Abstract

On 16 December 2011, the Russian Federation signed the protocol of accession to the World Trade Organization (WTO), marking the end of a long and complex negotiation process. At the end of 2010, Switzerland had agreed to facilitate the accession of the Russian Federation to the WTO by mediating an agreement between Georgia and the Russian Federation over customs procedures for trade to and from the disputed territories of Abkhazia and South Ossetia. In its role as facilitator, Switzerland used a process-based approach, narrowing gaps, seeking convergences, organizing formal and informal consultations in flexible and different formats, using technical knowledge and producing draft texts for decision-making. This process-based approach, which was developed within the Swiss Federal Department of Foreign Affairs and aimed at establishing new channels of communication and negotiating techniques, was baptized ‘diplomatic engineering’. Diplomatic engineering splits a complex negotiation problem into sub-problems that can be solved individually and irrespective of geopolitical and trade policy considerations. It de-politicizes them by focusing on the technical aspects of a dispute, thus creating space for a rational dialogue. While the Swiss mediation between Georgia and the Russian Federation remains little known by the public, important lessons for future accession negotiations can be drawn from this case study. In particular, the diplomatic engineering approach can be used by the WTO to underline its role as a convener, negotiating platform, hub of technical expertise and honest broker.

Abstract

Accessions to the World Trade Organization (WTO) generate large amounts of data accumulated during accession negotiations and subsequent domestic reforms. Owing to differences in the structure of acceding economies, accession commitments vary across recently acceded, or Article XII, members, in the number of tariff lines bound, the level of bindings and the various accession-specific commitments and obligations. The depth of commitments and extent of post-accession implementation influence the effectiveness of benefits derived by new members from WTO accession. In spite of the generally positive economic performance exhibited by all Article XII members, disparities exist in their country-specific economic performance in terms of trade, foreign direct investment (FDI) and gross domestic product (GDP) growth. This chapter analyses the impact and depth of accession commitments to assess the economic effects of WTO accession. It explores how the data from accessions acquis can assist policy-makers in implementing structural reforms and integrating their countries into regional and global value chains. An Accession Commitment Index is proposed as a basis for a statistical exploration of the impact of WTO accession on a series of variables related to economic growth. Using an extension of the difference-in-difference methodological approach, the chapter finds that WTO accession generally has a positive and significant impact on the acceding economy's trade and economic performance. The results also show that the impact of WTO membership on the trade/GDP ratio in developing countries is significantly higher than in previous studies.

Abstract

Accessions to the World Trade Organization (WTO) have profound implications for the private sector. The market liberalization required by accession commitments must be accompanied by deep structural reforms. Even though least-developed countries (LDCs) and developing countries usually benefit from special and differential treatment, the liberalization process can still lead to market adjustments that can test the status quo and require actions that will impact the private sector. This chapter discusses how the private and public sectors have cooperated to make the most of accession, while mitigating its risks. The chapter concludes that the business community values predictability. Therefore, acceding governments should find a way to integrate the private sector in the negotiating process. Gaining a thorough understanding of the objectives and implications of accession, in particular for small and medium-sized enterprises (SMEs), is a good starting point for building a partnership between the acceding government and its private sector. The acceding government should also seek consensus with the private sector on key accession commitments, on the direction of reform desired by stakeholders at the local level, and allow sufficient time to prepare the private sector to adjust to the expected changes in the business environment. The experience of recently acceded governments has shown that regular engagement with the private sector before, during and after accession enables new WTO members to make deeper liberalization commitments. When these commitments are the result of a consultative process between policy-makers and business, the likelihood of their successful implementation is greater.

Abstract

Long proposed in aspirational terms, good governance has increasingly become a subject of substantive global policy debate and international rule-making. An analysis of recent negotiating exercises, such as World Trade Organization (WTO) accession protocols and the WTO Trade Facilitation Agreement (TFA), shows that governance has been discussed among WTO members and embedded in WTO rules. This chapter first examines how WTO accession protocols addressed the issue of governance improvement by subjecting acceding governments to binding, accession-specific commitments. These commitments, in addition to ensuring greater market openness and integration in the rules-based global economy, established the legal basis for the increased rule of law for acceding members. The commitments undertaken by these members demonstrate their adherence to principles of transparency and predictability of trade policies, as well as their overall commitment to subject domestic trade regimes to international trade law. Improved governance is achieved through the entirety of WTO accession-specific commitments on rules, including the ones on transparency, policy enforcement, trading rights, state trading/state-owned enterprises (STEs/SOEs) and government procurement. A similar trend can be observed when analysing the good governance provisions of the new TFA, albeit with differences in their modus operandi. WTO members took a multifaceted and indirect approach, seeking to improve integrity by increasing transparency, strengthening due process rights and reducing space for discretionary action. Together, good governance provisions in accession protocols and the TFA contribute to building the upper floors of the new multilateral trading system by creating a binding set of rules and new standards that will be respected by virtually the entire trading world.

Abstract

Obligations in accession protocols that go beyond the multilateral trade agreements are commonly referred to as ‘WTO-plus’ obligations. This chapter reviews the so-called WTO-plus obligations and argues that even though they are perceived to expand the existing obligations under multilateral trade agreements, they in fact do not create two classes of membership within the World Trade Organization (WTO). First, all accession processes are conducted on a case-by-case basis, and thus result in different obligations for each acceding government. Second, the WTO legal system is evolving continuously; therefore, to adopt new rules and advance the legal system, obligations cannot remain the same as in previous accessions. Third, non-discrimination remains one of the fundamental principles of the multilateral trading system. Accessions to WTO follow this principle and hence WTO-plus obligations have been and will continue to be set on a non-discriminatory basis. At the same time, WTO-plus obligations help upgrade the rules-based multilateral trading system. They fill gaps in the WTO rules on anti-dumping, countervailing and safeguard regimes, and they advance WTO rules by promoting plurilateral agreements.

Generally, estimation of changes in social surplus requires knowledge of entire demand and supply schedules. The previous chapter discusses direct estimation of demand and supply curves, focusing on the demand curve for the purpose of measuring consumer surplus. It assumes that there is a market demand curve for the good in question, such as garbage collection or gasoline, and we can observe at least one point on this demand curve. In many applications of CBA, however, the markets for certain “goods,” such as human life or pollution, do not exist or are imperfect for reasons discussed in Chapter 4. In these situations it may be impossible to estimate or inappropriate to use the market demand (or supply) curve directly. In the past, such goods were treated as “intangible,” and their impacts were excluded or analysts were restricted to qualitative CBA or multigoal analysis. However, over the past 30 years, economists have devised methods to value these impacts, thus enabling analysts to conduct (comprehensive) CBA.

In practice, the change in social surplus can often be estimated from knowledge of the impact of a policy (e. g., number of affected persons) and the marginal social benefit or the marginal social cost of one more unit of the affected good or service. In a perfect market, the market price equals both the marginal social cost and the marginal social benefit of an additional unit of a good or service. When a market does not exist or market failure leads to a divergence between market price and marginal social cost, analysts try to obtain estimates of what the market price would be if the relevant good were traded in a market where the demand curve measured marginal social benefits and the supply curve measured marginal social costs. As we discuss in Chapter 4, such an estimate is called a shadow price.

When a market for the good of interest does not exist, one of two major methods of estimating shadow prices can be used. This chapter recognizes that although there may not be a market for the good or service of interest, its value (shadow price) may be reflected indirectly in the market for a related good.

Within the CBA framework, people's willingness to pay (WTP) for a policy change comprehensively measures its social benefits. Though analysts sometimes elicit willingness-to-pay amounts through contingent valuation surveys (see Chapter 15), they prefer to make inferences about them from observations of people's behaviors (see Chapters 12, 13, and 14). Observed changes in consumption of a good whose price or quantity is affected by the policy change allow WTP to be estimated. For many, perhaps most, applications of CBA, analysts can reasonably assume that such estimates capture the entire WTP. Yet in some applications of CBA, especially those involving changes to unique environmental resources, people may be willing to pay for the existence of “goods” that they themselves will never actually “consume.” Correctly conceptualizing and measuring such existence values poses a challenge to the application of CBA.

In this chapter, we consider existence value as an additional category of benefit. It is often grouped with option value and quasi-option value under the heading of nonuse or passive use benefits. As discussed in Chapters 7 and 8, however, option and quasioption values are better thought of as adjustments to standard benefit measures to take account of various aspects of uncertainty rather than as distinct categories of benefits. In contrast, existence value is another meaningful benefit category, though one that poses problems of definition and measurement.1 After framing existence value as a special benefit category, we discuss the theoretical and empirical problems analysts face in measuring it.

In the Affair of so much Importance to you, wherein you ask my Advice, I cannot for want of sufficient Premises, advise you what to determine, but if you please I will tell you how. When those difficult Cases occur, they are difficult, chiefly because while we have them under Consideration, all the Reasons pro and con are not present to the Mind at the same time; but sometimes one Set present themselves, and at other times another, the first being out of Sight. Hence the various Purposes or Inclinations that alternately prevail, and the Uncertainty that perplexes us.

To get over this, my Way is, to divide half a Sheet of Paper by a Line into two Columns; writing over the one Pro, and over the other Con. Then during three or four Days Consideration, I put down under the different Heads short Hints of the different Motives, that at different Times occur to me, for or against the Measure. When I have thus got them all together in one View, I endeavor to estimate their respective Weights; and where I find two, one on each side, that seem equal, I strike them both out. If I find a Reason pro equal to some two Reasons con, I strike out the three. If I judge some two Reasons con, equal to some three Reasons pro, I strike out the five; and thus proceeding I find at length where the Balance lies; and if after a Day or two of farther consideration, nothing new that is of Importance occurs on either side, I come to a Determination accordingly. And, tho’ the Weight of Reasons cannot be taken with the Precision of Algebraic Quantities, yet, when each is thus considered, separately and comparatively, and the whole lies before me, I think I can judge better, and am less liable to make a rash Step; and in fact I have found great Advantage from this kind of Equation, in what may be called Moral or Prudential Algebra.

Abstract

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) established the first multilateral understanding of what constitutes a standard for ‘adequate’ and ‘effective’ protection of intellectual property rights, and established a new mechanism for monitoring and reviewing how these standards are met. The policy and legal framework defined by the TRIPS Agreement has, in the two decades since it entered into force, progressively gained acceptance as a legitimate, balanced and transparent set of standards. Since then, however, two parallel sets of negotiations have revisited the standards defined by TRIPS: the multilateral WTO accession negotiations, and bilateral and regional trade negotiations outside the WTO. In each case, TRIPS standards have been further elaborated, and timelines for their implementation altered, in a manner that produces a layering of rules upon the foundation of TRIPS. However, the institutional, legal and policy implications of these two lines of development contrast sharply. This chapter reviews the main lines of development of rules relating to intellectual property in the accession processes, and contrasts these with the parallel developments outside the WTO. It concludes with an analysis of the policy and practical lessons that can be derived from contrasting these two processes.