Kazakhstan became the 162nd member of the WTO on 30 November 2015, bringing to a close twenty years of the toughest, most complex accession negotiations in the history of the General Agreement on Tariffs and Trade (GATT) and the WTO. The challenges that were overcome in the course of Kazakhstan's accession – technical complexity and geopolitical dilemmas – have helped advance multilateral rule-making with substantive systemic contributions. Key areas of advancement stemming from this accession include the principles and design of the tariff adjustment and compensation formula, associated regulatory adjustments and the relationship between a customs union and the multilateral trading system. As a result of these developments, many trade rules were re-confirmed, tightened and clarified.

For several years since the global financial crisis, the global economy has managed to avoid another systemic crisis and has been recovering gradually. However, growth has been low for so long that most people and businesses simply have not yet noticed that the economy was actually recovering. Weak economic growth, stagnant wages, high unemployment, and rising income inequality have stimulated support for inward-looking policies. Recovery has been sluggish and fragile, and its durability continues to be at risk. Recently some advanced economies have seen their GDP expand faster than expected, supported by a cyclical upturn in global manufacturing and trade. But at the same time, several emerging and advanced economies are still operating below capacity, and underlying core inflation is still low generally.

The book you are about to close picked up on the evolving discussion on accessions and trade multilateralism. The first book on the subject, WTO Accessions and Trade Multilateralism: Case Studies and Lessons from the WTO at Twenty, looked back. It took stock of two decades of accessions to the WTO, their welfare and development outcomes, the resulting improvements to market access, and their contribution to domestic reforms and to the rules-based multilateral trading system. It shone a powerful light on the GATT/WTO accession procedure – a process hitherto viewed as lacking transparency and complicated by its esoteric vocabulary and apparent detachment from the day-to-day conduct of trade.

This book looks forward. It focuses on the future of the multilateral trading system and the role of accessions in shaping it. It highlights the challenges of maintaining the system in a global economic and trade policy environment marked by radical transformation and uncertainty accentuated by fast-paced technological changes.

Clearly, the multilateral trading system needs to transform and adapt to this continually evolving environment. While it must remain a ballast for stability and global order, for policy relevance it must also adjust to the complex realities of a different age, an age in which one size cannot possibly fit all. The architecture of the rules-based system requires flexibility to adapt to the different needs of its members in different configurations, ranging from those focused on domestic policy reforms to those motivated by bilateral, plurilateral or regional trade integration priorities. A self-learning and adaptive multilateralism can accommodate these opposite pulls and pressures in a rules-based order. But multilateralism is only one piece of the puzzle and its abundant benefits are accompanied by a price. The price of multilateralism is constant adaptation, operation in different formats and in step with a complex reality. As argued elsewhere, there is a case for a ‘messy’ multilateralism, because ‘multilateralism is not one thing, but many’ (Haass, 2010).

The new realities of the twenty-first century require an upgrade of the multilateral trading system by erecting its upper floors on the foundation of the existing trade rules and the accumulated acquis.

Trade multilateralism at a crossroads

Trade multilateralism has been under stress following the transformation of the global environment in recent years. Political developments have revealed a fraying consensus on the benefits of international economic cooperation. While trade integration has helped to drive economic growth across the world for decades, recently an uptick in protectionism and inward looking policies have been a drag on trade and growth.

ABSTRACT

This chapter proposes a holistic framework by which acceding governments may evaluate the macroeconomic impact of joining the WTO. Because both acceding governments and WTO members are interested in preserving their own systemic stability and the stability of the multilateral trading system, evaluation of the Accession Package can be achieved by examining its impact on the domestic and external stability of the acceding country. The chapter concludes that, in the long run, the impact should be positive, and should be driven by better resource allocation as the acceding economy opens to international trade, makes deep structural reforms and aligns its institutions and policies with internationally recognised standards. However, in the short term, implementation of WTO commitments may lead to substantial adjustment costs in the public and private sectors. Overall, the design and implementation of WTO accession commitments is a matter of public policy that should aim to promote systemic stability and accelerate domestic reform, while addressing transitional costs.

Accession to the WTO is an outcome of negotiations. The applicant government engages in bilateral negotiations with interested WTO members on concessions and specific commitments on market access for goods and services. The results of these bilateral negotiations are consolidated into the final Accession Package. New members enjoy the privileges that the incumbent members give to them and the security that the trading rules provide. In return, acceding countries make commitments to abide by WTO rules and to open their markets. Such commitments have different dimensions – legal, institutional and economic – and usually focus mainly on general rules and individual products and sectors. However, while not explicit, there are also substantial macroeconomic dimensions to the WTO accession commitments, which are the focus of this chapter.

The macroeconomic implications of WTO accession can be viewed through the prism of systemic stability. Obviously, no acceding country would accept commitments that would destabilise its own economic system but, rather, would try to leverage WTO negotiations towards reaching its own domestic goals while using the opportunities opened by WTO membership. On the other hand, it is in the interest of the WTO as a whole to preserve the stability of the multilateral trading system by contributing to maintaining the stability of its members.