by profound trade policy reforms significant infrastructure investment and utilization of foreign capital under the overarching state policy of reform and opening-up. Shares of manufactures and services in production have kept increasing and remarkable export performance has been scored during this period. Additions of labour and capital as well as competitive costs have largely shaped the economy’s comparative advantages up to now and they are likely to be replaced by increasing domestic consumption productivity growth and a greater reliance on services as the main factors sustaining future economic growth albeit at a slower pace. Nonetheless opening-up and domestic policy reforms going hand-in-hand will continue to play a critical role. The question that this paper addresses from China’s perspective may serve as a reference for the African economies seeking to establish a strong manufacturing base and to realise economic take-off with the help of a clear opening-up strategy and a proper trade policy toolkit.
The 2001 WTO accession of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu: Negotiating experience – challenges, opportunities and approaches post-accession
The economy of Chinese Taipei has always been highly dependent on trade. Nevertheless its WTO accession negotiations were demanding – although the results have been significant and beneficial – involving a total of eleven formal meetings and five informal meetings for the working party and approximately 200 bilateral meetings between Chinese Taipei and thirty different WTO members. The gradual opening of Chinese Taipei’s market exposed domestic industries to global competition necessitating a process of adjustment and adaptation that has ultimately led to economic growth. For the more vulnerable industries the challenges of market liberalisation have acted as an incentive to restructure and reinvent in order to improve competitiveness. Chinese Taipei’s accession to the WTO has also been a catalyst for the globalisation and development of these industries and necessitated a process of adjustment and adaptation that has ultimately led to economic growth. The trade policies and regulations of Chinese Taipei underwent a thorough review and revision as a result of the requirements of WTO membership and this legislative overhaul has been highly beneficial in modernising the trade regime.
Contributions and lessons from WTO accessions: The present and future of the rules-based multilateral trading system
WTO accession still holds a magnetic attraction for non-members. Why is this so in spite of the challenges faced by the organisation conclusions by analysts of deadlock in the Doha Development Agenda assessments that trade policy action has shifted elsewhere to preferential trade arrangements (bilateral and regional trade agreements including more recently ‘mega-regionals’) and repeated forecasts about the WTO’s ‘irrelevance’ and ‘unravelling’? Systemically what have WTO accessions contributed to the rules-based trading system through their processes procedures best practices and results? What effects have accession negotiations had on domestic reforms in Article XII members? Are there broader lessons for the WTO? This chapter demonstrates that after the coming into force of the WTO in 1995 results from WTO accession negotiations served to update trade rules continuously (including influencing WTO jurisprudence) enlarged market access opportunities provided acceding governments with a critical multilateral instrument for legislation-based domestic reforms and supported geopolitical and geo-economic transformations from centrally planned to market-based economies the rule of law and good governance. The changes associated with these results were evident from the 1989 fall of the Berlin Wall and the 1991 collapse of the Soviet Union. The evidence strongly suggests that the accession process and its results have established a legal framework for international cooperation contributed to the global economic transformation of command to market economies and provided a platform for Article XII members to implement their development and modernisation priorities. Overall the legal economic and trade policy impact from the deposited Accession Protocols and the process of accession negotiations per se have not only reinforced existing rules and raised the systemic bar with associated catalytic effect for domestic reforms but have also staked out the parameters for the future of the rules-based trading system including a future WTO work programme.
The 2008 WTO accession of Ukraine: Negotiating experience – challenges, opportunities and post-accession approaches
Ukraine embarked on its road to WTO accession in 1992 a year after it had declared its independence. Fourteen years of intense work steep learning persistence political will and flexibility were to follow. Ukraine faced many immediate challenges and tasks in strengthening its independence and creating and establishing the national institutions required by an independent state moving away from a centralised economy and reinforcing foreign policy. Ukraine had to totally eliminate its post-Soviet legacy. A new system of national government and administration had to be established. Democracy the rule of law and a free market became the guiding principles for political social and economic life. WTO accession implied increased competition which turned out to be quite painful for some companies. However the negative scenarios foreseen by some researchers did not occur; in fact the accession offered the national economy new incentives for structural and long-lasting change. However WTO membership is not simply a recipe for future happiness. While it stimulates trade and business environments members must still work within the multilateral system to keep up to date.
WTO Accession Commitments on Agriculture: Lessons for WTO Rule-Making
This chapter explains how accession negotiations have helped to further the agricultural reform process by upgrading and deepening the existing multilateral rules on trade in agriculture. It provides a broad overview of the existing multilateral disciplines in the area of agriculture as contained in the Agreement on Agriculture (AoA). Using the experience of the thirty-six concluded accessions the chapter suggests that a number of commitments such as extensive market access commitments ambitious domestic support commitments and comprehensive bindings with regard to export duties helped establish high benchmarks vis-à-vis the undertakings of the original members of the World Trade Organization (WTO). In market access the commitments of acceded members are primarily in the form of reductions in tariff bindings with a very limited use of tariff rate quotas. In domestic support the commitments of the acceded members have been negotiated based on the respective recourse to such support during a recent three-year period dependent on the timing of the individual accessions. These commitments are generally more ambitious than the corresponding commitments of the original members under the AoA which were derived based on the domestic support policy framework existing in 1986–8. Similarly in the field of export subsidies the acceded governments’ ambitious efforts to eliminate these highly distorting subsidies helped to create a strong momentum in the broader agriculture negotiations leading to the eventual agreement on the global elimination of agricultural export subsidies at the Nairobi Ministerial Conference in 2015.
Helping Businesses Navigate WTO Accession
Accessions to the World Trade Organization (WTO) have profound implications for the private sector. The market liberalization required by accession commitments must be accompanied by deep structural reforms. Even though least-developed countries (LDCs) and developing countries usually benefit from special and differential treatment the liberalization process can still lead to market adjustments that can test the status quo and require actions that will impact the private sector. This chapter discusses how the private and public sectors have cooperated to make the most of accession while mitigating its risks. The chapter concludes that the business community values predictability. Therefore acceding governments should find a way to integrate the private sector in the negotiating process. Gaining a thorough understanding of the objectives and implications of accession in particular for small and medium-sized enterprises (SMEs) is a good starting point for building a partnership between the acceding government and its private sector. The acceding government should also seek consensus with the private sector on key accession commitments on the direction of reform desired by stakeholders at the local level and allow sufficient time to prepare the private sector to adjust to the expected changes in the business environment. The experience of recently acceded governments has shown that regular engagement with the private sector before during and after accession enables new WTO members to make deeper liberalization commitments. When these commitments are the result of a consultative process between policy-makers and business the likelihood of their successful implementation is greater.
Strengthening transparency in the multilateral trading system: The contribution of the WTO accession process
What specific obligations on transparency and notifications have been negotiated as part of the terms of accession to the WTO since 1995? What patterns and trends have emerged with regard to transparency and notification requirements in WTO accessions over time? What is the implementation behaviour on notification requirements of the states or separate customs territories that have negotiated their terms of accession pursuant to Article XII of the Marrakesh Agreement Establishing the World Trade Organization and joined the WTO in the period 1995 to 2013? How does the compliance of Article XII members on notification requirements under the WTO Agreements compare to the compliance behaviour of original members? By reviewing the empirical data available from more than thirty completed WTO accessions since 1995 representing about one-fifth of the WTO membership this chapter examines each of these questions assessing the extent to which the negotiated accession commitments on transparency have affected the existing transparency and notification obligations under the WTO Agreements. The results of this review suggest that the specific transparency and notification obligations resulting from accession negotiations have safeguarded and reinforced existing transparency requirements embedded across all WTO Agreements. They have also resulted in positive implementation behaviour with regard to notification requirements by WTO members that joined the WTO between 1995 and 2013 and have thus improved the compliance rate of the overall WTO membership. The number and scope of specific transparency commitments negotiated in WTO accessions underscores the importance that the WTO membership attaches to transparency one of its founding principles.
The year 2012: WTO accession of Montenegro – why did we apply to join? Priorities and results
Montenegro’s path to becoming a member of the WTO began in 1966 when the Socialist Federal Republic of Yugoslavia became party to the General Agreement on Tariffs and Trade (GATT). However pursuant to the constitution of the Federal Republic of Yugoslavia (FRY) in 1992 its application to continue as part of the GATT was not accepted. In 2000 the FRY re-started the process of accession to the WTO aware that WTO membership would increase its competitiveness in the international market with the acquisition of the so-called ‘WTO label’. In 2004 Montenegro decided to continue the accession process as an independent customs territory. This chapter describes the process of Montenegro’s accession up to and beyond its becoming a member of the WTO in 2012. With the country’s membership in the WTO an entirely new chapter begins in comparison to the period prior to accession negotiations. Post-accession the interest of each member is to be involved as much as possible in the activities of the WTO and to seek the scope to influence the decisions and rules that will be applied in the future.
Making Trade Multilateralism Work for All: The Role of WTO Accessions
Trade multilateralism i.e. global trade based on negotiated and agreed rules by the World Trade Organization (WTO) membership faces various challenges. Slow economic growth changes in the balance of global economic power and inequitable distribution of growth benefits have called into question the benefits of globalization and the rules-based global order. Trade has been the target of a barrage of criticism from many quarters and has become a lightning rod for policy failures weaknesses in international cooperation and the adverse effects of rapid technological advances on jobs and incomes. In this tortuous and uncertain environment concerted policy actions along several strategic axes are needed to put trade back on track and make trade multilateralism work for all once again. First trade multilateralism must be used as a tool to restart global economic growth and job creation while managing uncertainty and risks. Second a global trading system anchored in the WTO – with strong well-enforced rules that continue to adjust to promote competition and a level playing field – remains critical. Third the new realities of the twenty-first century compel an upgrade of the multilateral trading system by the building of its upper floors1 on the foundation of the existing trade rules and accumulated acquis and expertise. Such a system would preserve the fundamental set of rules at the core of the multilateral system abolish or revise obsolete rules which have not stood the test of time and adopt new rules that would reflect new realities. Fourth accessions to the WTO are arguably the most vibrant component of the multilateral trading system and have already made important contributions to each of these policy directions. The objective of this book is to draw on recent accession experiences to distil the impact of accessions on the constantly evolving architecture of the multilateral trading system.
The Accession of Kazakhstan: Dealing with Complexity
The negotiations on the accession of Kazakhstan to the World Trade Organization (WTO) concluded in 2015 were unique in the history of the General Agreement on Tariffs and Trade (GATT) and the WTO. This uniqueness was reflected in: (i) the complexity of the accession due to its technical substance and geopolitical aspects; (ii) the significant expansion of market access achieved in the process which is unusual in multilateral negotiations; (iii) the resultant update of the rules in line with GATT Article XXIV related to customs unions and free trade areas; and (iv) the unprecedented involvement and dedication of Kazakhstan’s officials guided by President Nazarbayev of WTO members and the WTO Secretariat and personally of WTO Director-General Roberto Azevêdo. The negotiations were essentially a moving target as they took place at the same time as the Customs Union between Belarus Kazakhstan and the Russian Federation was evolving into the Eurasian Economic Union (EAEU). The critical elements of the accession were Kazakhstan’s commitments on technical barriers to trade (TBT) sanitary and phytosanitary measures (SPS) and on market access for goods – essentially the behind-the-border issues. Notwithstanding the complexities and the bilateral and regional mechanics of the negotiations the Kazakh case demonstrates that the WTO accession process has had practical utility even in a geopolitically challenging and technically complex environment. Accessions continue to contribute to the strategic objective of a universal membership by updating trade rules encouraging market access expansion and strengthening the rule of law. The accession of Kazakhstan thus confirms the WTO’s relevance in an ever more complex global economic and trade policy environment.
Trade Rules, Industrial Policy and Competitiveness: Implications for Africa’s Development
Industrialization is one of the cardinal priorities for economies in dynamic transformation from a commodity base to a diversified value-added development stage. In major African economies as in other economies worldwide industrial policy is resurgent and back at the centre of economic policy. The sectors in focus revolve around manufacturing textiles and clothing footwear automobiles infrastructure information technology products petrochemicals aluminium smelting agro- and cut flower industries. African economies actively applying industrial policy include Algeria Egypt Ethiopia Kenya Madagascar Mozambique Nigeria Rwanda and South Africa.
The WTO Accession of Seychelles: Lessons from a Small Island Economy
Seychelles became a member of the World Trade Organization (WTO) in 2015 after an accession process that took almost twenty years to complete. Since the relaunch of its accession process in 2009 Seychelles has undertaken significant trade reforms as part of a broader economic modernization agenda. These trade reforms were anchored on the reform commitments taken by the government as part of accession to the WTO. Although it is still too early to evaluate the full impact and benefits of WTO membership this chapter offers insights into the negotiation process and weighs the costs and benefits of WTO accession from the perspective of a small country. The main lessons for small economies aspiring to become WTO members are that: (i) WTO accession is a long and arduous process that makes heavy demands on a small country’s resources; (ii) small and developing countries should not expect any special treatment from larger and older members of the WTO; (iii) accession provides a good platform for modernization of a country’s trade regime; and (iv) accession can have a positive impact on a country’s ratings among rating agencies international financial institutions and private investors.
Promoting Good Governance: From Encouraging a Principle to Taking Concrete Action – Examples from WTO Accession Protocols and the WTO Trade Facilitation Agreement
Long proposed in aspirational terms good governance has increasingly become a subject of substantive global policy debate and international rule-making. An analysis of recent negotiating exercises such as World Trade Organization (WTO) accession protocols and the WTO Trade Facilitation Agreement (TFA) shows that governance has been discussed among WTO members and embedded in WTO rules. This chapter first examines how WTO accession protocols addressed the issue of governance improvement by subjecting acceding governments to binding accession-specific commitments. These commitments in addition to ensuring greater market openness and integration in the rules-based global economy established the legal basis for the increased rule of law for acceding members. The commitments undertaken by these members demonstrate their adherence to principles of transparency and predictability of trade policies as well as their overall commitment to subject domestic trade regimes to international trade law. Improved governance is achieved through the entirety of WTO accession-specific commitments on rules including the ones on transparency policy enforcement trading rights state trading/ state-owned enterprises (STEs/SOEs) and government procurement. A similar trend can be observed when analysing the good governance provisions of the new TFA albeit with differences in their modus operandi. WTO members took a multifaceted and indirect approach seeking to improve integrity by increasing transparency strengthening due process rights and reducing space for discretionary action. Together good governance provisions in accession protocols and the TFA contribute to building the upper floors of the new multilateral trading system by creating a binding set of rules and new standards that will be respected by virtually the entire trading world.
Market access goods negotiations: Salience, results and meaning
Trade negotiations and the exchange of concessions on trade in goods have been the cornerstone of the multilateral trading system. This chapter examines the salient features results and meaning of the schedules of tariff concessions and commitments on goods of Article XII members: what they mean and what they have contributed. We find that the bilateral market access of Article XII members has shaped the landscape of tariff commitments that provide transparency and predictability to today’s merchandise trade relationships. We also found that the large number of post-2001 accessions coincided with an extended period of global growth particularly among the major emerging economies fostered by the stability of trade regimes. When we compared Article XII members with General Agreement on Tariffs and Trade (GATT) members on bound tariffs we found that the comparable bound tariff rates were higher for GATT members and that a number of original members retained unbound tariff lines for non-agricultural products. Overall results from the concluded accessions have produced more liberal tariff concessions than those of original WTO members expanding the market access for WTO members’ exports. The lower barriers to trade in these Article XII members’ markets have improved economic efficiency increased competition and led to better resource reallocation.
The 2004 WTO accession of Cambodia: Negotiating priorities and experience – growth and integration eleven years later
Cambodia was the first least-developed country to complete negotiations to become a member of the WTO. Its negotiations took place in the context of the Decision on LDC accessions taken by the WTO General Council in December 2002 in which WTO members agreed that they would be bound by certain restraints in dealing with LDCs seeking to join the WTO. Given the constraints that as an LDC it faced when entering the negotiations Cambodia recognised that joining the WTO could play an important part in accelerating its growth and development. This chapter describes Cambodia’s approach to the accession negotiations: its negotiating strategy the negotiations themselves and their outcome and Cambodia’s post-accession activities. The foundation of all international trading arrangements is the WTO its concepts and its rules most of which are carried over into preferential trading arrangements. Being a member of the WTO provides a member’s traders with the transparent and predictable trading environment that they need to prosper. It can truly be said that being a WTO member is one of the main pillars of Cambodia’s successful economic performance.
From Marrakesh to Nairobi: Africa – A Force for the World Trading System: From the Past Twenty Years to the Next Twenty Years
Morocco’s membership of the GATT and WTO has been part of an overall strategy of the Government of the Kingdom of Morocco at the instigation of the late King Hassan II to introduce a package of institutional and socio-economic reforms which sought mainly to modify and diversify the structure of the national economy optimize the allocation of its resources and ensure its integration into the world economy. Being a Member of the Multilateral Trading System is also an expression of the government’s wish to integrate more fully into the world economy by anchoring its reforms in the legal primacy of an international agreement rather than just in domestic legislation as reaffirmed by the Constitution adopted in 2011. In doing so Morocco made opening up its economy a firm and irreversible commitment.
The macroeconomic implications of WTO accession
This chapter proposes a holistic framework by which acceding governments may evaluate the macroeconomic impact of joining the WTO. Because both acceding governments and WTO members are interested in preserving their own systemic stability and the stability of the multilateral trading system evaluation of the Accession Package can be achieved by examining its impact on the domestic and external stability of the acceding country. The chapter concludes that in the long run the impact should be positive and should be driven by better resource allocation as the acceding economy opens to international trade makes deep structural reforms and aligns its institutions and policies with internationally recognised standards. However in the short term implementation of WTO commitments may lead to substantial adjustment costs in the public and private sectors. Overall the design and implementation of WTO accession commitments is a matter of public policy that should aim to promote systemic stability and accelerate domestic reform while addressing transitional costs.
Geographical Indications in the Accessions Landscape
Geographical indications are signs used to identify the origin of goods characterized by a given quality or reputation that is essentially linked to their geographical origin. They preserve traditional knowledge foster the growth of local production and satisfy the needs of increasingly quality-conscious and demanding global consumers. Governments acceding to the World Trade Organization (WTO) have reformed their rules on geographical indications in order to achieve WTO consistency. In doing so they have added value to the multilateral trading system by clarifying the scope of WTO obligations in the field of geographical indications in the following ways: minimum standards of protection; requirements for application to geographical indication protection; the relationship between geographical indications and trademarks; and the scope of substantive provisions with regard to geographical indications. This heightened understanding of the regulation of geographical indications has set new standards in the multilateral trading system. Acceding economies have followed international best practices and sometimes gone a step further by undertaking commitments that exceed those in effect among incumbent WTO members. Rule-making on geographical indications has also helped to prevent disputes on related issues. The lessons learned in the WTO accession process can serve other developing countries and emerging economies to unravel the legal and economic potential of geographical indications.
Competition Policy in WTO Accessions: Filling in the Blanks in the International Trading System
Important synergies and complementarities exist between trade liberalization initiatives and the application of measures to suppress anti-competitive practices or arrangements. Both anti-competitive practices of firms and state-orchestrated arrangements that restrict competition can undermine the gains from trade in myriad ways. Moreover trade liberalization can be a powerful tool for addressing competition policy concerns. Whether there is a need to develop for more explicit linkages between national competition policies and the multilateral trading system remains an unresolved question in debates surrounding the future of the World Trade Organization (WTO). The role of competition policy is however increasingly being addressed by working parties during the accessions of new WTO members. This chapter finds that in a vast majority of accessions the acceding economy is requested to provide information on its domestic competition policy regime. In approximately 80 per cent of all accessions the acceding parties have made notifications on aspects such as the objectives of the regime its enforcement mechanisms by relevant agencies as well as on work under way to put in place an effective competition regime where one is not already extant. This in itself shows a clear recognition and acceptance by WTO members of the importance of competition policy as a tool of economic integration. The complementarity between WTO law and competition policy however is broader than what is reflected in notifications and observations regarding competition legislation per se. Consequently the analysis in this chapter also presents an in-depth study of the wider impact of competition in the WTO accession process taking into account the information provided on aspects of the domestic regime dealing with state monopolies and the treatment of state-owned enterprises (SOEs).
Trade Policy Trends in Africa: Empirical Evidence from Twenty Years of WTO Trade Policy Reviews
Trade liberalization has been a key component of economic development and transformation in the global economy since the middle of the last century and is a leading force in fostering globalization and connectivity in the twenty-first century. Trade reform has been on the agenda of African economies first under the IMF-supported structural adjustment programmes of the 1980s and the early 1990s and subsequently pursued within the multilateral legal and policy framework of the WTO. Following two decades of rapid trade growth in Africa the evidence suggests that significant barriers to trade remain within Africa impeding its integration to regional and global value chains. Considerable scope exists for the use of trade policy to accelerate and deepen sustained economic development and transformation. African economies should embark on the next generation of trade and associated structural reforms more aggressively and ambitiously.
WTO accessions: A market access perspective on growth – the approach of the European Union
A strong multilateral trading system is vital to developing countries’ longterm interests both for its rulebook and for the market access that it guarantees in all key markets. Markets are increasingly located in developing countries. Indeed for the first time in recent history South–South trade outweighs North–South trade even though barriers to South–South trade are much more significant than those to developed countries’ markets. Through their WTO accession acceding economies can reap the benefits of more and better access to most world markets – that of the European Union being among the biggest.
Sanitary and phytosanitary measures: Trends in accession plurilateral negotiations
Since 1947 effective levels of average tariff protection have declined as regulatory protectionism – behind the border – has risen. To a large extent the greater gains from continued trade opening lie in the area of procompetitive domestic regulatory reform codified in duly enacted legislation with associated implementing regulations. In the practice of WTO accession negotiations specific obligations have focused more on regulatory areas of the foreign trade regime. The evidence from thirty-three deposited Accession Protocols shows that there have been ninety-three specific obligations undertaken on sanitary and phytosanitary (SPS) measures. Pursuant to WTO Accession Protocols these are now integral to the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). The quantum of citation in WTO jurisprudence in the area of SPS is considerable: since 1995 42 out of 494 WTO dispute settlement cases have cited the WTO Agreement on Sanitary and Phytosanitary Measures in the request for consultations. This chapter examines the evolution of accession results on SPS from 1995 to 2015 and their contributions to the enhancement of the existing WTO legal and policy framework on SPS. Specifically this chapter focuses on the increasing importance of SPS regulatory issues in the foreign trade regimes of WTO members the substance of specific SPS obligations undertaken by Article XII members and their relationship to the WTO Agreement and the core questions that have emerged on the SPS accession treaty dialogue in the context of customs union agreements. As demonstrated in this chapter SPS accession commitments undertaken by thirty-three Article XII WTO members have exercised a significant influence on WTO jurisprudence. To a large extent this has further clarified and strengthened WTO law.
Accession Protocols as building blocks
This book provides multiple perspectives on the process and results from WTO accession negotiations. The perspectives reflected are those of economists lawyers academics chief negotiators of selected original WTO members and Article XII members chairpersons of WTO accession working parties professionals from the multilateral institutions of the WTO World Bank International Monetary Fund and International Trade Centre. Analysis is combined with ‘stories’ enriched by anecdotes. The detailing of the facts of trade policy drudgery is accompanied by explanatory narratives that bring the situations to life. In many ways what will strike the reader is that this is a unique book of high value that has emerged from a system that has yielded higher levels of transparency albeit grudgingly and only when pressed.
A reflection on accessions as the WTO turns twenty
As the WTO celebrates its twentieth year it is appropriate to ask what WTO accessions have contributed to the rules-based multilateral trading system. What demands have been made by the original and incumbent WTO members on acceding governments? How have the acceding governments fared? This chapter finds that WTO accessions have expanded the reach of the trading system not only geographically but conceptually by clarifying disciplines and pointing the way to their further strengthening in future negotiations. Members who have acceded under Article XII of the General Agreement on Tariffs and Trade now account for 20 per wto_cent of total membership of the WTO. Meanwhile with globalisation the increased prevalence complexity and capillarity of international exchange has greatly increased the need for a universal system of trade rules. Crucially accession negotiations have been used by governments as an instrument for wide-ranging domestic reforms including by means of far-reaching new legislation that has effectively changed the business landscape. In several instances the WTO accession negotiating platform has been used for the much broader purpose of facilitating new closer geopolitical relationships. As the negotiating arm of the WTO continuously adapts the success of accession negotiations also points to the opportunities inherent in variable negotiating configurations such as plurilaterals around specific issues. There is also considerable scope for improving the process of accession negotiations to ensure greater transparency streamlining and fairness.
Integration into Global and Regional Value Chains – How Is It Done? The Experience of Lesotho in the Textiles and Apparel Sector
Lesotho is a landlocked least-developed economy and a member of the Southern African Customs Union (SACU) the oldest customs union (CU) in the global economy. Forty per cent of the population lives under the poverty line. The economic base is narrow reliant on the textiles and apparel industry (for 59 per cent of total exports) subsistence agriculture remittances regional customs revenue and a degree of manufacturing. The apparel industry and agriculture constitute the backbone of the economy and the main employer. Faced with Lesotho’s geo-economic circumstances and development challenges the trade and economic response of government has been strategic. Domestic economic policy and structural reforms accompanied by a policy of economic diversification trade openness and integration have been pursued. A trade development plan was carefully designed for active integration into regional and global value chains. These measures have yielded significant welfare gains and economic livelihood dividends. Trade and economic policies are reviewing the next generation of reforms inter alia in the sectors of mining electricity and tourism which face challenges but have potential for growth. This chapter identifies and discusses the specific steps in the trade policy plan for Lesotho’s successful integration into the textile and apparel value chain specifically and more broadly into a global value chain.
WTO rule-making: WTO Accession Protocols and jurisprudence
This chapter examines rule-making in the WTO. It explains the legal provisions governing how rules are made in the WTO and describes WTO rule-making in practice including through the adoption of decisions by the Ministerial Conference and the General Council and by way of dispute settlement. The role of consensus and voting in WTO rulemaking are discussed. The chapter also refers to different types of rules and decisions – such as ministerial declarations authoritative interpretations amendments and waivers – and considers their legal value and effect as well as how different types of rules or decisions have been interpreted or applied. Finally it also includes a look at rule-making in the context of accessions and considers Accession Protocols and working party reports through the lens of WTO dispute settlement.
Accession of Liberia: An Agenda for Transformation
On 14 July 2016 Liberia joined the World Trade Organization (WTO) as its 163rd member. Liberia’s accession negotiations were done in 804 days since the appointment of the Chief Negotiator after stalling for over 6 years and 10 months since Liberia first applied for Accession. This unprecedented efficiency was made possible by a combination of factors. First Liberia’s determination at the highest political level allowed it to conduct accession negotiations with commitment and focus while adhering to a time-bound roadmap. Speed and efficiency of accession-related reforms were essential as the country had endured an almost simultaneous double shock – the Ebola epidemic and a sharp drop in commodity prices. Second WTO members appreciated this determination and were ready to move faster than usual in the negotiating process to help put the country on track with trade-related reforms in particular those aimed at overcoming the twin shocks. Third the WTO wished to include Liberia’s accession among the deliverables for its Tenth Ministerial Conference in Nairobi the first ministerial conference to be held in Africa. The outcome was an accession that is now commonly referred to as the Liberian Model. An accession is concluded based on rational individual choices constructed around a vision for modernizing a country and its economy. This chapter highlights Liberia’s transformation and its challenges and discusses why WTO accession continues to be essential in facilitating Liberia’s economic diversification agenda.
Building Capacity in Africa to Facilitate Integration into Global Value Chains: Contributions from the ITC
While Africa’s share of global value-added trade has increased significantly during the past 20 years connecting African small and medium-sized enterprises (SMEs) to value chains and turning the support for greater intra-African trade into a reality remains challenging. Ensuring that the trade discourse is fully integrated into this development story is critical and countries especially those that have recently acceded have to be supported to recognise and take advantage of the global trading system and their WTO membership. To place a spotlight on trade-led growth for SMEs the International Trade Centre (ITC) launched its SME Competitiveness Outlook in 2015. This flagship publication identified three key determinants of SMEs’ ability to integrate into value chains: their ability to compete connect and change. The ITC’s capacity-building interventions which have a strong focus on African countries are centred on helping SMEs become more competitive and connect to value chains to drive the continent’s sustainable economic development.
Article XII Members - The 2001 WTO accession of China: Negotiating experience – challenges, opportunities and post-accession approaches
China is among the Article XII members which joined the WTO after its establishment in 1995. Membership of the WTO has served as a major stabiliser and strong accelerator for China’s economic take-off although China’s accession commitments were highly demanding. One of the most profound impacts brought about by China’s accession has been that the country fully embraced the rules-based spirit upheld by the WTO. Concepts such as non-discrimination transparency and the rule of law are no longer trade jargon but common words for the general public. To this end China conducted the largest legislative reform in its history to establish a WTO-consistent legal system. China’s accession brought tangible benefits to the Chinese people quadrupling the gross domestic product per capita increasing people’s income and improving people’s livelihood. Household income increased from about US$800 to US$3300 marking an annual growth of 10 per cent. More than 200 million people were successfully lifted out of poverty. As China benefited from integration into the WTO and the rules-based multilateral trading system it has shared these benefits with other WTO members including and in particular least-developed countries.
Investment and Trade Rules: Increasing the Stock of African Foreign Direct Investment Flows
Trade can be a powerful engine for development. But harnessing trade for development in Africa requires investment to foster lasting economic transformation. Investment therefore is key to unlocking the potential of trade-led growth. While flows of foreign direct investment (FDI) into Africa paint a familiar picture of the dominance of extractive industries the reality is more nuanced and promising. The fact that FDI stocks in Africa are geared towards the burgeoning services sector offers immense potential for countries in Africa to access and climb regional and global value chains; however unless interrelated policy challenges are addressed Africa will not be able to optimize the benefits of FDI. Combined with efforts at national and regional levels the WTO should be better used by African countries to properly exploit the trade-investment nexus for the achievement of the United Nations’ Sustainable Development Goals.
African Union Priorities at the WTO
The African Union’s (AU) priorities at the WTO reflect the priorities of the WTO’s African member states that the multilateral trading system should contribute to the economic development of their economies through the elaboration of equitable fair and development-friendly rules. The position of the AU is consistent with the recently adopted United Nations Sustainable Development Goals (SDGs) which also see trade as being critical to achieving the goal of eradicating extreme poverty everywhere. The AU’s priority is therefore to see WTO outcomes that serve to facilitate the structural economic transformation and development of developing and least-developed African countries in line with the vision of the African Union’s Agenda 2063.
Facilitating accessions: The role of the working party chairperson
What is the role of the chairperson of a working party? What instruments can he or she use to manage the complexities of the WTO accession process? Typically WTO accession negotiations are time consuming because of extensive domestic legislative and institutional reforms which need to be aligned with economic development strategies. These reforms focus on the tough questions of eliminating trade barriers improving governance tackling corruption and enforcing the rule of law through WTO-consistent legislation. Formally the function of the chairperson is to preside over working party meetings. In practice the chairperson works as part of a team with the WTO Secretariat led by the Accessions Division in seeking to identify the balance of interests and what the market can bear and hence leading the working party to develop a common view of its purpose and shared responsibility.
Developments in the global economy and trading system effects: The transformation of world trade
The Great Recession of 2008–2009 tested the resilience of economies across the world and placed enormous strain on the frameworks underpinning global cooperation. In no arena was the test more severe than in world trade which against a background of collapsing output and surging unemployment in the industrialised countries fell about one-quarter in the first half of 2009 a rate of decline that exceeded the worst years of the Great Depression of the 1930s. Although the rate of recovery remains sluggish and the pace of trade liberalisation has slowed a relapse into protectionism has been avoided and world trade volumes have surpassed the pre-crisis peak by some 25 per cent. The world trading system seems to have passed this most strenuous of tests. This chapter examines how two great changes in the global economic landscape deepening trade integration (trade as a means of production as well as consumption) and the rising weight of developing countries are changing trade and investment flows and creating new challenges for policy-makers.