The Hindu Business Line : WTO must remodel entry norms

The Doha Round negotiations have collapsed mainly due to the Western nations' refusal to reduce, leave alone eliminate their enormous agricultural subsidies. This does not come as a surprise to those who have been following the developments of the negotiations. But the real surprise came on July 15, just before the beginning of the G-8 summit at St. Petersburg. It was all along expected that the signing of a protocol between the US and Russia, paving the way for the latter's entry into the World Trade Organisation, would be announced.

But news reports pronounced that the US President, Mr George Bush, blocked Russia's entry into the WTO. Russia had applied for entry into the multilateral trading system way back in 1993. That was when the GATT was in existence; it morphed into the WTO that came into being on the January 1, 1995. Why is it that even after 13 years Russia is still not able to get an entry?

Friends despite tension

After the end of the Cold War , Russia and the US became friends despite some tensions. Russia was even admitted to the then powerful group of nations — the G-7 — in 1998 and the body came to be called the G-8.

The WTO Club is extraordinarily peculiar in the matter of rules and procedures of admission. In any international body such as the IMF or the World Bank, the admission of an applying member is nearly automatic. This should be so and this is natural since the purpose of a broad-based international body that benefits its members is defeated the moment there is an entry barrier. But entering the WTO is riddled with such ridiculously cumbersome and unimaginative procedures that reaching the moon may seem easier. As per Article XII of the WTO Agreements, the accession to or the entry into the WTO would be "on terms to be agreed" between the acceding government and the WTO. This prima facie looks simple as in the entry into any club where the applicant has to simply agree to the basic club rules and conditions.

But it is not so with the WTO. The applicant country should enter into bilateral negotiations and protocol with all the members and fully satisfy each in terms of trading parameters.

Entry norms

Today there are 149 members in the WTO and nearly 30 pending applications for membership. Imagine the time and effort needed in the enormous process of bilateral negotiations where the expectations of each existing member regarding market access, tariff levels etc, have to be fully satisfied.

To quote a source, "all interested (existing) members must be in agreement that their individual concerns have been met and that outstanding issues have been resolved in the course of their bilateral and multilateral negotiations (with the applying party)."

In respect of an application for entry into the WTO by any government, the WTO General Council sets up a working party, which is open to all members of the WTO.

Based on the results of all bilateral and multilateral negotiations carried on by the applicant , an "Accession Package" is prepared by the working party. On the acceptance of the Accession Package, in a meeting of the General Council or Ministerial Conference, the applicant government is granted entry into the WTO.

In Russia's case, practically all WTO members, with the sole exception of the US, have concluded their negotiations and signed Russia's entry. But the US, conscious of its world leadership position, is still dragging its feet. Washington is aggrieved by the Moscow ban on the import of American beef and pork. The US wants Russia to act against music piracy. And the US also wants higher market access of its manufactured goods than the Russians are willing to allow.

Bilateral trade relations

The US should realise that Russia is still in a state of transition to market economy and is facing many hurdles. In any case, the order of trade between the US and Russia is quite insignificant.

In 2005, the US exports to Russia were about $4 billion and the Russian exports to the US about $15 billion. In comparison, in 2005, China's exports to the US nearly $243 billion and imports from the US were nearly $42 billion. It is noteworthy that China had to wait for 14 years to get admission to the WTO, which it did on November 12, 2001, on the heels of the Doha Ministerial Meet. China's bilateral negotiations were smooth with regard to the African, Asian and Latin American countries, but was squeezed by the US and Europe.

The attitude of the US and Europe has been one of `might is right'. This has resulted in tortuous negotiations for the WTO entry. It is time the accession procedures were speeded up and simplified.

Depending on the economic and trade performance and capability of each applicant country, it should be possible to arrive at its obligations and commitments in terms of tariff levels and other factors. This should short-circuit the needless process of bilateral negotiations.

The developing countries have now got together (starting from the Seattle Ministerial Meet) and they are now in a position to dictate terms; this was well evident from the way the West was prevented from hijacking the Doha issues to its advantage.

By the same token, the developing countries should take the initiative in effecting procedural changes for the quick and smooth entry of applicant nations into the WTO.

(The author, a former member of the Indian Administrative Service, has worked as Director-General of the World Trade Centre, Mumbai. He is the author of "World Trade Organisation and India: Some Insights.")