Accession experiences during WTO’s first decade

1. Accession experiences during WTO’s first decade Kym Anderson World Bank, Washington DC and University of Adelaide, Australia Vientiane, Lao PDR, 15-17 June 2005

2. New members of WTO since 1995

4. Accessions are taking ever-longer • Recent acceding countries have taken about 10 years to accede from date of establishing a Working Party • Even ignoring China (number 15 in Figure 1), the trend number of years is clearly rising • Due to more demands by WTO members, or because late applicants have the most distorted economies or are the most reluctant reformers?

5. Countries currently seeking accession

6. Of the 29 countries currently seeking WTO accession … • Nine applied more than 10 years ago • Twelve applied 5-10 years ago • Average period so far for those 72% is 9 years • Nine are LDCs (applied >5 years ago on av.) • Ten are from Eastern Europe/CIS • Eight are from Middle East/N. & NE Africa • If all joined, WTO membership would rise from 148 now to 177 customs territories • Largest ones: Russia and Saudi Arabia • then Iran, Kazakhstan, Ukraine and Vietnam

7. The ‘price’ of accession • Involves market access commitments, and other specific commitments • In terms of market access, the average tariff binding is getting lower over time • see agric and non-agric in the following two figures • (the final two applicants are the first LDCs to join WTO: Nepal and Cambodia)

10. Required services commitments also are growing • Of the WTO’s 160 services sub-sectors, the number of commitments made by founding members were 44 for developing and 108 for developed countries • But the twenty developing and transition economies that have joined WTO since 1995 have on average committed in 104 sub-sectors

11. And specific (non-market access) commitments are being added • An average of 20 per acceding country • Some are WTO+, going beyond commitments agreed among members in Uruguay Round • Others are WTO-, or involve agreeing to forego rights available for existing WTO members • e.g., Ecuador’s commitment to eliminate all domestic subsidies prior to joining and never to introduce them in future; China’s acceptance of product-specific transitional safeguard provisions (likely to be used by importers of Chinese clothes)

12. How countries have made the most of WTO accession process • Starting unilateral reform even before and certainly during the Working Party stage • Being pro-active in targeting reforms to areas identified as national priorities • e.g. Cambodia identified textiles, clothing and tourism as sectors that could benefit from reform • Clearly identifying goals, analyzing options (requires modelling), and formulating negotiating strategies and fall-back options

13. Lessons from the past decade of experience with accession negotiations • Expect the process to take at least 5 years, or more if society is reluctant to reform • Establish a broad base of support within government, civil society and especially the private sector (and with key trading partners) • Expect to have to bind average tariffs at <20% for agric and <10% for non-ag goods • And so anticipate the employment and other adjustments needed and the domestic measures (e.g. adjustment assistance) that could reduce opposition to reform and facilitate growth • And identify aid funds to finance adjustment assistance

14. Lessons from experiences with implementing accession commitments: the case of China • Discussion questions: • How large were the adjustment shocks? • How much reform was still to be implemented at time of WTO accession? • Were there significant losing groups/regions? • How were they dealt with? • What complementary domestic reforms were introduced to magnify gains/ ease adjustment burdens? • How did China’s trade change, and how did its trading partners respond? • What is the consensus now within China about whether WTO accession has been worthwhile?

15. Changes in applied tariffs (%) by China post-WTO accession