By: Khalid Yousufzai

WTO Accession Process and Afghanistan’s accession:

Any state or customs territory having full autonomy in the conduct of its trade policies may join “accede to” the WTO, but WTO members must agree on the terms. Broadly speaking the application goes through four steps:

1.             TELL US ABOUT YOURSELF:  The government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO in a memorandum which is examined by the working party dealing with the country’s application. These working parties are open to all WTO members.

2.             WORK OUT WITH US INDIVIDUALLY WHAT YOU HAVE TO OFFER:  When the working party has made sufficient progress on principles and policies, parallel bilateral talks begin between the prospective new member and individual countries. They are bilateral because different countries have different trading interests. These talks cover tariff rates and specific market access commitments, and other policies in goods and services. The new member’s commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. In other words, the talks determine the benefits (in the form of export opportunities and guarantees) other WTO members can expect when the new member joins. (The talks can be highly complicated. It has been said that in some cases the negotiations are almost as large as an entire round of multilateral trade negotiations.)

3.             LET’S DRAFT MEMBERSHIP TERMS:  Once the working party has completed its examination of the applicant’s trade regime, and the parallel bilateral market access negotiations are complete, the working party finalizes the terms of accession. These appear in a report, a draft membership treaty “protocol of accession” and lists of “schedules” of the member-to-be are commitments.

4.             THE DECISION:  The final package, consisting of the report, protocol and lists of commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-thirds majority of WTO members vote in favor, the applicant is free to sign the protocol and to accede to the organization. In many cases, the country’s own parliament or legislature has to ratify the agreement before membership is complete.

 WTO members expect all acceding countries to fully conform to all WTO mandatory agreements and understandings prior to accession. This has been to case for all non-GATT countries seeking accession to the WTO. During the Doha Ministerial Conference in November 2001, there were significant discussions to facilitate accession for Least Developed Countries (LDSs). Notwithstanding WTO accession; it is in the best interests of Afghanistan, in order to attract investors, to adhere to WTO rules since they have been recognized as best international practices and applied in around 150 countries at least. On the other hand, the terms of market access for goods and services, agricultural subsidies, and government procurement are negotiable. A preliminary assessment indicates that accession for Afghanistan will take at least five years mainly for the following reasons: 

·        The most optimistic scenario for any country to accede to the WTO is 3 years; provided there is a strong political will and the acceding country engage in an intense and ambitious negotiations process.

·        In order to initiate negotiations, a country must submit its Memorandum of the Foreign Regime (MoFTR). It takes around six months to prepare the MoFTR. 

Afghanistan’s Accession to WTO:  The cost of WTO membership for Afghanistan is numerous, but they are manageable provided significant donor assistance is provided to Afghanistan particularly with regard to: 

1. Policy and legal reform for conformity with WTO agreements

2. Institutional capacity building

3. Establishment of new institutions for negotiation accession and administering/enforcing WTO laws, and

4. Modernization and automation of relevant state institutions and laboratories 

In addition, WTO membership will require representation in Geneva and payment to WTO secretariat of and annual observer free ($ 17500) and after accession, and annual  membership fee ($ 35000 ) this figure increases every year and varies with the exchange rate of US$/SFr. 

WTO Membership will increase the prospect of Afghanistan to fully exploit its economic capabilities and potential, attract investment capital/technology/know-how, and increase production and exports.  Foreign investment will modernize the production process which will lead to production in accordance with international quality and safety requirements making Afghan products competitive internationally.  Increase in trade and investment will (i) facilitate economic recovery and development, (ii) pave the way for long-term sustainable economic growth, (iii) increase fiscal revenue, (iv) create jobs, and (v) alleviate poverty.   WTO will establish the enabling environment, investor and the private sector need to make the best of WTO Membership.  The Afghan government has a key role to play in terms of good governance, proper enforcement of laws, as well investment and export promotion. 

Other benefits of membership in the WTO system include access to the WTO Dispute Settlement Body.  This will provide fair resolution to any trade disputes that may arise between Afghanistan and its trading partners.  It is particularly advantageous to a small trading nation like Afghanistan to rely on such neutral system than to resolve disputes on a bilateral basis with a more powerful trading partner.   The WTO, in addition, will lead to a more stable and predictable trade relations with WTO trading partners as all WTO Members are under the same umbrella and subject to the same rules. 

WTO membership will also allow Afghanistan to resolve a number of critical issues that are currently problematic for its exports.  First, Afghanistan is a landlocked country facing current difficulties in transiting imports and exports via neighboring countries which all, except Turkmenistan, are either Members (Pakistan) or seeking WTO accession.  Article V of the GATT 1994 requires that a WTO member provides other Members freedom and non-discriminatory transit via all modes of transport (e.g. air, land, and pipelines).  In addition, transit fees must be fair, reasonable, and non-discriminatory.     Second, Afghanistan is a potential producer of quality textile goods.  Starting in 2005, textile quotas are prohibited among WTO Members whereas WTO Members may continue to impose quotas on imported textiles from non-Member nations. 

The average accession period for non-GATT members has been around seven years. Most countries in the process of accession have been negotiating for more than seven years and some for more than ten years. The fastest accession for non-GATT members was the Kyrgyz Republic (around 2.5 years).