World Trade Organization Accession Research Articles

Interpreting Paragraph 15 of China’s Protocol of Accession

Although some commentators view paragraph 15 of China's World Trade Organization (WTO) Accession Protocol as conferring market economy status automatically by-year end 2016, no such commitment is discernable in the actual text of this provision, as examined based upon well-established rules of interpretation of WTO law. This paper also contends that, besides lacking textual support, a 'sudden death' approach to China's Non-Market Economy (NME) status would eviscerate the case-specific, facts-based approach that is the distinguishing characteristic of paragraph 15 vis-a-vis NME provisions in prior accessions.

The Vacation Is Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism

The Vacation Is Over:Implications for the Caribbean of Opening U.S.-Cuba Tourism Rafael Romeu (bio) The trade literature regularly seeks to explain how barriers affect trade. For example, recent work that more tightly linked the workhorse gravity trade model to its empirical applications solved a major puzzle as to why borders reduce trade.1 Empirical studies have measured export growth after European Monetary Union (EMU) or World Trade Organization (WTO) accession, or the industrialization of China.2 Similarly, this study seeks to estimate the impact on the Caribbean of normalizing bilateral tourism trade between the United States and Cuba. The kaleidoscope of nationalities, languages, races, and political and colonial histories, coupled with what at first appears to be comparable endowments, makes the Caribbean a unique natural experiment for trade. Moreover, the importance of tourism for the region’s economies fuels interest from policymakers and academics. For example, a recent passport mandate for U.S. travelers to the Caribbean set off intense lobbying by the affected economies to stop a transitory cost asymmetry relative to Mexico. Similar concerns were raised in response to the drop in banana and sugar exports to EU countries from their former Caribbean colonies. [End Page 1] On the issue of the supply shock from an opening of U.S. tourist flows to Cuba, concerns have arisen over the need to brace for such competitive pressures.3 For example, the very high cost of visiting Cuba compared with the perfect trade integration of the U.S. Virgin Islands suggests that the current restriction provides substantial trade protection to the latter. The rest of the Caribbean lies somewhere in between these two extremes, with U.S. tourist arrivals driven at least in part by preferential trade positions relative to Cuba. Under a scenario in which U.S. tourist flows to Cuba are unrestricted, the market will need to find a new equilibrium, as the largest consumer of tourism services in the region meets for the first time in nearly fifty years the region’s largest potential producer. As this deadweight loss is lifted from U.S. consumers, Caribbean vacations will be repriced, based on fundamental costs, and new tourism consumption patterns will emerge across all destinations and visitor countries. Previous research has not reached a consensus on the impact of liberalizing Cuba-U.S. tourism on the Caribbean. In particular, earlier work forecasting tourism without the current restrictions draws on potentially unreliable data or on untested assumptions. For example, Padilla and McElroy (2003) project arrivals based on a comprehensive historical review, including evidence from the 1950s and industry surveys. These projections appear plausible, but they are not tested econometrically and the resulting conclusions depend on qualitative evidence that is difficult to benchmark in the wake of a major structural change.4 This study shapes a liberalized Cuba-U.S. tourism counterfactual by estimating a gravity trade model of the Caribbean tourism industry. This model, grounded in consumer optimization across differentiated international products, can successfully explain upward of 85 percent of the variation in the trade data used here. These estimations are anchored in macroeconomic, industry, and socioeconomic data from international sources so as to minimize Cuba-specific uncertainty. The measures employed are standard in gravity models, which have enjoyed great empirical success in the trade literature.5 Moreover, the gravity model allows tests of whether Cuba and competing [End Page 2] Caribbean destinations adjust their tourism base to hedge potential gains or losses in the wake of free Cuba-U.S. tourism trade. The model estimates presented reflect both the current distortions in Cuba-U.S. tourism relations, as well as the underlying fundamentals that determine the long-run equilibrium. The results presented here point toward two major findings. First, liberalized Cuba-U.S. bilateral tourism would increase overall arrivals to the Caribbean. This surge will likely drive tourism in Cuba to full capacity, although much is unknown about short-run supply constraints. As U.S. visitors overwhelm capacity, Organization for Economic Cooperation and Development (OECD) visitors currently vacationing in Cuba would be redirected toward neighboring countries. Hence, while short-run constraints bind in Cuba, the region would enjoy a period of sustained demand. In the...

What Can LDCs Acceding to the WTO Learn from Other Acceded Countries?

When the World Trade Organization (WTO) was established in 1995, it had less than 130 members. Since then membership has expanded to 159 as a result of 31 completed accessions. Of these, only six were least developed countries (LDCs). Another 24 countries are currently at various stages of the accession process; among these, nine are LDCs. Thus, although it can be argued that the WTO is approaching universal membership, quite a bit remains to be done in terms of LDC accessions. The purpose of this paper is to provide lessons for countries currently in the process of accession to the WTO, notably LDCs, based on the established practice and experience of other acceded countries. The paper does so by, first, providing a summary overview of WTO accessions and terms of accession of all countries that have acceded to the WTO under Article XII. It also considers recent changes in the WTO accession regime for LDCs, notably the enhanced Guidelines for WTO accession, and draws conclusions from these for the approach of LDCs to WTO accession. Secondly, the paper analyses in more detail the accession experience of selected acceded countries, namely small developing economies and LDCs. Accession countries which were members of regional trade agreement (RTAs) with common external trade policies are also considered. In particular, the paper takes all six acceded LDCs into account – Cambodia, Cape Verde, Lao PDR, Nepal, Samoa, and Vanuatu – as well as, with regard to the impact of RTA membership on WTO accessions, Kyrgyz Republic, Russia, Tajikistan and Ukraine.

Vietnam goes Western: A political economy analysis of Vietnam’s accession to the WTO

This paper explores the reasons and motivations for Vietnam’s entry into the World Trade Organization (WTO) in 2007. On the basis of in-depth, semi-structured interviews with elites, secondary sources, and official documents, we point to the relevance of political economy considerations in this decision. In particular, Vietnamese authorities used WTO accession as an instrument to lock-in internal structural reforms, signal political stability to trade partners, and secure market access to Western consumer markets. Accession comes after a qualitative change in the export pattern (increased added value) that also meant new trade partners, mostly Western partners. Therefore, we interpret WTO accession as the final step of a wider process of economic and trade “Westernization”.

The Impact of Macro Factors on the Profitability of China’s Commercial Banks in the Decade after WTO Accession

Profitability of China’s commercial banks has increased significantly since it joined the World Trade Organization (WTO). Constantly advancing of deepening the reform and increasingly fierce of international competition make us to be concerned more about macroeconomic factors. This paper makes an empirical analysis with a panel of 10 Chinese listed banks during the period 1998- 2012 to make a study of the potential impact of external factors may bring to China’s capital market. The results confirm that macroeconomic do have a substantial influence to the earning power of commercial banks, according to which some suggestions are made at the end of the paper.

Development of Russian copper industry under the conditions of the World Trade Organization membership

The article concerns the influence of the obligations undertaken by Russian Federation upon the World Trade Organization accession, on the development of the national copper industry. The main aim of the research is to evaluate if the overall concepts of positive influence of the WTO accession on Russian metallurgy are true for the copper industry. The article reveals the analysis of the factors that determine the development of the stated industry as well as the risks that come from the changes of the business environment. The overall influence of the market drivers on the industry is considered in order to support the assumption that the factors specific for the copper industry can significantly compensate the forecasted general positive influence of the WTO accession on nonferrous metallurgy and moreover: the associated risks will lead to unbalancing of the industry development in the middle and long term perspective. In this regard, as the results of the research the authors expect that the industry development will depend on the world copper market situation even to a greater degree. The copper market in its turn has been following the downwards trend in the last years. The results of this work can be applied to the production strategy development by the companies of the industry as well as become a basis of the analysis of regional economic systems stability.

Agricultural policy in Russia and WTO accession

This article analyzes the implications of World Trade Organization (WTO) accession for Russian agricultural policy. Using Organisation for Economic Co-operation and Development (OECD) data on producer support from 2010, we identify two major characteristics of Russian agricultural and trade policy (a) reliance on sizeable differences between world and domestic prices to generate two-thirds of agricultural producer support and (b) highly distortionary budget support. We then consider whether the disciplines introduced by WTO accession will constrain or even roll back these distortionary policies, thereby substantially changing the nature of agricultural policies in Russia. Using data from OECD-FAO (Food and Agriculture Organization of the United Nations) and Russian Ministry of Agriculture projections, we conclude that the structure of OECD-type producer support in 2020 will be very similar to its current state. Market price support will continue to dominate the Producer Support Estimate, and the projected Current Total Aggregate Measure of Support (AMS) will approach the WTO Bound Total AMS (the ceiling on production-distorting support) only in 2018. For the reasons above, we conclude that although WTO accession provides opportunities for important changes in Russian sanitary, phytosanitary, food safety, trade, and tariff policies, membership is not a guarantee of systemic change. In fact, a serious look at Russian WTO commitments makes a minimum-change scenario quite possible and even likely.

Making the WTO Accession Work for Ethiopia: Lessons from Cambodia and Nepal

This Article examines the experiences of least developed countries (LDCs) acceded to World Trade Organisation (WTO) in relation to their accession process, terms of accession and implementation of commitments with a view to drawing lessons which would be relevant to Ethiopia to devise successful strategies and avoid mistakes in an effort to gain maximum benefits from its WTO membership. Given that accession to the WTO is not an end in itself, Ethiopia should carefully and strategically negotiate to reap the potential benefits of membership in light of its long-term development strategies.

Vietnam’s Experience in Developing International Trade Lawyers Following Five Years of World Trade Organization Accession

(Research shows the development of institutional and legal capacity is important in managing World Trade Organization (WTO) participation. Vietnam, an emerging economic power in Asia, is expected to face increasing legal challenges in the WTO dispute settlement forum. This article examines Vietnam's experience in developing its legal capacity and critically assesses Vietnam's capacity to develop indigenous legal capacity in WTO law. A conclusion is formed that building capacity is technically and politically difficult for small nations like Vietnam. On the basis of the research conducted, this article is able to recommend three measures and strategies the government could employ to strengthen its legal capacity).

EU-Russia Trade Relations: It Takes WTO to Tango?

On 22 August 2012, Russia finally became, nineteen years after its application, a member of the World Trade Organization (WTO). This historical step was applauded by many EU officials as they argue that Russia's WTO accession not only means the country's definitive accession into the world market economy, but that it also creates a window of opportunity for deepening EU-Russia trade relations. The current EU-Russia legal framework, the Partnership and Cooperation Agreement (PCA), is limited in its scope and contents and does not provide the EU with a solid legal instrument to rely on in its many trade disputes with Russia. Therefore, this article analyses to which extent Russia's multilateral WTO accession commitments will broaden and deepen the bilateral PCA in order to reduce or settle these trade conflicts. Particular attention will be devoted to the EU's role in Russia's WTO accession process. On the basis of three case-studies (i.e., (i) Russia's sanitary and phytosanitary (SPS) import bans, (ii) energy disputes and (iii) Russia's export duties on raw materials), the author argues that the results are rather mixed. In addition, it will be demonstrated that the prospect of an EU-Russia Free Trade Area (FTA) remains unrealistic because the feasibility of such an undertaking is hampered by several legal and political obstacles.

BRIC Agricultural Policies Through a WTO Lens

AbstractThis article examines the agricultural policies of Brazil, Russia, India and China (BRIC) through the prism of the disciplines on agricultural domestic support in the World Trade Organization (WTO). Although the BRIC are often grouped collectively as an emerging force in the world economy, divergent agricultural interests are reflected in different approaches towards agricultural policy both through international dispute settlement and notification of their own support. We examine the support notified to the WTO for verification of compliance with their legal commitments, which under the complex WTO rules often differs significantly from measurement of support in economic terms. We note the resulting difficulties of these disciplines in establishing limits on trade‐distorting support. Implications of a Doha agreement are examined. Although the prospect of adoption of new Doha disciplines has become remote, the negotiated provisions are informative about the future policy space the BRIC sought to maintain. Russia’s domestic support commitments under its 2012 WTO accession extend the international disciplines but share the complexity of the other cases.

The Roles of Saving, Investment and the Renminbi in Rebalancing the Chinese Economy

AbstractChina's current account surplus widened from the late 1990s, and its private consumption fell to one third of gross domestic product (GDP). We examine these domestic and external imbalances from two perspectives: the saving‐investment balance and the effective renminbi exchange rate. China's large external surplus has arisen neither from anaemic consumption nor from weak investment but rather from the saved windfalls from favorable demographics, market liberalization, robust restructuring and World Trade Organization (WTO) accession. Looking ahead, as these windfalls fade, saving will subside. The exchange rate is already playing a supporting role in rebalancing the Chinese economy, and the real effective exchange rate based on unit labor costs has appreciated very sharply. Prospective savings‐investment and exchange‐rate developments point to a higher consumption share and a narrowing of China's current account surplus.

China and the WTO into the Next Decade: Probing the Past and Present as a Path to Understand the Future

AbstractThis article surveys the literature on China and the World Trade Organization (WTO) and provides background information on China and the WTO. It also identifies some future research directions for those studying China and the WTO. Other important purposes are to summarise the articles in this special issue and to highlight some of the answers they offer to a variety of question. As useful as it is, the extant literature has various deficiencies. First, it is narrowly focused, emphasising topics such as China’s WTO accession, rather than China’s compliance and participation record. Second, a large proportion is becoming dated. Third, it is largely descriptive. The contributions to this special issue address some of these problems by supplying us with contemporary information about a number of WTO topics, such as China’s fulfilment of its WTO obligations in regards to trading and distribution rights, and the evolution of its intellectual property rights protection regime. They make a significant conceptual contribution by showing that a cost/benefit framework can illuminate a wide variety of China-WTO-related phenomenon ranging from China’s acceptance of highly demanding WTO accession terms to China’s interactions with Taiwan prior to and after the two party’s respective entry into the WTO.

The Dynamics of China’s Accession to the WTO: Counting Sense, Coalitions and Constructs

AbstractThis article probes China’s admission to the World Trade Organization (WTO). China’s WTO accession deserves further analysis because much of the extant literature is divorced from the international relations (IR) literature. Moreover, while past analyses have considered external and internal factors shaping China’s stance towards joining the WTO, they have rarely gone beyond this to probing when particular variables mattered more. For its part, research that emphasises domestic factors falls short because it often treats such factors generically or fails to detail the path through which they affect issue identification, policy construction and implementation. This article addresses these lacunas by conducting a theoretically informed study of China’s WTO accession. While traditional interest-, power- and idea-based IR approaches to international governmental organisations (IGOs) capture various aspects of the story of China’s effort to join the WTO, they miss other critical features. This article argues that a leader-oriented cost-benefit model best explains China’s continued quest to become a WTO member, its aggressive pursuit of accession in the second half of the 1990s, and its willingness to tolerate very demanding WTO entry terms.

China and the WTO

The 'rise' of China stands as one of the most significant developments in global politics in the post-cold war era. Yet, China's rise has not been uniformly welcomed. For some, it has generated fears that the PRC's growing global prominence will inevitably be malignant; for others the rise of China has been largely 'system-preserving' in character. While a consensus has yet to emerge, the dominance of the debate has ensured that investigations into the factors shaping the PRC's international relations and, with regard to the subject of this paper, its behaviour in the World Trade Organisation (WTO) have been too bound up with, and as a result too distracted by, the search for proof of 'real' intentions and less concerned with clear analysis. We seek to move beyond the strictures of this debate to investigate more thoroughly the factors shaping China's trade diplomacy.We argue that an examination of the factors shaping China's trade diplomacy must take into account the strong effects exerted on that diplomacy by its membership of the WTO. To substantiate our argument, we begin by setting out some conceptual markers on what we know about the peculiarities of international institutions as a framework for understanding how the WTO as an institution affects China. We then explore key developments in China's political economy to the point at which the PRC acceded to the organisation before considering how the pursuit of WTO membership has shaped Chinese development, its trade diplomacy, and impact on the WTO of China's membership. We conclude that while WTO accession may have altered the composition of the organisation's core decision-making group by placing China at its heart, it has been sufficiently, and perhaps uniquely costly to China in terms of concessions made, in closing down room for manoeuvre in the current Doha round and in constraining the PRC's capacity to switch from an export-led to a domestic consumption based model of development.

Assessing the Impact of Trade Liberalization: The Case of Jordan

This paper assesses the impact of Jordan’s substantial trade liberalization over the last two decades. Using a gravity model, a large country sample, and a long time-series, we estimate the effects of various Free Trade Agreements (FTAs) and the World Trade Organization (WTO) accession on both Jordan’s exports and imports. Overall, we find that the impact has been rather small, as no statistically significant and robust impact on exports and imports can be found due to multilateral or preferential trade liberalization. However, there is one exception: the FTA with the United States of America has boosted Jordan’s exports to the US to a considerable degree.

Ethiopia's World Trade Organization Accession and Maintaining Policy Space in Intellectual Property Policy in the Agreement on Trade‐Related Aspects of Intellectual Property Rights Era: A Preliminary Look at the Ethiopian Patent Regime in the Light of the Agreement on Trade‐Related Aspects of Intellectual Property Rights Obligations and Flexibilities

After having stayed as an observer for about 6 years, Ethiopia formally applied for membership at the World Trade Organization (WTO) in January 2003, and it has since been going through the accession negotiations. One of the areas of scrutiny by the WTO members as part of the accession process has been Ethiopia's intellectual property (IP) regime. Indeed, a number of issues were raised in relation to Ethiopia's IP regime in the three rounds of questions the country received from WTO members. In its replies to the questions from WTO members, Ethiopia has promised to revise this law in the light of the Agreement on Trade‐Related Aspects of Intellectual Property Rights (the TRIPS Agreement). The accession process has thus given impetus for Ethiopia to embark on a reform of its IP regime, which is being carried out in two fronts: the enactment of new IP laws in areas where little or none existed before, and revising existing IP laws, particularly the patent law. This article analyzes Ethiopia's patent regime in light of the TRIPS Agreement, identifies the obligations that might need to be met as part of the accession, as well as the flexibilities that might be available to Ethiopia as a least‐developed country (LDC).

Reducing Tariffs According to WTO Accession Rules: The Case of Vietnam

AbstractWhen Vietnam joined the World Trade Organization (WTO) in 2007 it was granted an accession period up to 2014. During this period tariffs would have to fall according to the accession agreement. This paper evaluates this 2007–2014 trade liberalization by building an applied general equilibrium model and calibrating it to the Vietnamese data. The model pays careful attention to the fact that Vietnam has many state‐owned enterprises. The model simulations show that the WTO tariff reductions will reduce overall welfare. Moreover, the biggest loss will take place among the poor rural households in Vietnam. This paper proposes other tariff reforms that will both raise overall welfare and reduce income inequality.

The Divergent Effects of Joining International Organizations: Trade Gains and the Rigors of WTO Accession

AbstractGovernments have joined the World Trade Organization (WTO) in vastly different ways: some have taken mere days to join without undertaking any trade liberalization, while others have taken more than a decade and been forced to undergo significant liberalization. We argue that the more rigorous a state's accession to an international organization (IO), and thus the greater policy change required to join, the greater the benefits it will receive from membership in the organization. In the trade context, states facing greater scrutiny from the WTO and thus engaging in greater trade liberalization as part of the WTO accession process should experience greater trade on joining compared to those who face little scrutiny and engage in little if any liberalization. We develop a three-part classification of WTO members based on type of accession—early, automatic, and rigorous—and then compile detailed original data on the accession experiences of each relevant state, including length of time, number of veto players, rounds of questions, and tariff and nontariff commitments. Results of exhaustive quantitative tests on all countries from 1950 to 2006, which are robust to estimator, sample period, and model specification choices, consistently demonstrate that those who engage in the greatest amount of accession-driven liberalization experience the greatest trade increases from WTO membership, particularly in the years right after joining. In contrast, those who do little or nothing to join do not see any trade gains from being a WTO member. These findings reconcile previous findings on the effects of WTO membership on trade, highlight the causal importance of IO accession, and illuminate the conditions under which IOs will have beneficial effects for member states.

WTO accession and equity-based entry modes in Vietnam

It has been over 3 years since Vietnam became the 150th member of the World Trade Organization (WTO) in January 2007. Does the choice of entry mode provide a means to handle institutional changes like WTO accession in Vietnam? This study analyzes a sample of 2627 Foreign Direct Investment (FDI) firms (including those from Korea, Taiwan, Singapore, Japan, United States, Europe and China) established in Vietnam between 1992 and 2009 in order to compare the influence on the determinants of equity-based entry mode before and after Vietnam's WTO accession. Nine hypotheses were proposed and tested with regard to the determinants of the choice of entry mode – Wholly Owned Subsidiary (WOS) or Equity Joint Venture (EJV) – by FDI firms. The findings show that Vietnam's WTO accession certainly has a significant impact on foreign firms’ market entry strategy in Vietnam. The results provide strong evidence of a change in the determinants of equity-based entry modes.