Serving its 153 Members, the World Trade Organization (WTO) today is celebrated as one of the great successes of international economic cooperation. As an organization that maintains the multilateral trading system, it essentially has five core functions to provide: (i) a set of rules for the conduct of international trade; (ii) monitoring and surveillance of trade policy measures; (iii) a forum for negotiating trade liberalization; (iv) a dispute settlement system and (v) technical assistance and capacity building.
By its very nature, the multilateral trading system aspires to be universal. Article XII of the Marrakesh Agreement that established the WTO stipulates that countries may accede to the WTO on specific terms to be negotiated between the WTO Members and applicants.
The process of accession involves negotiations between Members and the applicant government for which purpose a special Working Party is set up. In the Working Party, the applicant presents a memorandum of its foreign trade regime and on proposed changes to implement the WTO commitments. They also answer questions from WTO Members.
The outcome of the accession negotiations is contained in a protocol of accession, which includes all the commitments by the acceding country to abide by WTO rules, a schedule with the bindings on tariff and agricultural domestic support, as well as specific commitments on services. Once the protocol of accession is approved by consensus in the Working Party, it is followed by the approval of the WTO Members in the General Council and ratified by the applicant thereafter.
The accession negotiations involve two main aspects. First, a bilateral market access negotiation on merchandise and services between the acceding country and all interested WTO Members individually. The results remain confidential until all negotiations on market access are concluded, at which point the results are consolidated in one schedule circulated to all Members. The most-favored nation obligation applies, and consequently the benefits of these negotiations are extended to all Members of the WTO.
Second, in accordance with Article XVI of the Agreement establishing the WTO, “each member shall ensure that their laws, regulations, and administrative decisions are in line with the commitments arising from the attached agreements”. Therefore, among other things, accession to the WTO requires a transposition of international commitments into the domestic laws of the acceding country and will have a major effect on the country’s legal framework. While these changes may be profound and may seem radical to some, they are in fact enhancing the transparency and credibility of government economic and other trade-related policies and will help create a more secure business environment. Hence, implementation of the WTO agreements plays a role in assisting governments striving to attain important political and economic objectives. This is not a “real” negotiation, since the Members will want the relevant regulatory framework to be in full compliance with WTO obligations before accession. For many to undertake the necessary reforms is a long and, at times, painful process. And usually, the speed of domestic reform is what dictates the speed of the accession.
Kazakhstan is a party to the Customs Union with Russia and Belarus, which came into existence on January 1, 2010. The announcement of the formation of the Customs Union brought much confusion and slowed down the accession negotiations of its three members, as it took considerable time to fully ascertain the impact of this new bloc on the terms of their accession to the WTO.
In light of Article XXIV:4-8 of GATT 1994 and Article V of GATS, the WTO recognizes that regional trade agreements (RTAs), i.e. customs unions and free trade agreements, and the WTO share the common objective of trade liberalization, and thus allows their existence as an exception to the most-favored nation principle. Under a customs union, several aspects of trade policy, for example customs administration and tariffs, are common to its signatories vis-à-vis the rest of the world. Once their compatibility with the WTO is ascertained, the accession negotiations of all three Customs Union members should be facilitated.
For the Republic of Kazakhstan, a state that gained independence in 1991, the advantages of accession are plenty. To begin with, accession to the WTO will significantly improve the existing conditions for the country’s access to foreign commodity markets and provide non-discriminatory treatment for Kazakhstani exporters to the markets of the WTO’s 153 Members. Being the ninth largest country in the world, Kazakhstan has a relatively small domestic market and will benefit from improved terms of access to the expanding global market. Secondly, as a Member of the WTO, Kazakhstan will gain recourse to the WTO dispute settlement system and thus better protect its interests. Thirdly, keeping in mind non-negotiating aspects of the accession process, the membership will further enhance and liberalize the climate for foreign investments in the country, which, in turn, will expand opportunities for trade of goods and services to and from Kazakhstan. Fourthly, the increased flows of foreign goods, services, and investments to the Kazakhstani market will stimulate domestic producers to enhance the quality of their produce and build up their competitiveness. Finally, as a WTO Member, Kazakhstan will participate in negotiations on future international trade agreements and fully join the international cooperation efforts of rule making in the area of trade and intellectual property.
Considerable progress has been made in the negotiations, and the WTO Members look forward to welcoming Kazakhstan as a Member in the near future.
This article was prepared with the assistance of Nadiya Nychay, Attorney-at-Law, former contract lawyer with the WTO.
© The Business Year