The New Year has started with positive news for the WTO. The Membership of the Organization has finally reached the 150 country mark with the official admission of Vietnam in January 2007. This follows on Vietnam having domestically ratified the terms of accession accepted by the WTO on 7 November 2006. Accession is the term used to describe the process whereby countries that wish to join the world trade body are put through their paces by the existing Members making them ‘trade acceptable’ to the existing club Members. Technically the procedure is conducted in terms of Article 12 of the Marrakech Agreement establishing the WTO.
In recent times accession has served to breathe a positive spin surrounding the WTO when things have seemed dreary on the negotiating front. Looking at the accession immediately preceding Vietnam we recall that Saudi Arabia was the 149th country to join back in December 2005 in advance of the Hong Kong Ministerial meeting, coming after 12 years in the accession process. It was then in fact expected that the Pacific island nation of Tonga would become the 150th WTO as their accession was officially endorsed by the Hong Kong Ministerial Conference, being one of the only positive outcomes from that Conference. However, it is interesting that the domestic passage of the enabling legislation to ratify the Tongan accession has not been that smooth back in the south Pacific islands. Because of this domestic implementation delay Tonga’s accession has now been superseded by that of Vietnam. Tonga is now the most likely candidate to become the 151st Member as it has leeway from the WTO 1 July 2007 to complete its ratification process.
The accession process is sometimes critiqued because accession countries often have to accept more stringent rules than those applicable to the existing Members. In meeting the demands of its trading partners in the WTO, Vietnam will reduce its tariff protection on about 95% of its industrial tariff lines with very low duties (ranging between 0% and 5% on some of its leading sectors like construction equipment, pharmaceuticals and aircraft. Foreign service suppliers will also enjoy much improved market access in Vietnam in many important services sectors, including telecommunications, financial services, distribution, and energy services. Other undertakings in terms of their WTO accession will enhance export opportunities through government procurement transparency and intellectual property protection.
Despite any critique, in the face of an uncertain start to the resumption of the impassed Doha Development Agenda trade negotiations (likened by the WTO Director General to water that is heating, but not yet boiling), it is notable that the WTO Membership continues to grow. When the WTO was established in 1994, there were 123 countries that signed up. Vietnam’s accession means that the trade club has increased in size of 22% in just over a decade. In addition no country has ever resigned.
The most significant country in the wings of the accession process at present is Russia, now in its 14th year of the accession process. Russia is now set to rival China’s mammoth 15 years and 5 months in completing an accession. Interestingly Africa also has some contenders, with Algeria, Libya, Ethiopia and Sudan, all in the relatively early stages of the process.