WTO accessions
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.
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.
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.
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).
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.
Trade Multilateralism in the 21st Century
Trade multilateralism in the twenty-first-century century faces a serious test as weakness in the global economy and fast-paced technological changes create a challenging environment for world trade. This book examines how an updated and robust rules-based multilateral framework anchored in the WTO remains indispensable to maximizing the benefits of global economic integration and to reviving world trade. By examining recent accessions to the WTO it reveals how the growing membership of the WTO has helped to support domestic reforms and to strengthen the rules-based framework of the WTO. It argues that the new realities of the twenty-first century require an upgrade to the architecture of the multilateral trading system. By erecting its 'upper floors' on the foundation of existing trade rules the WTO can continue to adapt to a fast-changing environment and to maximize the benefits brought about by its ever-expanding membership.
Preferential Trade Agreements in Africa: Lessons from the Tripartite Free Trade Agreements and an African Continent-Wide FTA
Economic transformation is an important pre-requisite for African countries to maximize the benefits of globalization. The development outcomes of the transformation process are conditioned on the one hand by the level of inclusiveness and on the other by the sustainability of the development pathways among other factors. Building on experiences since the new millennium in which Africa has witnessed rapid and sustained high levels of economic growth and informed by the policy discourse that accompanied the formulation of the Common African Position on Sustainable Development Goals African countries have charted a transformation path in which they aspire to play to their comparative advantages.
WTO Accession Reforms and Competitiveness – Lessons for Africa
This chapter evaluates the impact on competitiveness of reforms undertaken by recently acceded countries and draws lessons for African countries pursuing the goal of becoming emerging economies. By comparing reform outcomes before and after accessions relative to control groups using the difference-in-difference evaluation method the chapter concludes that the recently acceded members improved their international competitiveness although the overall impact was relatively small and differed substantially across economies economic sectors and time. African economies aspiring to become emerging economies could build on the experience of recently acceded countries by designing long-term reform agendas similar to the accession reform packages locking them into a credible policy framework through a series of domestic and international agreements frontloading reforms to gain credibility and persisting in their implementation balancing short-term costs with long-term benefits and learning from Article XII peers who have gained substantial experience in managing complex reforms.
African Perspectives on Trade and the WTO
Twenty-first century Africa is in a process of economic transformation but challenges remain in areas such as structural reform governance commodity pricing and geopolitics. This book looks into key questions facing the continent such as how Africa can achieve deeper integration into the rules-based multilateral trading system and the global economy. It provides a range of perspectives on the future of the multilateral trading system and Africa’s participation in global trade. It also underlines the supportive roles that can be played by multilateral and regional institutions during such a rapid and uncertain transition.
Introduction and Overview
This volume the work of more than twenty authors grew out of the Fourth China Round Table and the WTO’s Tenth Ministerial Conference two seminal events held back-to-back in Nairobi Kenya in December 2015. The work presented here provides comprehensive substantive insights of the African trade policy and development context in which these two meetings took place.
Economic Diversification in Africa’s Number One Economy
Nigeria is the largest economy in Africa with a GDP in excess of US$ 500 billion dependent on oil and gas exports for the bulk of government revenues as well as foreign exchange. Its growth – which averaged about 7 per cent in the decade between 2005 and 2014 – has in recent years been driven by the non-oil sectors: services agriculture and manufacturing. The principal challenge for the President Buhari administration which took office in May 2015 is to build on this trend by diversifying export income and the sources of government revenues as well as kickstarting the long-overdue task of industrializing the Nigerian economy. One of the goals of this approach is to achieve robust stable and predictable growth free from short-to-medium-term cycles of boom and bust.
Deepening African Integration: Intra-African Trade for Development and Poverty Reduction
The obstacles to deeper African integration are great but the potential gains for development and poverty reduction warrant a sustained effort to overcome these challenges. High trade barriers between countries have been reflected in trade that is more oriented toward distant markets than neighbouring African countries – it is often easier for Africans to trade with the rest of the world than with each other. The potential exists for greater intra-African trade in ways that would have significant positive impacts on the lives of millions living in poverty. Barriers to intra-regional trade need to be tackled along with complementary efforts to ensure that the poorest people can access the opportunities created. The World Bank Group is working in a number of different areas to support this effort and is ready to do more.
African Trade Integration and International Production Networks
African trade is heavily concentrated in agricultural and natural resourcebased commodities sectors that are highly embedded in international value chains. There has been significant trade dynamism in recent years driven by greater participation by African firms and communities in value chains especially in products like fresh produce and flowers. Much of this trade and production is for end markets in Europe but there is also increasing trade of this type within Africa in some manufacturing sectors as well as within services such as tourism. Intra-regional trade remains well below potential however and the challenge to diversify trade and increase the value-added share of African trade continues to confront most African economies. There are improving prospects for this as a result of intra-African policy changes ranging from a greater focus on trade facilitation to the ambition of creating a continental free trade area. A steep increase in supply chain trade in Africa is possible in coming decades if efforts continue to put in place a supporting policy environment. This must centre on substantially lowering trade costs for African firms by implementing trade facilitation measures especially for intra-regional trade flows and improving the productivity of transport logistics and related services that determine the feasibility of efficiently operating regional value chains.
Rising Africa in World Trade? A Story of Traditional Commodities and New Products
International trade provides ample opportunities for the economic development of countries and regions. The fall in trade costs – communication and transportation costs greater access to international capital markets regional cooperation and last but not least the decrease in trade barriers – has supported global trade and output expansion over the last decades. Emerging opportunities and challenges resulting from technological economic and political developments differ however from region to region. Historical experience shows that much of the progress in economic growth and development also depends on the readiness of local business and governments to rapidly adapt and seize opportunities.
Implementing Trade Facilitation Reform in Africa
Trade facilitation is central to Africa’s competitiveness in the global economy. Costs related to trade facilitation make up a significant proportion of overall trade-related costs which in Africa are higher than in any other developing region. This acts as a barrier for the integration of African countries into global markets as well as greater intra-African integration. Improving trade facilitation is essential for lowering costs for African agricultural producers as well as supporting the development of higher value-added activities in agribusiness manufacturing and services including participation in regional and global value chains. Diagnostic tools used by the World Bank Group such as the Logistics Performance Index as well as country-specific diagnostics highlight the key challenges faced. The evidence also shows that performance varies with some countries making significant progress on reform programs to improve trade facilitation. With other developing regions having generally more advanced trade facilitation regimes the lessons from these regions can be instructive in designing and implementing reforms in Africa which the World Bank Group is actively supporting at the national and regional levels. A priority for the Bank Group is implementing trade facilitation programs that do more to reduce trade-related costs facing the extreme poor given the concentration of extreme poverty in Africa.
Trade, Investment and Development
Structural transformation is imperative for Africa’s economies. An unprecedented policy unanimity has emerged amongst African government and business leaders that to achieve sustained growth and development Africa must industrialize and secure a greater share of the benefits of its participation in global value chains. This requires further advances in a programme for ‘development integration’ that simultaneously combines market integration with purposeful industrial development intervention and cooperation to strengthen regional value chains underpinned by efforts to develop and rehabilitate cross-border infrastructure for greater connectivity across Africa.