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Paying the Price for Joining the WTO

A Comparative Assessment of Services Sector Commitments by WTO Members and Acceding Countries

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This paper focuses on the accession process for new WTO membership. The basic premise is that the commitments demanded are too onerous for new members. It argues that the whole process is fundamentally flawed and, in fact, forces applicant countries to accept demands that are not required under WTO agreements. Section 2 is a brief discussion of the process of accession and highlights the inherent flaws. Section 3 focuses on one of the crucial international trade agreements, the General Agreement in Trade and Services (GATS) and provides sectorspecific commitments by countries. Section 4 uses a series of statistical tests to verify whether acceding countries have made a significantly higher number of specific commitments than existing WTO members. Section 5 makes some concluding observations. The paper uses a strong body of econometric evidence to support its claim that acceding countries undertake greater commitments than those made by WTO members of a similar development status.

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Executive Summary

The relevant provisions (Article XII of the Marrakesh Agreement) and practices that govern he process of accession to the WTO are fundamentally flawed at each stage. In the first stage, known as the multilateral stage, self-interested WTO members review the trading practices of an applicant to determine their compatibility with WTO rules, a process which in effect allows complainants to act as judge and jury on the trade regimes of acceding countries. During the second stage, or bilateral track, WTO members ‘negotiate’ bound tariffs, agricultural schedules and service sector commitments, but since the applicant may make no demands it can impose no marginal cost on the demandeur.

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