The trials and tribulations of acceding to the WTO: Vanuatu’s experience

22 July 2013

As a WTO member, least developed countries (LDCs) gain a voice in the shaping of the global trading system. That voice may be too feeble and drowned in the cacophony to make any real impact; nevertheless, it counts. Moreover, as part of the most favoured nation group of trading countries, LDCs receive enforceable guarantees that they will not be disadvantaged from benefits accruing to the rest of the body. The membership also comes with costs, not the least of which is trying to become a member.

The 2012 LDC accession guidelines seek to streamline and improve on the earlier 2002 version. The proposal includes benchmarks for market access negotiations on goods and services, calls for increased transparency on accession negotiations, reaffirms the provision of special and differential treatment and transition periods, and the provision of technical assistance. It is a step in the right direction; nonetheless it could be too short as well as too late for many.

Vanuatu, an LDC in the South Pacific, started its WTO accession process in 1995 and finally became a member in 2011. It had suspended its accession negotiations in 2001 and re-engaged in 2007. The factors that led Vanuatu to suspend the accession process as well as restart it in 2007 provide important lessons for other LDCs that either are currently negotiating WTO accession or are likely to begin.

Walking into the darkness

Vanuatu had negotiated an accession package with its working party and was in line to become the first LDC to accede to WTO at the Doha ministerial conference in 2001. The stakes were high then. The Doha ministerial conference would give birth to the development round and welcoming an LDC to the organisation at the conference would have allowed for interesting presentations. Vanuatu pulled out at the eve, and the Doha Round has remained at an impasse.

Vanuatu suspended the process when it became clear that the accession package would not be accepted politically. At the time, no parliamentarian was willing to risk political capital to mobilise support for ratifying the package. A number of failures took place in Geneva and Vanuatu ended up to such a situation. First, the benefits as well as implications were not clearly discussed with and internalised by the wider stakeholders in Vanuatu. The constituency that supported the accession process was thin and limited to few officials who attended WTO meetings. Second, WTO members pursued a "one-size fits all" negotiating strategy, which failed to appreciate the difference of capacity of Vanuatu and that of any other developing country negotiating accession at the time. Because Vanuatu was first in line amongst acceding LDCs, it was subjected to aggressive demands that went beyond WTO rules, in the interest of setting precedence for other acceding countries. The LDC accession guidelines were established in 2002, but they arrived too late for Vanuatu. Third, the role of the WTO secretariat in its accession process was largely limited to that of a postman. In addition, the distance to Geneva meant that even on stretching its resources, Vanuatu could never control and influence the accession negotiations. Fourth, Vanuatu's accession strategy was excessively technical, and it did not sufficiently leverage political capital in the region and in Geneva to its advantage.

Light at the end of the tunnel

Vanuatu decided to restart its accession process in 2007. Important developments in Vanuatu built the momentum, which in turn received critical support by influential actors in the country and in Geneva.

The perceptions of the WTO held by the civil servants, politicians, private sector and civil society had changed by then because of two reasons. First, there was an increasing awareness that Vanuatu was committing to many of the WTO rules through its involvement in bilateral and regional trade agreements, but unlike its main trading partners in the region it was not a member of the WTO. Furthermore, Vanuatu had been unilaterally reforming policies on tax, tariffs and foreign investment in the services sector, which meant that many of its commitments in the 2001 accession package had been implemented. Second, the department of trade actively shared opportunities to attend WTO meetings and training courses with line departments. This allowed senior civil servants to build competencies on WTO issues and increase their confidence in engaging with these. These developments had helped enlarge the constituency of influential actors in the government, civil society and private sector who encouraged Vanuatu to reengage in the accession process.

The Diagnostic Trade Integration Study (DTIS) of the Enhanced Integrated Framework (EIF) in 2007 was the watershed moment, as it presented the business case for concluding the WTO accession. The department of trade developed a strategy of concluding the accession process that involved mobilising support within the country and the region, and using it as a foundation to do the same in Geneva. It first sought a cabinet decision to start the accession process as well as a mandate to negotiate. The cabinet approval was communicated to the WTO secretariat, in particular the Director General's office, and requested the active support of the Secretariat in concluding the accession. The department then started discussions with embassies of Australia and New Zealand, members of its working party, in Vanuatu. The aim was to bridge the differences on the accession package and to seek support (logistical and network) from their embassies in Geneva in restarting bilateral negotiations with other working party members.

Vanuatu conducted a number of bilateral negotiations on its accession package, which were mostly centred on trade in services agreement between 2008 and 2010. Vanuatu wanted to revise the services schedule of the 2001 accession package, particularly with regards to national treatment in social and environmental sectors. The overall balance of commitments achieved in the 2001 package was maintained by reducing the level of commitments in some sectors while including the ‘new' service sector. Vanuatu's accession package was adopted by the General Council in 2011.

Lessons for other LDCs

Vanuatu's second round of the accession process highlights two key lessons for others. First, the political process is as important as the technical one, and the two must act together from day one of the accession process. Vanuatu's minister of trade took to the driving seat, and was supported by the chief trade negotiator and the director of trade. In addition, the political adviser to the minster, an influential member of the ruling party, accompanied the negotiating team to all meetings. This meant that the politics of accession existed in parallel to the progress in technical negotiations. Second, external actors can play a critical role in supporting the accession process. The Enhanced Integrated Framework (EIF) secretariat and UNDP's trade unit in Geneva sensitively facilitated the process through the planning of EIF resources as well as provision of technical advice. The Australian embassy in Vanuatu mobilised their mission in Geneva to help Vanuatu organise meetings with other working party members. The WTO Director General's office used its good office to seek an early resolution on outstanding issues. An ODI fellow, embedded within Vanuatu's civil service, provided vital technical support in preparation of the accession package and in the lead up to its ratification by Vanuatu's parliament.

In setting some benchmarks, the 2012 LDC accession guidelines are an improvement on the previous version. The benchmark provides some stable goal posts to negotiate the trade in goods agreement. It also includes many good practices from Vanuatu's second round of accessions negotiations experience such as in the area of technical assistance. However, it remains largely silent on the process, which place huge demands on scarce resources (human and financial) available to the LDC negotiating team. Reflecting on Vanuatu's experience, the guidelines could have been more helpful to LDCs if it had also included some of the following, under the broader principles of special and differential treatment:

• A more ex-ante, proactive role for the development division of the WTO secretariat that is reflected in their work programme. The role of the secretariat, apart from the Accession Division, is largely limited to ex-post supporting the implementation of the commitments.

• The demand for regulatory reform by members should be tied to and contingent on them providing financial and technical support. At the moment it is a best endeavour and often members point to the many buildings of specialised agencies in Geneva to find such support.

• All negotiations should be at the working party level and the proceedings made open to the public.

• An accession timeline with clear milestones to measure progress should be established. Each accession negotiation will be unique and cannot be prejudged. Also the speed of accession should be determined by the LDC. Nonetheless, setting a timeline with milestones will help LDCs have better control over the process by keeping the finish line in sight.

Conclusion

Notwithstanding the above, the process does allow flexibility and, at least in theory, LDCs can structure it to suit their needs and interest. So, the interesting question is when and how can LDCs influence the process to their advantage? It could do so by effectively mobilising politics at home, in the region and in Geneva. A clear articulation of why it wishes to be a member of WTO and what benefits it seeks to derive would help rationalise the costs associated with becoming a member. This would also help shift focus from the here and now of the accession process to the longer term interests of being a member of the global trading system.

Author:

Yurendra Basnett is a Research fellow on trade the Overseas Development Institute and Senior Advisor to Vanuatu’s Chief trade negotiator for the WTO accession (2008-2011).

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22 July 2013
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22 July 2013
Becoming a member of the WTO is an extremely difficult process, especially for the least developed countries (LDCs). The Vanuatu experience, analysed in the following article, reveals the complexity...
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