The price of WTO Membership

Economies such as Chi­na and Tai­wan that joined the WTO after the WTO Agree­ments entered into force (1995) have had to com­ply with the rules with­out access, in most cas­es, to the long imple­men­ta­tion peri­ods avail­able to orig­i­nal WTO Mem­bers; economies that were for­mer­ly mem­bers of the GATT. Com­pli­ance is dif­fi­cult enough. But the bilat­er­al deals on mar­ket access that are the sec­ond ‘down­pay­ment’ on Mem­ber­ship can be even tougher, as Viet­nam is find­ing: bq. There are still 27 coun­tries requir­ing nego­ti­a­tion rounds with Viet­nam. Last June, Viet­nam con­duct­ed 20 bilat­er­al rounds of nego­ti­a­tions with 17 WTO mem­bers, includ­ing the Euro­pean Union (EU), the US, Cana­da, the Repub­lic of Korea, Aus­tralia, Nor­way, Cuba, Uruguay, Argenti­na, Brazil, Japan, Switzer­land, New Zealand, India, Tai­wan, Chile and Paraguay. These nego­ti­a­tion rounds focused on goods and ser­vices fields. So far, Viet­nam has com­plet­ed nego­ti­a­tions with six out of 27 part­ners. (“VOV News”: Even this, how­ev­er, is more eas­i­ly man­aged than the chal­lenges that begin once acces­sion is com­plete. At that point, the com­mer­cial impacts of new com­pe­ti­tion from imports begin. As the Chi­nese have found (“ ‘Full impact of WTO remains to be felt’ ”:, the com­mer­cial pres­sure can bring much more rapid and dif­fi­cult adjust­ment for domes­tic indus­tries than the reg­u­la­to­ry changes need­ed for com­pli­ance with the WTO rules. In a book of case stud­ies that I co-edit­ed last year for the WTO—to be pub­lished in the sec­ond quar­ter by Cam­bridge Uni­ver­si­ty Press—there is an account of the chal­lenges that the bank­ing sec­tor of Viet­nam faces fol­low­ing acces­sion. There are many sim­i­lar­i­ties with the report­ed Chi­nese expe­ri­ence. I’ve also recent­ly fin­ished a project work­ing with the Min­istry of Agri­cul­ture and Rur­al Devel­op­ment (MARD) in Hanoi on a ‘roadmap’ of adjust­ments in the agri­cul­tur­al sec­tor that will fol­low Viet­nam’s acces­sion. The changes, which will be dri­ven both by reg­u­la­to­ry and by com­mer­cial fac­tors, are like­ly to make a pro­found mark on Viet­nam’s social and indus­tri­al envi­ron­ment. Join­ing the WTO brings about reg­u­la­to­ry and com­mer­cial chal­lenges that are epoch-mak­ing for most devel­op­ing economies (as our ‘case study book’ demon­strates) par­tic­u­lar­ly if the econ­o­my is simul­ta­ne­ous­ly in tran­si­tion from a planned to a mar­ket-ori­ent­ed eco­nom­ic con­sti­tu­tion. But the chal­lenges will be big­ger after the adop­tion of the new agree­ments being nego­ti­at­ed in the Doha round of WTO. Those agree­ments will require still more open­ness to glob­al mar­kets (and glob­al oppor­tu­ni­ties) in agri­cul­tur­al, man­u­fac­tur­ing and ser­vices mar­kets. As was the case a decade ago at the end of the Uruguay Round, only those economies that are Mem­bers of WTO before the Agree­ments enter into force will be able to take full advan­tage of the imple­men­ta­tion delays to be built into the Agree­ments. Despite the ‘price’ it is pay­ing for full mem­ber­ship of the mod­ern world trad­ing sys­tem, Viet­nam may well look back on today’s terms as a ‘bar­gain’.

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