. Participation in WTO One of the most important differences between the current trading system and its GATT predecessor is in the near uni...
. Participation in WTO One of the most important differences between the current trading system and its GATT predecessor is in the near universality of WTO membership. As late as the 1980s, many of the largest developing countries were still outside GATT. Following a wave of accessions in the concluding years of the old regime, and another set of accessions into the WTO, there are few countries left that are not either members or seeking to become members (box 4). Box 4. Who is in WTO? And who is not? The multilateral trading system started with just 23 GATT contracting parties in 1947, but grew to 128 by the time that GATT gave way WTO in 1995. Many more countries acceded to WTO over the next two decades, with the total number of members reaching 164 in 2016. WTO membership is so broad that it even encompasses some members that are not recognized as separate States in the United Nations, including one regional super State (i.e. the European Union) and three members that have special relations with the People’s Republic of China (i.e. Hong Kong (China), Macao (China) and Taiwan Province of China).
Three kinds of countries that had been marginalized in the old GATT order now figure prominently among those that have recently joined WTO or that are still in the process of accession. Eleven of the 36 countries that joined from 1995 through 2016 were formerly part of the Soviet Union, and another 11 either had been or remained non-market economies; five of the countries still in the process of accession were likewise former Soviet or Yugoslav republics. Eight of the countries that acceded, and five of those still acceding, are formally designated by the United Nations as least developed countries (LDCs). Many net oil-exporting countries had stayed out of GATT, but they now account for three of those that acceded to WTO and seven of those still acceding. As of early 2017, 19 countries – either developing countries or former Soviet republics (except for Andorra, Bosnia and Herzegovina, and Serbia) – were still in the process of accession. The largest of these is Ethiopia, with a population of just under 100 million. Six other countries still in accession have populations of at least 10 million persons each, including Algeria, the Islamic Republic of Iran, Iraq, the Sudan, the Syrian Arab Republic and Uzbekistan. The remaining countries still negotiating to enter WTO are Azerbaijan, the Bahamas, Belarus, Bhutan, Comoros, Equatorial Guinea, Lebanon, Libya, and Sao Tomé and Principe. This leaves just 14 Members of the United Nations that have no relationship at all with WTO, being neither members nor in the process of accession. The largest is the Democratic People’s Republic of Korea, with a population of 25.2 million. The only other countries in this group that had populations in excess of one million persons were Somalia, South-Sudan, Eritrea, Turkmenistan and Timor-Leste. The rest consist of very small States located either in Europe (i.e. Monaco and San Marino) or the Pacific (i.e. Kiribati, the Marshall Islands, Micronesia, Nauru, Palau and Tuvalu). IV. TRADE NEGOTIATIONS AND TRADE PROMOTION 41 Algeria offers an example of a country that has found the process of WTO accession to be lengthy and difficult, with its negotiations beginning even before WTO came into being and now having lasted more than a quarter of a century. The elongation of the process is due in part to an ambivalence on the part of Algerian authorities over the costs and benefits that accession may have on the Algerian economy. Membership in WTO ensures integration into global value chains, according to the TPF, but does not in itself guarantee diversification and upgrading of exports. The TPF nevertheless concluded that staying out of WTO is not an option, as that would mean keeping the country exposed to the willingness of WTO member countries to extend reciprocity autonomously. The principal remaining question, as explored at length in that TPF, is whether Algeria ought to use WTO accession as a lever for diversification, or should instead diversify its economy before exposing itself more openly to multilateral trade rules. Once a country has joined WTO, it must answer three more questions: Will it establish a permanent mission in Geneva, how will that mission be structured and how large will its staff be? Some countries maintain non-resident status and are represented only from the national capital or from some other mission in Europe, others establish a general-purpose mission dealing with all Geneva institutions, while still others will found (in addition to a general-purpose mission) a dedicated trade mission that is devoted solely to WTO affairs and other trade-related organizations headquartered in Geneva (especially UNCTAD and the World Intellectual Property Organization). As for the size of WTO missions, be they all-purpose of specific to trade, they might range anywhere from one to 20 persons. The choice among these alternatives requires that a country balance its needs with its means. Maintaining a permanent mission in Geneva is a costly undertaking, as this is one of the world’s priciest places to live and work. According to one survey, in 2016 it was the twenty-first most expensive city for the rental of office space. The average cost was $93 per square foot, which was well below the most exorbitant locations ($290 in Hong Kong (China) and $262 in London) but above the average price in New York ($86).23 The disparities in the cost of living are even higher. One survey shows Geneva as the third-most expensive among 267 world cities; living in Geneva costs 1.3 times as much as living in Paris, 2.9 times more than Bogota and 3.3 times more than Cairo.13 When the cost of office space, salaries and adjustment allowances for staff are combined, it is easy to see how the price tag for even a small permanent mission in Geneva can readily exceed $1 million per year. Despite these costs, more countries opt to establish dedicated trade missions in the WTO era than they had in the GATT period. As of 1982 there were only four GATT contracting parties with dedicated missions, or just 5.3 per cent of all missions; these were run by an average of 4.8 persons. By 1997 this had grown to 20 dedicated WTO missions (19.2 per cent of the total) with an average of 6.9 staffers, and by 2012, the numbers rose to 39 such missions (28.7 per cent ) with 7.6 people each. The numbers of persons in the average general-purpose mission also grew, nearly doubling from an average of 3.0 persons in 1982 to 5.8 in 2012. These numbers have continued to rise: As of 2014, the average developing country with a dedicated mission had a staff of 7.8 persons, compard with 6.6 persons for the average developing country with a general-purpose mission.14 At the other end of the spectrum are the members that have no mission at all in Geneva. Non-resident status hampers a country’s ability to monitor and participate fully in negotiations and related activities conducted under the auspices of WTO,
not to mention the other Geneva-based institutions. Non-residency was once a major problem, with many of the GATT contracting parties or WTO members being represented only intermittently from the capital city or from a mission based in Bonn, Brussels, or London. Non-residency peaked in 1997, when just over one fifth of members were non-resident, but then declined to 16 members (10.1 per cent ) in 2014. What accounts for the decision of some countries not to establish a Geneva mission? This choice is strongly associated with economic size, such that in 2014 the average GDP of a non-resident country ($2.6 billion) was far below that of the average developing country with either a general-purpose mission ($95.6 billion) or a dedicated trade mission ($679.9 billion). Relative income is less important, with the average gross domestic income per capita in a non-resident country ($5,427) being just a little less than that of the average country with a general-purpose mission ($5,737). Only 4 of the 16 non-resident members are LDCs
, due to the fact that these countries are eligible for a Swiss subsidy that supports the establishment of WTO missions. Today the most typical non-resident member is a very small island State that is relatively 42 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES poor but still above the income level of an LDC. These are generally countries that can afford to have only a handful of diplomatic missions anywhere in the world, and establishing one in Geneva might require that they either close another elsewhere or find more elasticity in a foreign ministry budget that may already be stretched thin.15
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