. Participation in WTO
One of the most important differences between the
current trading system and its GATT predecessor
is in the near universality of WTO membership. As
late as the 1980s, many of the largest developing
countries were still outside GATT. Following a wave of
accessions in the concluding years of the old regime,
and another set of accessions into the WTO, there
are few countries left that are not either members or
seeking to become members (box 4).
Box 4. Who is in WTO? And who is not?
The multilateral trading system started with just 23 GATT contracting parties in 1947, but grew to 128 by the time that
GATT gave way WTO in 1995. Many more countries acceded to WTO over the next two decades, with the total number
of members reaching 164 in 2016. WTO membership is so broad that it even encompasses some members that are not
recognized as separate States in the United Nations, including one regional super State (i.e. the European Union) and three
members that have special relations with the People’s Republic of China (i.e. Hong Kong (China), Macao (China) and Taiwan
Province of China).
Three kinds of countries that had been marginalized in the old GATT order now figure prominently among those that have
recently joined WTO or that are still in the process of accession. Eleven of the 36 countries that joined from 1995 through
2016 were formerly part of the Soviet Union, and another 11 either had been or remained non-market economies; five
of the countries still in the process of accession were likewise former Soviet or Yugoslav republics. Eight of the countries
that acceded, and five of those still acceding, are formally designated by the United Nations as least developed countries
(LDCs). Many net oil-exporting countries had stayed out of GATT, but they now account for three of those that acceded to
WTO and seven of those still acceding.
As of early 2017, 19 countries – either developing countries or former Soviet republics (except for Andorra, Bosnia and
Herzegovina, and Serbia) – were still in the process of accession. The largest of these is Ethiopia, with a population of
just under 100 million. Six other countries still in accession have populations of at least 10 million persons each, including
Algeria, the Islamic Republic of Iran, Iraq, the Sudan, the Syrian Arab Republic and Uzbekistan. The remaining countries
still negotiating to enter WTO are Azerbaijan, the Bahamas, Belarus, Bhutan, Comoros, Equatorial Guinea, Lebanon, Libya,
and Sao Tomé and Principe.
This leaves just 14 Members of the United Nations that have no relationship at all with WTO, being neither members nor
in the process of accession. The largest is the Democratic People’s Republic of Korea, with a population of 25.2 million.
The only other countries in this group that had populations in excess of one million persons were Somalia, South-Sudan,
Eritrea, Turkmenistan and Timor-Leste. The rest consist of very small States located either in Europe (i.e. Monaco and San
Marino) or the Pacific (i.e. Kiribati, the Marshall Islands, Micronesia, Nauru, Palau and Tuvalu).
IV. TRADE NEGOTIATIONS AND TRADE PROMOTION 41
Algeria offers an example of a country that has found
the process of WTO accession to be lengthy and
difficult, with its negotiations beginning even before
WTO came into being and now having lasted more than
a quarter of a century. The elongation of the process is
due in part to an ambivalence on the part of Algerian
authorities over the costs and benefits that accession
may have on the Algerian economy. Membership in
WTO ensures integration into global value chains,
according to the TPF, but does not in itself guarantee
diversification and upgrading of exports. The TPF
nevertheless concluded that staying out of WTO is not
an option, as that would mean keeping the country
exposed to the willingness of WTO member countries
to extend reciprocity autonomously. The principal
remaining question, as explored at length in that TPF,
is whether Algeria ought to use WTO accession as
a lever for diversification, or should instead diversify
its economy before exposing itself more openly to
multilateral trade rules.
Once a country has joined WTO, it must answer three
more questions: Will it establish a permanent mission
in Geneva, how will that mission be structured and
how large will its staff be? Some countries maintain
non-resident status and are represented only from the
national capital or from some other mission in Europe,
others establish a general-purpose mission dealing
with all Geneva institutions, while still others will found
(in addition to a general-purpose mission) a dedicated trade mission that is devoted solely to WTO affairs
and other trade-related organizations headquartered
in Geneva (especially UNCTAD and the World Intellectual Property Organization). As for the size of WTO
missions, be they all-purpose of specific to trade, they
might range anywhere from one to 20 persons.
The choice among these alternatives requires that a
country balance its needs with its means. Maintaining
a permanent mission in Geneva is a costly undertaking,
as this is one of the world’s priciest places to live and
work. According to one survey, in 2016 it was the
twenty-first most expensive city for the rental of office
space. The average cost was $93 per square foot,
which was well below the most exorbitant locations
($290 in Hong Kong (China) and $262 in London)
but above the average price in New York ($86).23 The
disparities in the cost of living are even higher. One
survey shows Geneva as the third-most expensive
among 267 world cities; living in Geneva costs 1.3
times as much as living in Paris, 2.9 times more
than Bogota and 3.3 times more than Cairo.13 When
the cost of office space, salaries and adjustment
allowances for staff are combined, it is easy to see
how the price tag for even a small permanent mission
in Geneva can readily exceed $1 million per year.
Despite these costs, more countries opt to establish
dedicated trade missions in the WTO era than they had
in the GATT period. As of 1982 there were only four
GATT contracting parties with dedicated missions, or
just 5.3 per cent of all missions; these were run by
an average of 4.8 persons. By 1997 this had grown
to 20 dedicated WTO missions (19.2 per cent of the
total) with an average of 6.9 staffers, and by 2012,
the numbers rose to 39 such missions (28.7 per cent
) with 7.6 people each. The numbers of persons in
the average general-purpose mission also grew,
nearly doubling from an average of 3.0 persons in
1982 to 5.8 in 2012. These numbers have continued
to rise: As of 2014, the average developing country
with a dedicated mission had a staff of 7.8 persons,
compard with 6.6 persons for the average developing
country with a general-purpose mission.14
At the other end of the spectrum are the members that
have no mission at all in Geneva. Non-resident status
hampers a country’s ability to monitor and participate
fully in negotiations and related activities conducted
under the auspices of WTO,
not to mention the other
Geneva-based institutions. Non-residency was once
a major problem, with many of the GATT contracting
parties or WTO members being represented only
intermittently from the capital city or from a mission
based in Bonn, Brussels, or London. Non-residency
peaked in 1997, when just over one fifth of members
were non-resident, but then declined to 16 members
(10.1 per cent ) in 2014.
What accounts for the decision of some countries
not to establish a Geneva mission? This choice is
strongly associated with economic size, such that in
2014 the average GDP of a non-resident country ($2.6
billion) was far below that of the average developing
country with either a general-purpose mission ($95.6
billion) or a dedicated trade mission ($679.9 billion).
Relative income is less important, with the average
gross domestic income per capita in a non-resident
country ($5,427) being just a little less than that of
the average country with a general-purpose mission
($5,737). Only 4 of the 16 non-resident members are
LDCs
, due to the fact that these countries are eligible
for a Swiss subsidy that supports the establishment of
WTO missions. Today the most typical non-resident
member is a very small island State that is relatively
42 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES
poor but still above the income level of an LDC. These
are generally countries that can afford to have only
a handful of diplomatic missions anywhere in the
world, and establishing one in Geneva might require
that they either close another elsewhere or find more
elasticity in a foreign ministry budget that may already
be stretched thin.15