WTO accessions

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.

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.

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.

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.

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.

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.

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.

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.

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.