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Membership and accessions

Membership and accessions: The numbers

As of July 2018, WTO has 164 members. The last country joining the organisation was Afghanistan, in July 2016. WTO members account for more than 97% of the international trade.

 

All CIS countries are WTO members with the exception of Azerbaijan, Uzbekistan and Turkmenistan. Kyrgyzstan, Georgia, Moldova and Armenia were the first ones in joining the WTO. Ukraine became member in 2008, Russia in 2012, Tajikistan in 2013 and Kazakhstan in 2015. 

 

22 countries are seeking accession, they marked in yellow in the map below. Iran is the largest economy not yet member of the WTO. Negotiations with several countries, including Comoros and Bosnia and Herzegovina, are likely to be completed in 2018. Several countries are actively negotiating, including Belarus. Only a few countries have not yet applied for WTO accession, including North Korea and Turkmenistan. 

 

(Source: www.wto.org. Click on it to access the Membership page) 

 

The accession process

The accession process follows a well-established sequence which is summarized in the following graphic:

 

(Source: www.wto.org) 

 

The multilateral, plurilateral and bilateral processes are the most time-consuming part of the accession negotiations. It usually takes several years of full engagement before they can be completed. The multilateral and plurilateral processes take place with the working party members, in Geneva, and require multiple meetings and exchanges of information including questions and replies. The bilateral process requires one-on-one meetings and exchanges with each interested member. In the final part of the process, to prepare the draft goods and services schedules, the Secretariat is involved.

 

Once the draft working party report and the draft goods and services schedules are finalised, the procedure for their adoption starts. From there to the membership becoming effective, it usually takes several months. The two main steps are the adoption of the package by the members and the acceptance by the acceding government.

 

The process is developed in detail in the Handbook on Accession to the WTO. 

 

Why do countries accede?

Whether very large, large, medium or small economies; whether large, medium or small in size; regardless of the economic or political model, 36 countries, diverse and from several continents, have concluded, after taking into consideration many factors, that their overall (not only economic!) interests are better served by joining the WTO.

 

While countries want to accede to the WTO, no country has ever taken any serious steps to leave the WTO.

 

What do countries seek through the accession to the WTO?

The following is a list of reasons indicated by countries interested in acceding:

  • Pursuance of economic reforms, including structural reforms
  • Transitioning from a centrally planned to a market economy
  • Diversification of the economy away from dependence on a narrow set of commodities
  • Nation-building processes after reaching independence
  • Post-conflict recovery
  • Stepping stone to a regional integration initiative


And, what do countries get from accession?

Empirically, there are several outcomes that acceding countries have achieved through accession to the WTO:

 

Improvement of economic performance and trade growth

The WTO has examined the economic performance of countries that have acceded the organisation and concluded that:

The following data support the above statement:

(Source: www.wto.org, document WTO/ACC/28)

 

Even excluding China, the rest of the countries that have acceded to the WTO have had a better performance – with the exceptions of 2009 and 2015 – than the rest of the world. The following graph shows the development of world trade in nominal value, by membership status, between 1995 and 2016:

 

(Source: www.wto.org, document WTO/ACC/31 - WT/GC/189 - WT/MIN(17)/6)

 

Regardless of whether China is/is not taken into consideration, the countries that have acceded to the WTO (in the graph, referred to as “Article XII Members (excluding China)”) have increased trade at a much faster pace than the rest of the world. With respect to export growth, the following example illustrates a positive impact of accession:

 

Structural transformation of the economy

The depth and width of the commitments of countries acceding to the WTO is such that a transformation of the economy of the acceding country is unavoidable. Structural transformation encompasses, among others:

 

Accession to the WTO is generally seen as a driver for such reforms, and hence for structural transformation:

 

By committing to abide by the WTO Agreements, including the specific obligations undertaken through the WTO accession process, domestic regulatory and economic reforms are locked-in. WTO accession thus helps preventing backlashes because of the nature of WTO obligations, in particular their enforceability before national courts and/or the WTO Dispute Settlement Mechanism.

 

Among others, the results of the Trade Policy Reviews to which Members are subject to, as well as the limited number of disputes litigated in the WTO, demonstrate that structural transformation occurring as a result of accession is maintained or further deepened in the post-accession stage.

 

Diversification of the economy 

An analysis made by the WTO examined, for each country that acceded to the organisation, the number of HS chapters that accounted for more than 60% of total exports at the time of accession to the WTO and compared it to the number of such HS chapters in 2014/2015. (WT/ACC/28) That analysis shows that on average acceding countries increased the number of HS chapters over that period, from 4 to 6.

 

At individual level, countries such as Latvia and Lithuania more than doubled, or almost doubled, the number of HS chapters. Looking at the resource-based countries, in approximately 50% of the cases, the number of HS chapters has increased over that period. For the remainder, no change is observed or there is no data available.

 

In sum, empirical data show that accession to the WTO contributes, in quite a few cases, to the export diversification.

 

Increased competition

Trade liberalisation, through the reduction/elimination of import tariffs on goods or lifting barriers for the supply of services, is at the core of the WTO accession negotiations. Unless the acceding country had a liberal regime, increased competition will be unavoidable through accession. Furthermore, the number of commitments that acceding countries have to make, in order to be able to accede to the WTO, has been increasing over time. 

 

Such increased competition may have positive impacts, the most important being that local producers of goods and services will be required to work actively on improving their competitiveness. If this does not happen, a negative impact of the increased competition is that local producers may have to downscale or even face closure. Only through in-depth analyses and a good understanding of each industry, the likely “winners” and the “losers” of the market opening can be identified and measures can be adopted to increase competitiveness of sectors of the economy.

 

Enhancement of the business environment

Business environment and regulatory environment are closely intertwined. For two reasons, by requiring changes to the regulatory environment accession to the WTO positively affects the business environment:

 

According to the WTO (WTO/ACC/31 - WT/GC/189 - WT/MIN(17)/6), accession helps the enhancement of the business environment by:

  • Improving transparency: Commitments enhance domestic businesses' access to domestic rules
  • Clarifying the domestic legal framework: Commitments create legal certainty for businesses by clarifying the legal framework under which businesses operate
  • Enforcement of rules, establishment of tribunals, and impartiality: Commitments create obligations to enforce rules that will likely apply to domestic businesses or affect their activities, and help ensure that such enforcement will be performed by impartial tribunals and regulators
  • Identities and responsibilities of domestic economic actors: Commitments clarify the identities of certain major economic actors (e.g. state-trading enterprises and state-owned enterprises) or actors upon whom the government relies for certain services, and clarify such entities' responsibilities and expected behaviour
  • Minimising trade-restrictive regulations: Commitments seek to minimize certain rules that may hinder domestic business' trading activities
  • Involving private sector in legislative process: Commitments empower domestic actors to participate in the legislative process regarding laws that could affect their businesses
  • Equal business opportunities: Certain commitments encourage the liberalization of criteria under which entities may perform certain economic functions

 

The positive relationship between WTO accession and changes to the domestic business environments of acceding countries is further demonstrated through the Distance-to-Frontier metric of the Doing Business Reports. Based on data for the period 2004-2014, this metric, which focuses on 10 indicators including starting a business, getting credit or trading across borders, shows that the during accession process or after accession massive improvements in the ratings occurred in Ukraine and Russia (27 and 21% respectively). In Tajikistan improvements were also significant (10%). 

 

The following excerpts taken from Trade Policy Reviews reflect what, in the view of some key countries, are tangible results achieved as a result of WTO accession: 

 

Governance and/or market-based development

According to the Organisation for Economic Cooperation and Development, good governance is characterised by participation, transparency, accountability, rule of law, effectiveness and equity, among others. In the public sphere, good governance refers to the management of government in a manner that is essentially free of abuse and corruption, and with due regard for the rule of law.

 

While good governance is neither a requirement for WTO accession, nor for the continued membership in the Organisation, acceding to WTO certainly requires accepting and applying the principles of a rule-of-law based system. 

 

  • Participatory and transparency tools must be in place and operative: for instance, draft technical regulations shall be publicly available and interested parties must be given the opportunity to comment on draft technical regulations  
  • Authorities shall base their actions on facts: for instance, in the sanitary and phytosanitary area scientific evidence is required to support measures adopted 
  • Authorities shall be even-handed: for instance, in trade defence investigations and in its determinations, authorities shall not be biased towards the interests of any particular party; when resorting to any exception, for example protection of human, plant or animal life or health, authorities must neither discriminate between domestic and foreign parties nor between foreign parties
  • Authorities shall be accountable for their (in)actions, which should be reviewable by independent administrative authorities and/or the judiciary: this is a basic requirement to be found in the WTO agreements
  • A simple correlation between the Corruption Perceptions Index of Transparency International and of the Rule of Law Index of the World Justice Project shows clearly that in systems where the principles set forth in the previous bullets are implemented more strictly and effectively, corruption is perceived to be lower

 

Above all, authorities are expected to behave in accordance with the rules set forth in normative frameworks which, during the accession stage or as a result of accession negotiations, should have been made WTO-compliant. Where this is not the case, other Members may seek to redress the WTO-inconsistent behaviours through the powerful mechanisms contemplated in the WTO Agreements.

 

The multilateral trading system, including the WTO, is based on market-oriented principles. Therefore, centrally-planned economy countries, or countries in transition, wishing to accede to the WTO need to adjust their economic policies accordingly. The extent of changes to be made depends on the stage of transition from a centrally-planned to a market-based economy. There are changes which may be easier and quicker to achieve – for instance the removal of the foreign trade monopoly – than others – for example reforming the quality infrastructure and the food safety/veterinary/phytosanitary areas to reflect a market-oriented approach, which as experience shows, often require constant effort for many years and hefty investments to accomplish. 

 

To name a few, China, Ukraine and Vietnam, are countries which through accession to the WTO have made considerable moves towards operating under market-oriented principles. Each country, however, has chosen its own path, and speed, to do so, taking into account, among others, the start situation, own culture and mentality, and political factors. Importantly, adopting such market-oriented principles has brought economic development to the countries by among others contributing to their further integration into the world trading system.

 

Note: Accession to the WTO does not mean that, necessarily and automatically, the acceding country will be treated by all the membership as a “market economy”. For instance, China and Vietnam have had to accept that in the context of trade defence investigations, they can be treated as “non-market economies” for certain time after their accession. As a result the investigations are conducted differently than for exporters from countries regarded to be “market economies”. This different treatment leads to higher measures being imposed against their exporters.

Other countries whose Protocol of accession is silent on this matter, such as Georgia or Armenia, are still treated generally as “non-market economies” in such investigations. Countries doing so, such as the European Union or the United States, say that accession is per se insufficient to determine whether a country operates effectively as a “market economy”. Rather, it is the actual economic policy of the country that demonstrates whether that status has been reached or not.

This is a controversial issue from a legal point of view. Ongoing disputes regarding the treatment of China in EU and US anti-dumping investigations should shed light on this.

 

Information regarding accession negotiations and commitments

Once accession is completed, the documents generated during the accession process are derestricted. Access to them is possible through the WTO website.  In particular, commitments undertaken by a country are contained in the Protocol of accession of the country to the WTO, in the Working Party Report and in the Schedules of Concessions. Protocols of accession and Working Party Reports are contained in thousands of pages. To facilitate searches, the Accession Commitments Database presents the commitments and related information undertaken by acceding countries. Go to the Accession Commitments Database for more information and targeted searches on commitments undertaken by acceding countries: acdb.wto.org

 

Relevant documents, data and resources

Click in each of the links below to access the document, data or resource:

Data

Resources