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Chapter 5
WTO Accession

 

INTRODUCTION

One of the most important tasks the WTO faces in pursuit of a truly transparent, predictable and fair world trading system is the integration of non-members. Since the inception of the WTO on January 1, 1995, only four countries have completed the entire accession process: Bulgaria, Equador, Mongolia and Panama. Currently, thirty-four governments hold observer status in the WTO, thirty-one of which are actively seeking accession.(1) (See Annex XI) Some applicants also constitute some of the world's largest trading nations - China, Russia and Taiwan. Most of the applicant governments are developing or transitioning economies, for whom WTO membership will accelerate development and bind economic reform into an international legal framework.(2) Their accession will also benefit current WTO members through increased market access and transparency.

The following sections will enumerate the mechanics of accession, the changes in content between accession to the GATT-1947 and accession to the WTO, and the costs and benefits experienced by the applicants. In addition to their schedule of commitments undertaken at the time of accession, governments agree to submit to a monitoring process, the Trade Policy Review Mechanism (TPRM), which ensures compliance with WTO rules, enhances transparency, and builds confidence that applicants will be held accountable for the commitments they take on. A discussion of this monitoring process will be followed by case study of the accessions of China and Taiwan.

ACCESSION TO THE WTO

Article XII of the Marrakesh Agreement Establishing the World Trade Organization, which provides for accession, states:

"Any state or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to the WTO on terms to be agreed between such state or separate customs territory and the members of the WTO."

The phrase "on terms to be agreed" necessitates that the accession process is a series of negotiations between the applicants and members of the WTO. Generally, aspiring members will first become observers, a status intended to allow governments to become familiar with WTO requirements and the accession process. Observers are not required to make any changes or commitments and are allowed to attend meetings and review WTO documents. As they develop a familiarity with WTO requirements, they may start unilaterally changing their foreign trade regime in anticipation of the accession process.

Governments then request to accede to the WTO by submitting a communication to the director-general, which is then circulated among all members. Upon approval of the request at the next General Council meeting, a Working Party will be established to review the application. Any and all WTO members may form the Working Party, although usually only those governments particularly interested in the accession of a given government will participate.

Thus begins the "information gathering" stage of the accession process. The applicant provides a memorandum on its foreign trade regime describing all aspects of its trade policy that has a bearing on WTO Agreements.(3) The memorandum covers general economic indicators, policies affecting trade in goods, such as import and export regulations, agricultural and industrial policies, policies regarding intellectual property rights, policies affecting trade in services, customs valuation, and licensing requirements. The memorandum on the foreign trade regime is distributed among Working Party members, who in turn submit written questions and comments for response by the applicant. Based on this initial round, the Working Party will meet to further delve into the details of laws, regulations, sectoral policies, taxation systems, privatization plans, subsidy policies, information on regional trading agreements, tariff and non-tariff barriers and anything else that might affect international trade.

With some overlap into the "information-gathering stage," the "negotiating" phase begins whereby the applicant engages in parallel multilateral and bilateral talks with members of the Working Party. For example, the U.S. government consults with the private sector by issuing a call for comments in the Federal Register on the accession of a particular government. Based on these and other consultations, U.S. negotiators develop a formal request to lower tariffs and other barriers to trade, and to provide specific sectoral market access commitments. During this phase, either the applicant could submit an initial offer or Working Party members could submit requests as a basis for further negotiations, which continue until the Working Party agrees that all necessary changes have been made to bring the applicants foreign trade regime into compliance with the WTO.

Eventually, a Draft Report of the Working Party, summarizing the discussions of the Working Party, is drawn up and sent to the General Council along with a Draft Protocol of Accession. The bilateral tariff, non-tariff, and market access commitments, once agreed to by the Working Party, are combined to form the draft protocol. (The bilateral commitments made will automatically apply equally to all WTO members in accordance with the non-discrimination principle.) The report and draft protocol must be adopted by the General Council/Ministerial Conference by a two-thirds majority. The Protocol enters into force thirty days after ratification of the applicant government.

Article XII governing accession does not set a fixed time frame or deadline for completion of the accession process. The detailed review of the applicants trade regime and the negotiations are time consuming and technically complex. The applicants themselves are largely responsible for the progress of their accession.(4) Given the expanse of issues covered, governments may have difficulty providing all of the requested information or they may try "to hide or gloss over 'uncomfortable' features of their trade regimes" thereby delaying the process.(5) Given that many applicants are developing or transitioning, they may have to develop new laws and regulations requiring difficult political and economic decisions.

Given the difficult nature of the accession process, the WTO Secretariat and individual member states offer technical assistance to applicants. The observer status is designed for the purpose of familiarizing an applicant with the meetings of other working parties, WTO councils and committees. In addition, the Secretariat will provide assistance in the technical preparation of any documentation requested of the applicant. The United States also frequently provides similar assistance in addition to guidance in the process of economic and legislative reform.

Other factors that may delay the accession process include a lack of resources on the part of the WTO and Working Party members and conflicts within the Working Party regarding required commitments of the applicant. The large number of applicants, many of whom are in the early stages of accession, may limit the attention members can devote on a particular accession. This highlights, again, the need for acceding governments to be forthright in the information gathering stages and how the pace of accession is largely in the hands of the applicant.

The harmonization of regional trading agreements (RTAs) with WTO rules may also complicate the accession process. Specifically, WTO members are concerned that tariffs and other regulations as applied to third parties outside the RTA are not on the whole higher or more restrictive.(6) The applicant countries Lithuania, Latvia, and Estonia, who are in line to accede to the EU, must harmonize their trading systems with the WTO and with the EU. In some cases there are conflicts between the two goals, such as with Latvia's commitments on the treatment of service suppliers. The EU would like Latvia to make the same commitments that all EU members have made - specifically, taking the necessary legal steps to maintain a quota reserving 51 percent of commercial airtime for European works. The United States strongly disapproves of such an exemption, and the conflict has effectively held up Latvia's accession process through no fault of its own.

In addition, WTO members are examining the customs union currently being established among Russia, Belarus, Kazakstan and the Kyrgyz Republic. According to an OECD report, "the present network of different types of trade agreements among the NIS [Newly Independent States]...is complex and lacks transparency both for NIS and non-NIS traders."(7) Indeed, WTO accession may clarify for applicants the role of regional preferential trading agreements.

The fact that most applicants are either developing or transitioning economies brings certain concerns to the accession process. First on the list is whether or not to admit them as "developing countries" and whether or not to recognize them as "market" or "non-market" economies. Declared developing countries receive "special and differential treatment" within the WTO. For the most part, this status enables them to have a longer time-frame within which to implement certain commitments, although they may also commit to a lower level of obligations and obtain more favorable treatment for the least developed countries.

WTO negotiators are trying not to repeat the failures of the GATT-1947; designating "developing country" status provided little incentive for reciprocity on the part of the developing countries, and relegated them to second class status. Throughout the Uruguay Round, developing countries realized the benefits of being a first-class member. By engaging in reciprocal exchanges of concessions, they had a credible and significant role in addressing their concerns with the new issues of GATS, textiles and clothing, agriculture, and tropical products. Now, negotiators focus as much as possible on locking in more rational trade policies before granting accession. This is especially evident in the case of former communist countries: as communism failed, the prevailing thought was to bind them to a Western institution quickly before communism resurged. Once the West became certain that communism was defunct, the hurdles to accession became higher as the focus turned to commercially viable trade policies.(8)

The next issue is to determine whether or not the applicants are "market economies," which is especially important in determining whether a country is "dumping" its exports by pricing them below cost. As prices in non-market economies "reflect administrative priorities, not prices resulting from competition," so the logic goes that dumping calculations for non-market economies will be less accurate than for market economies.(9) This issue is particularly sensitive in the cases of China and Russia. Investigations into anti-dumping are time consuming and costly to firms and are more prevalent when countries are labeled as "non-market." The EU has recently announced its intention to remove the label of "non-market" as applied to China and Russia.(10)

WTO accession for developing and transitioning countries will bring with it many benefits, among them, the systemic effects of increased transparency, predictability, and the reinforcement of a multilateral rule-based framework on their economic reform.(11) Membership will also provide permanent and multilateral most-favored nation status, legal protection in anti-dumping cases and access to the dispute settlement mechanism.(12) The process also places high adjustment costs upon the countries. Providing for transparency, adequate enforcement of intellectual property rights and clear regulations on trade-related investment measures, among other issues, places quite a burden on applicant's resources. Realistically, these problems would not prevent accession, but they certainly contribute to the length of the accession process.

The mechanics of the accession process is essentially the same as under GATT-1947. A series of negotiations determines the terms of membership. The inclusion of GATS, TRIMs, and TRIPs, as well as new sectors including agriculture, textiles and clothing resulting from the Uruguay Round, somewhat complicates the negotiations. The inclusion of these additional issues and sectors into the world trading system means that, unlike GATT-1947, applicants must "make legislative changes to meet WTO institutional and regulatory requirements in addition to the eliminating existing WTO-inconsistent measures."(13) In a final contrast to GATT-1947, the organizational nature of the WTO and the "enforcement" mechanisms of the TPRM and the Dispute Resolution Body serve to remind the acceding governments that they will be "watched" and will be held accountable through possible retaliation if they fail to meet their commitments.

THE ACCESSIONS OF CHINA AND TAIWAN

China, the world's tenth-largest producer of export goods, the world's largest trading country, and the second largest sources of the United States deficit, has attracted the most attention among all current applicants for accession to the WTO.(14) China's accession to the WTO has been more complicated than most accession proceedings as it encompasses the political element of the Sino-U.S. relationship in addition to the difficult trade liberalization issues associated with the largest "semi-market" economy. Moreover, the accession of China will have a strong impact on China's domestic economic reforms, the WTO, and the world- trading environment. China's accession to the WTO raises concerns for many scholars' and policy-makers regarding the advantages, disadvantages and future of the WTO with or without China. Moreover, the entry of China into the WTO directly affects accession of another applicant, Taiwan, which has entangled the accession process in the existing unresolved disputes between China and Taiwan.

As the United States traditionally has an influential vote within the Working Party and within the General Council, it is fitting to examine negotiations between China and the U.S. The biggest obstacles to China's accession currently are the issues of non-transparency and the non-market economic structures. China seems very reluctant to make acceptable concessions in the negotiation process, imposing barriers to U.S. exports, and refusing to remove them in the near term.

On October 10, 1992, the United States and China signed a Memorandum of Understanding on Market Access that commits China to dismantle most of these barriers and gradually open its markets to U.S. exports, as consistent with WTO principles. As a direct result, China has removed over 1,000 quotas and licenses on a wide range of key exports such as telecommunications digital switching equipment, computers, many agricultural products, and medical equipment.(15) As of late 1997, however, China currently maintains non-tariff measures against 385 tariff-line items, according to the Chinese trade officials.(16) Although the final non-tariff measure eliminations were scheduled to occur no later than January 1, 1998, there have been indications that China is erecting new barriers to restrict imports and trading rights in addition to restricting foreign investment in China with local content requirements. (17) By late 1997, China had not announced tariff-rate quota administration rules and quota volumes, and has yet to move to eliminate severe restrictions in this area. Also, administrative actions to enforce intellectual property rights have been weak; end-user piracy of computer software remains widespread.

Despite China's reluctance to implement certain trade liberalization measures, the United States has a vested interest to continue to negotiate and encourage China to join the WTO. Trade with China under the rules of "the club," would create more jobs in both export and import industries, and help the United States achieve a more balanced trade relationship with China.(18) China's entry into the WTO will also provide a motive to catalyze the ongoing economic reforms, contributing to the transparency of Chinese economic structures and provide American firms with more important information on the price of doing business with China.(19) Finally, integrating China into the WTO may reduce the bilateral tensions between China and the United States, by providing a multilateral mechanism through which to deal with various trade disputes.(20)

An additional complication to China's accession to the WTO surrounds the 1974 Jackson-Vanik Amendment to the U.S. Trade Act requiring the annual conditional renewal of China's MFN status. Many legislators feel this process provides a key leverage against China to improve human rights and prevent arms trading. The U.S. Congress is unlikely to revoke the amendment, although it could remove China from the list of nations requiring such conditional MFN extension. Unless the United States is willing to surrender that leverage power, it would have to invoke the non-application provisions of Article XIII of the WTO Agreement. These provisions prohibit the extension of permanent MFN status to the acceding country. This would probably trigger a serious political crisis and undermine the value of WTO membership to China. (21)

Chinese leaders are concerned about the potential negative impact WTO accession may have on China. The leaders are very worried that the rapid opening of Chinese society and the liberalization of the economy will result in massive dislocations of revenues and resources, unemployment resulting from foreign competition, and social instability.(22) China, being the largest remaining communist country, still has a state-controlled economy and a highly authoritarian government. As Greg Mastel has pointed out, China is not a rule-based country, but rather a "man-ruled" country.(23) Mr. Mastel illustrates that point with a quote by Qiao Shi, former Chairman of China's National People's Congress, that "China remains a society ruled by strong men, not strong laws."

Therefore, we should also examine whether China will have any negative effects on the WTO. As mentioned above, China is a state-planned economy, and its accession may set up a model for other countries that formerly operated command economies. Many other countries have argued that the WTO should not establish a different standard for China's accession and China should comply with all the WTO standards.(24) They have insisted that China cannot violate key provisions of the WTO, which include a free market economy and rule-based international trade regime. Moreover, some scholars are concerned that, based on China's record in breaking or ignoring international agreements, there exists the possibility that the WTO might not handle China effectively, not only because the WTO lacks experience in dealing with non-compliant members, but also because of China's size as a nation and an economy.(25) Others remain concerned that if these non-market economies are admitted to the WTO, they can become free-riders in the international trading system, enjoying the benefits of WTO membership without making any significant concessions or accepting any major responsibilities.(26)

Therefore, the accession does not purely revolve around the emergent trade agreements but also depends on political consensus. China has linked Taiwan's accession to its own. Beijing has claimed repeatedly that while China would permit Taiwan to enter the WTO as a separate customs territory, as Hong Kong did, it would oppose any attempt to grant Taiwan WTO membership ahead of China.(27) But Taiwan, America's eighth largest trading partner and the world's fourteenth largest trading nation, is much closer to meeting the WTO's free market criteria than China.(28) As of February 20, 1998, the United States and Taiwan have achieved a comprehensive conclusion of market access agreements to facilitate Taiwan's accession to the WTO. The agreements include immediate market access for some agricultural products, the lifting of a ban on imports of U.S. rice, the establishment of an import quota, and agreements to reduce telecommunication interconnection fees by half by October 1998, followed by further reductions to a level consistent with other major developed countries by 2001. The Monopoly Board, which administers the sales of alcohol and tobacco products, will eliminate internal taxes that discriminate against imported products and replace them with a value-added tax system.(29) Taiwan needs only to negotiate market access agreements with the EU and Switzerland before the final stages of the application process can take place, whereas China has the United States and other major trading partners with which it still has to complete negotiations. China is determined to link Taiwan's accession to political factors rather than trade issues, in direct contrast to WTO Director-General Ruggiero's statement that the "WTO is not, fortunately, ruled by political principles." (30)

Since China has been called the superpower of the next century, many are eager to bring it into the global economy. Support or opposition to accession is based either on the belief that China should take responsibility for obeying the rules of the international economic system or based on the commercial gains resulting from China's entry, or even on the idealistic view that democracy and human rights will be effectively improved with the continuing opening up of China's economic structures. We should evaluate with caution the advantages and disadvantages of China's accession to the WTO. Enjoying the benefits from a free market economy must be balanced with abiding by its rights and obligations. The need to integrate such a country into the world trading system presents the WTO with one of its most challenging tasks.

THE TRADE POLICY REVIEW MECHANISM

After states or customs territories accede to the WTO, they must still have their trade regimes monitored. Such a monitoring system is essential in the WTO's pursuit of a transparent and equitable trading system. This goal is achieved largely through the operation of the Trade Policy Review Mechanism (TPRM), agreed to during the Montreal Mid-Term Review of the Uruguay Round in December 1988,(31) and established in the April 1994 Marrakesh Agreement, in response to the lack of an "explicit general monitoring system to check on the behavior of its members"(32) in the GATT. The TPRM, although still developing as an institution, serves as a mechanism for "achieving greater transparency in, and understanding of, the trade policies and practices of Members,"(33) and also plays an important role as a confidence-builder in the expansion of the WTO.

The TPRM conducts a review of the trade policies of every member of the WTO based on a rotating schedule. The largest four trading powers (the EU, Japan, Canada, and the United States) are reviewed every two years. The next sixteen largest trading states are reviewed once every four years, and the remaining members are reviewed once every six years.(34) There is a six-month "flexibility" period for reviews, and it was decided in 1996 that every other review of a member would be an "interim" review that would cover the changes in trade policy since the last "full" review. Least-developed countries may be granted a longer period between reviews.

A TPRM report consists of three parts; the Secretariat Report, the Member Country Report, and the Minutes of the Trade Policy Review Body (TPRB) meeting. Each report is intended to provide a detailed synopsis of the trade policies and practices, policy-making institutions, and macroeconomic situation of the member under review. The preparation of the Secretariat Report and the questionnaire used during the TPRB meeting are the responsibility of the Trade Policy Review Division (TPRD) of the WTO Secretariat. The TPRD conducts research, interviews and analyzes outside writings on the member's trade policies. The process of data collection and preparation for a review takes approximately ten months. The current staff of the TPRD consists of a director, sixteen economists, and eleven support staff.(35) The limited manpower available to the TPRD means that the increasing number of requests for review may constrain the scope and quality of reports in the future.(36) (See Annex XII)

The actual Trade Policy Review is carried out under the auspices of the WTO Secretariat by the TPRB as established in Annex III of the 1994 Marrakesh Agreement.(37) The TPRB is made up of the General Council of the WTO as convened to conduct trade policy reviews according to the schedule established for that year. The function of the TPRB is to conduct trade review meetings according to the Draft Rules of Procedure for Meetings of the Trade Policy Review Body,(38) as well as produce the WTO's Annual Overview of Developments in the International Trading Environment.

The TPRB meeting for a given country is a chance for members of the TPRB as well as any designated discussants (usually two, selected in agreement with the member under review)(39) to air any questions or concerns regarding the findings of the report. Questions for the member under review must be submitted in writing a week before the scheduled meeting. Discussants are required to submit an outline of relevant points at least one week prior to the meeting.(40) The minutes of the official TPRB meeting, along with the Secretariat Report, and the Member Report, are published together as the Trade Policy Review of the given member.

The TPRB voted in 1997 to allow international Intergovernmental Organizations observer status at TPRB meetings.(41) This will allow the IMF and World Bank, as well as other interested multilateral institutions, to sit in on TPRB review meetings. The TPRB also agreed in 1997 to conduct "grouped" reviews of nations involved in regional customs unions or other obvious geographical or political linkages in an effort to stave off overloading of the TPRB.(42) The TPRB is also responsible for guiding the evolution of the trade review mechanism, including any modification of the outline format for country reports, and providing assistance to least-developed countries in producing their Country Reports.

Although the primary goal of the TPRM is to provide transparency in domestic trade policies, there has been some debate about the ability of the TPRM to act in an enforcement capacity regarding unfair trade practices. The logic behind this argument is that laying bare a country's trade policies for criticism in a multilateral context allows members little choice in whether to change policy in response to the review. The TPRM has repeatedly shied away from such a role. While the TPRM fulfills a public good in providing an institutionalized format for transparency in commerce, it has been limited by its charter and repeated statements to an observational and non-judgmental ideal. Although data from TPRM reports may serve as the starting point for a dispute resolution through the DSB, the evidentiary link between the TPRM and the dispute settlement mechanism has not fully developed yet.(43) Therefore, despite calls for an admission that the TPRM process does serve in an enforcement capacity - to explain "to little red riding hood what the functions of the long teeth are"(44) - the TPRM in its current form is limited in its impact on national policies. "This is precisely not what the reviews are intended to be about; and if countries had thought that they would in any sense be facing a kind of tribunal leading to a legal judgment, it is probable that there would have been no agreement to launch the exercise in the first place."(45)

The generalized nature of the reports system itself has in fact been criticized for allowing states to gloss over or trivialize aspects of their trade policies in the Country Report. Statements like "The EC Report (1991) is characterized both by superciliousness and diplomacy"(46) are not uncommon in analyses of TPRM results. The current Country Report draft outline allows a member to selectively target specific issues for consideration. The depth and breadth of the Secretariat reports vary as well, from being hailed as "the best available description so far"(47) of a given economy to being "a little dry and seemingly descriptive."(48) Given the limited resources of the TPRD and the time limits on the review meetings, a more detailed and structured report format may help to eliminate the ability to "game" the country side of the review mechanism. One U.S. government official noted:

"A defined standard of review, and what a review entails, will help to eliminate inconsistency in the report system. By training review teams in standard procedures, like the IMF or the WTO does now, as well as imposing standards in terms of data and analysis on the country being reviewed, we can help alleviate the burden on the TPRM."(49)

The application of the TPRM universally and on a set schedule has meant that Members both know it is coming and also know that others will not be able to avoid the same level of scrutiny. This has acted to reinforce the concept of equity in the process, but has also allowed Members to prepare to present their national trade policies in the best possible light. Further systematization of the institution of the TPRM will increase confidence in and compliance with the spirit of the exercise.

The TPRM, although still limited in its ability to enforce free trade measures, could provide an important "safety valve" for the WTO dispute settlement mechanism. By instituting a middle level of arbitration or consultation between the impartial review and the dispute settlement process, the TPRM could serve to alleviate the caseload of the DSB. Findings in the TPRM process could serve as a basis for a deadline for reform or arbitration between states outside the DSB prior to activation of DSB proceedings. Giving the TPRB the power to order a deadline for arbitration or consultation on unfair trade practices uncovered in the review process would serve to eliminate some DSB cases before they got off the ground without seriously undermining the binding authority of the DSB. The TPRM should serve an important role not just in monitoring but also in compliance with WTO rules. A clearer role for the TPRM in this process should be a priority for the TPRM process review scheduled to occur between now and 2000.

The TPRM plays and essential role in confidence-building as the WTO negotiates the accession of new members. The mandatory nature of the WTO gives current members the assurance that accession-seeking countries like China, Taiwan, or the Russian Federation will have their trade policies brought under the same scope of evaluation they have come to accept. This is especially important in relation to transition economies and states with traditionally closed trade policies. The greatest limiting factor in market access to China, for example, is a lack of transparency in China's domestic trade policies.(50) The majority of companies questioned reported that China's trade and investment laws are "unclear, inconsistent, or administered in a seemingly arbitrary manner."(51) The mandatory nature of the TPRM process, however, means that China's accession to the WTO will shed important light on the structure and implementation of its trade policy. A state seeking accession is explicitly stating its willingness to open its trade policy, the first step towards freer trade. "Everyone who enters the WTO does so under the same conditions. The Working Party for accession is basically the first Trade Policy Review. It puts on the table a plan to bring their policies into line with the WTO guidelines. Membership in the WTO commits a country to a regime of monitoring and compliance that applies to everyone equally."(52) Trade officials should see the TPRM not as an exposure to criticism that undermines state sovereignty but as an important factor in the continued expansion of the WTO and its success in bringing about freer trade practices.

The TPRM also serves as a useful yardstick of progress in evaluating a nation's commitment to free trade. The repetitive nature of the reviews allows for a comparison over time of changes in trade policy. The institution in 1996 of "interim" reviews, which concentrate on changes in trade policy since the previous review, allows for a clarification of a state's implementation of WTO guidelines.(53) Despite the youthful nature of the TPRM, the increasing number of comparative reviews will facilitate the study of trends and customary practice in trade policy liberalization. The TPRM review reports serve as a record of a state's progress in implementing free trade policies and should serve as a guideline for state's considering accession to the WTO.

The TPRM, although both innovative and experimental, has so far fulfilled its purpose. It has provided, despite limited resources and a challenging schedule of reviews, a body of useful and comprehensive data on trade policies of member states. While debate continues over the role of the TPRM in WTO compliance and its future procedures and scope, the TPRM acts to boost the confidence of its members in accession-seeking states. It also provides an institutional history of trade policy change as well as a forum for the expression of views on trade policy outside the DSB or General Council. A state seeking accession to the WTO must recognize, however, that the TPRM process may be a rough one, and that fulfilling the requirements of the TPRM report process does represent a burden on analytical resources. The actions of the TPRB, however, have so far been generally even-handed and helpful to lesser-developed states in providing assistance and detailed analysis of trade practices. The resulting transparency goes far in ensuring that nations, large and small, operate above the board in international trade.

CONCLUSION

Accession to the WTO proves to be a much more complicated process than accession to the GATT-1947. The additional issues and sectors undertaken by the Uruguay Round must be undertaken in whole by applicant countries. As these countries are largely developing or transitioning economies, many of these new issues place heavy burdens on these countries as they change and create new laws, regulations, policies and enforcement mechanisms to comply with WTO requirements. The ability of an applicant to address the issues brought up by the Working Party will, by and large, determine the speed of the accession process, although there may be other political factors at play.

Once a member of the WTO, countries must be subject to the Trade Policy Review Mechanism in order to ensure transparency and impart confidence that all members will be subject to the same requirements and monitoring. This process is not unlike the first Working Party meeting where applicants submit a Memorandum on their Foreign Trade Regime. The experience of the TPRM since the inception of the WTO has been generally favorable in providing assistance to LDCs in developing their trade regime and transparency to the world trading system.

The cases of China and Taiwan illustrate the importance and complexity involved in the WTO's task of integrating non-members. The WTO seeks to avoid political questions and attempts to direct issues toward the development of a free and fair trading system. It is as beneficial for the WTO to accept these new members as it is beneficial for the applicants to join the organization, despite the costs of the process. The thirty-one countries knocking on the WTO's door certainly indicate the success of the WTO in recent years, while also testifying to the large and important task of creating a truly global trading system.


1 For a list of countries and their application status, see Annex XI.

2 Renato Ruggiero, "From Vision to Reality: The Multilateral Trading System at Fifty," Address to the Brookings Institution Forum "The Global Trading System: a GATT 50th Anniversary" at http://www.wto.org

3 For complete details on what is included in the Memorandum, see WTO Documents WT/ACC/1, WT/ACC/4 and WT/ACC/5 available at http://www.wto.org

4 Ibid.

5 Kim, Chulsu, "Process of Accession to the World Trade Organization," Journal of Northeast Asian Studies. Fall 1996: p. 7.

6 Office of the U.S. Trade Representative

7 Organization for Economic Cooperation and Development, Trade Policy and the Transition Process, Paris: 1996, p. 31.

8 U.S. State Department source.

9 OECD, p. 127.

10 U.S. State Department source. This information may also be found in a press release by the European Commission.

11 OECD, p. 32.

12 An important caveat here is that countries may invoke the nonapplication clause and refrain from providing permanent MFN status to new members. For example, the United States may only grant permanent MFN to certain countries under the Jackson-Vanik amendment or Title IV of the Trade Act of 1974. Currently 13 accession applicants are covered by this provision and must be removed from the list by legislative action. These countries are Albania, Armenia, Azerbaijan, Belarus, China, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova, Russia, Ukraine, Uzbekistan and Vietnam. "1998 Trade Policy Agenda & 1997 Annual Report," p. 87.

13 Office of the U.S. Trade Representative, "1998 Trade Policy Agenda & 1997 Annual Report," p. 88 at http://www.ustr.gov/reports/tpa/1998/contents.html

14 "China and the WTO," Nicholas R. Lardy, Brookings Policy Briefs.

15 1997 Country Reports on Economic Policy and Trade Practices, Department of State report submitted to the Senate Committees on Foreign Relations and on Finance and to the House Committees on International Relations and on Ways and Means, January 1998

16 Ibid.

17 Ibid.

18James R. Sasser U.S. Ambassador to China, Engaging China, Address to the Asia Society, Washington, D.C.: March 4, 1997.

19 Richard N. Haass and Nicholas Lardy, The United State and China: A New Framework, Brookings Institute Policy Brief, October 1997.

20 Nicholas R. Lardy, China and the WTO.

21 Michaela Eglin, "China's Entry Into the WTO With a Little Help From the EU", International Affairs, Vol. 73, No. 3, 1997.

22 "U.S. Says China Isn't Close to WTO Accord", Paul Blustein, Washington Post, August 5, 1997.

23 Greg Mastel, "Is the WTO Ready for China?", Far Eastern Economic Review, May 8, 1997.

24 "South Korea, China, and the WTO", Washington Post, January 10, 1997.

25 Greg Mastel, "Is the WTO Ready for China?", Far Eastern Economic Review, May 8, 1997.

26 "The More Important Debate", Greg Mastel, Washington Post, June 24, 1997.

27 Bridges Weekly Trade News Digest, Vol. 2, No. 7, March 2, 1998.

28 "Lost a Battle on China Trade, Won the War", George F. Will, Washington Post, July 3, 1997.

29 "The United States and Taiwan Conclude Comprehensive Market Access Agreement", Press Release, American Institute in Taiwan, February 20, 1998.

30 Bridges Weekly Trade New Digest Vol. 2, No. 7, March 2, 1998.

31 WTO, "Overseeing the National Trade Policies: The TPRM," 1997.

32 Victoria Curzon Price, "GATT's New Trade Policy Review Mechanism," The World Economy, June 1991.

33 WTO, Annex III of the Marrakesh Agreement, 1994.

34 Ibid.

35 WTO, "The Trade Policy Review Division (TPRD)," 1997.

36 For a schedule of reviews planned for 1998, see Annex B.

37 WTO, Annex III of the Marrakesh Agreement, 1994.

38 WTO Document WT/TPR/W/4.

39 WTO, Annex III of the Marrakesh Agreement, Section C(iv), 1994.

40 WTO Document WT/TPR.W/4, Ch. IV.

41 TPRB Report on the Meeting Held on 10 March, 1997. WT/TPR/R/1, 1997.

42 Ibid.

43 Interview with Al Sibert, U.S. State Department, Bureau of Economics and Business Affairs, Office of Trade Policy and Programs. March 13, 1998. Views expressed by Mr. Sibert do not necessarily reflect those of the U.S. Government.

44 Asif H. Qureshi, "Some Lessons From 'Developing' Countries' Trade Policy Reviews in the GATT Framework: An Enforcement Perspective," The World Economy, May 1995.

45 Roderick Abbott, "GATT and the Trade Policy Review Mechanism: Further Reflections on Earlier Reflections," Journal of World Trade, Vol. 27, No. 3, 1993.

46 Asif H. Qureshi, "Some Reflections of the GATT TPRM, in the Light of the Trade Policy Review of the European Communities: A Legal Perspective," Journal of World Trade. December 1992.

47 George Fanc, "The Trade Policy Review of Indonesia," Journal of World Trade. December 1992.

48 Pelkmans and Carzaniga, "The Trade Policy Review of the EU," The World Economy: Global Trade Policy 1996.

49 Al Sibert, U.S. State Department, Bureau of Economic and Business Affairs, Office of Trade Policy and Programs, March 13, 1998.

50 U.S. General Accounting Office, International Trade: Challenges and Opportunities for U.S. Businesses in China, T-NSIAD-96-214, 1996.

51 Ibid.

52 Al Sibert, U.S. State Department, Bureau of Economic and Business Affairs, Office of Trade Policy and Programs, March 13, 1998.

53 The 1997 EU review noted the interim status of the report, noting that "These tendencies provide encouraging evidence that the mulilateral framework of rules and disciplines constitutes and important - and growing - point of reference in the elaboration of the Union's policies." The Trade Compliance Center, "Trade Policy Review Summaries: WTO Implementation and Single Market Completion Lead to Greater Liberalization in the European Union," at http://tcc.nist.gov November 12, 1997.  

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