WTO accessions
China - Tariff Rate Quotas for Certain Agricultural Products
On 18 April 2019 the WTO circulated the panel report in the case brought by the United States in “China - Tariff Rate Quotas for Certain Agricultural Products” (DS517).
Russia - Measures Concerning Traffic in Transit
On 5 April 2019 the WTO circulated the panel report in the case brought by Ukraine in “Russia - Measures Concerning Traffic in Transit” (DS512).
Tariff Negotiations and Renegotiations under the GATT and the WTO
Over the past seven decades since the General Agreement on Tariffs and Trade (GATT) was established in 1947 there has been a phenomenal increase in international trade in goods largely due to sustained efforts by the world’s main trading nations to reduce and eliminate tariff barriers in a multilaterally orchestrated manner. This publication reviews how the procedures and practices relating to tariff negotiations and renegotiations have evolved over this time. In particular this new edition recounts how negotiations to expand the duty-free coverage of the Information Technology Agreement were concluded and provides an account of tariff renegotiations regarding successive enlargements of the European Union. It also covers tariff negotiations for the accession of a number of new members to the WTO such as China and Russia. This book will be of particular interest to negotiators members of government trade ministries economists and academics specialized in trade policy.
Georgia's Post-Accession Structural Reform Challenges
The process leading to WTO accession is complex requires solid domestic coordination mechanisms in the acceding country a rethinking of its economic and trade policies and significant domestic structural reforms. It often implies the creation of new institutions designed to coordinate and implement the policies at the national level as was the case in Georgia.
An Empirical Assessment of the Economic Effects of WTO Accession and its Commitments
Besides facilitating access to the world market WTO accession negotiations entail a process of domestic reforms that are expected to improve the supply side of acceding economies. However measuring the actual impact of accession remains an empirical debate.
The WTO- Plus Obligations: Dual Class or a Strengthened System?
Obligations in accession protocols that go beyond the multilateral trade agreements are commonly referred to as ‘WTO-plus’ obligations. This chapter reviews the so-called WTO-plus obligations and argues that even though they are perceived to expand the existing obligations under multilateral trade agreements they in fact do not create two classes of membership within the World Trade Organization (WTO). First all accession processes are conducted on a case-by-case basis and thus result in different obligations for each acceding government. Second the WTO legal system is evolving continuously; therefore to adopt new rules and advance the legal system obligations cannot remain the same as in previous accessions. Third non-discrimination remains one of the fundamental principles of the multilateral trading system. Accessions to WTO follow this principle and hence WTO-plus obligations have been and will continue to be set on a non-discriminatory basis. At the same time WTO-plus obligations help upgrade the rules-based multilateral trading system. They fill gaps in the WTO rules on anti-dumping countervailing and safeguard regimes and they advance WTO rules by promoting plurilateral agreements.
How Post- TRIPS Negotiations Reframe the ‘Trade- Related Aspects’ of Intellectual Property after TRIPS: The Lessons of WTO Accessions
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) established the first multilateral understanding of what constitutes a standard for ‘adequate’ and ‘effective’ protection of intellectual property rights and established a new mechanism for monitoring and reviewing how these standards are met. The policy and legal framework defined by the TRIPS Agreement has in the two decades since it entered into force progressively gained acceptance as a legitimate balanced and transparent set of standards. Since then however two parallel sets of negotiations have revisited the standards defined by TRIPS: the multilateral WTO accession negotiations and bilateral and regional trade negotiations outside the WTO. In each case TRIPS standards have been further elaborated and timelines for their implementation altered in a manner that produces a layering of rules upon the foundation of TRIPS. However the institutional legal and policy implications of these two lines of development contrast sharply. This chapter reviews the main lines of development of rules relating to intellectual property in the accession processes and contrasts these with the parallel developments outside the WTO. It concludes with an analysis of the policy and practical lessons that can be derived from contrasting these two processes.
Trade Multilateralism – Enhancing Flexibility, Preserving the Momentum
The book you are about to close picked up on the evolving discussion on accessions and trade multilateralism. The first book on the subject WTO Accessions and Trade Multilateralism: Case Studies and Lessons from the WTO at Twenty looked back. It took stock of two decades of accessions to the WTO their welfare and development outcomes the resulting improvements to market access and their contribution to domestic reforms and to the rules-based multilateral trading system. It shone a powerful light on the GATT/WTO accession procedure – a process hitherto viewed as lacking transparency and complicated by its esoteric vocabulary and apparent detachment from the day-to-day conduct of trade.
WTO Rules, Accession Protocols and Mega-Regionals: Complementarity and Governance in the Rules-Based Global Economy
Over the past twenty years the rules-based global economy has been subject to a dynamic process of transformation. The trading environment has been characterized by shifts in the balance of economic power emerging structures and rapid changes in global and regional alliances. Since its establishment in 1995 the WTO has sought to adapt to these global trends. The 2017 Trade Facilitation Agreement (TFA) the 2015 Nairobi Decisions on Agriculture the 2015 expansion of the Information Technology Agreement (ITA) and twenty years of cumulative WTO accessions acquis are all part of this process of constant adaptation by the WTO to a rapidly changing environment. However after the Seattle Ministerial meeting in 1999 free trade agreements (FTAs) and regional trade agreements (RTAs) mushroomed. The 'spaghetti-bowl’ consequences and the continuing proliferation of preferential trade agreements (PTAs) and counter-PTAs have created challenges and opportunities for the rules-based multilateral trading system. Several questions have been raised revolving around the compatibility and the discriminatory and trade diversion effects of such agreements. Are these agreements building blocks or stumbling blocks for the multilateral trading system? Moreover the emergence of mega-regional RTAs (MRTAs) in particular the Trans-Pacific Partnership (TPP) have called into question in some quarters the power and relevance of the WTO at large. This chapter examines the core question of whether mega-regionalism (and FTAs by implication) poses an existential risk to the multilateral trading system and argues that the answer is ‘no’. The negotiating results from FTAs including in their mega-regional forms and trade multilateralism can coexist in a constructive healthy and competitive relationship and both are essential for the governance of the multipolar twenty-first-century global economy. To substantiate this conclusion the chapter reviews the WTO accessions acquis and compares it to the provisions of the TPP without pre-judging its future. The comparative analysis is conducted across several areas: market access; trade rules (bilateral/plurilateral/multilateral); trade negotiations as an instrument for domestic reforms; and discriminatory effects. The results of the analysis point to areas of significant complementarity and mutual supportiveness between WTO accession acquis and the TPP and different degrees of trade liberalization in certain sectors. The accessions acquis demonstrates a process of mutually supportive coexistence between bilateral and plurilateral negotiations and the multilateral legal and policy framework of the WTO. The scope and quality of accession negotiations results are comparable to results from PTAs including MRTAs and go further to show greater robustness and durability.
Post-Accession Support Platform
WTO obligations including notification requirements and specific accession commitments are complex. Most of them become effective from the date of WTO membership. From a centralized accession process new members now suddenly have to adapt to a decentralized WTO procedures and participate in parallel in its multiple bodies. The twenty years of post-accession experience of Article XII members suggests that many especially least-developed countries (LDCs) have faced major implementation challenges until a system of post-accession support was introduced recently. This chapter reviews the Post-Accession Support Platform (PASP) a framework developed by the WTO Secretariat to facilitate the transition from acceding economy to full-fledged WTO member. The PASP offers individual post-accession implementation strategies technical assistance and capacity-building best international practices a dedicated website and internal Secretariat procedures that can be used to support new WTO members. The chapter reviews the use of the PASP by two recently acceded LDCs – Afghanistan and Liberia – and finds early signs of improved effectiveness in the WTO post-accession transition process.
Trade Multilateralism in the Twenty-First Century
Trade multilateralism in the twenty-first 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.