How Does a Country Become a WTO Member?
Six Steps to Accession
Any country that is in control of its trade policies is eligible to apply for membership in the World Trade Organization. The country seeking membership is called an Observer. It can remain an observer for five years. That gives it time to learn more about the WTO. An observing country can participate in WTO meetings and receive technical assistance. In return, it must contribute to the WTO.
A WTO membership is so important especially for a developing country because of the competitive trading benefits this organization can offer.
The Six Step Process
A country has to go through a six-step process before becoming a WTO member.
First of all, the country submits an application. This application is reviewed by a Working Party for Accession forms. Any current WTO member can join the Working Party. It can also include representatives of the United Nations, United Nations Conference on Trade and Development, International Monetary Fund, the World Bank, World Intellectual Property Organization, European Bank for Reconstruction and Development, and European Free Trade Association. The Working Party then oversees the entire application process.
Second, the Observer then submits forms that describe its current trade policies in detail. This is called Memorandum of the Foreign Trade Regime. It includes statistics about that country’s economy. It also includes existing free trade agreements and any laws affecting international trade. Then the Working Party reviews these forms to determine how they would affect its ability to conform to WTO requirements. The Secretariat distributes them to all WTO members. Every WTO member can ask the Observer questions.
After a series of discussions and negotiations, the Secretariat consolidates it in the Factual Summary of Points Raised.
Third, Working Party then outlines all the terms and conditions that the Observer must meet before becoming a member. After becoming a member of WTO, the Observer must agree to follow all WTO rules. It must agree to make the legislative and structural changes needed to meet these rules.
Fourth, the Observer then negotiates bilateral trade agreements with any country it wishes. The agreements will set, reduce, or remove tariffs. The agreements will open up access to the countries' markets. They will also adjust different policies to trade goods and services more freely. Every agreement must also be applied to all other WTO members. That means the bilateral agreements can take a long time to negotiate because the stakes are so high.
Fifth, the Working Party drafts the terms of membership. The so-called Accession Package has three agreements. It includes changes that the observer has made to its trade policies. It also contains the terms of bilateral trade agreements. It also has a membership treaty, called the Protocol of Accession. Last but not least is the list of commitments made by the applicant. Those obligations are called the schedules.
Sixth, the General Council approves the Protocol of Accession. It issues its decision and publishes the approved Protocol of Accession. The country has only three months to rectify the agreement. After rectifications, it notifies the WTO Secretariat. One month later, it becomes a member.
The WTO has 162 members. Sixty-five countries were members of the General Agreement on Tariff and Trade. Those 65 countries automatically became WTO members on January 1, 1995. All the remaining 97 countries went through the six-step process to become WTO members. Here are the five newest members.
- Seychelles was accepted on April 26, 2015.
- Kazakhstan, on November 30, 2015.
- Yemen became a member on June 26, 2014.
- Laos joined on February 2, 2013.
- Tajikistan, on March 2, 2013.
There are 22 observer countries currently in this application process. They have five years to complete it. They are Afghanistan, Algeria, Andorra, Azerbaijan, Bahamas, Belarus, Bhutan, Bosnia, Herzegovina, Comoros, Equatorial Guinea, Ethiopia, the Vatican, Iran, Iraq, Lebanon, Liberia, Libya, Sao Tome, Principe, Serbia, Sudan, Syria, and Uzbekistan.
Only 12 countries are not WTO members. These nations do not wish to become members. They are Eritrea, Kiribati, Marshall Islands, Micronesia, Monaco, Nauru, North Korea, Palau, San Marino, Somalia, South Sudan, Turkmenistan, and Tuvalu.