Ensuring Development-supportive Accession of Least-developed Countries to the WTO: Learning from Nepal

Nepal was the first least-developed country (LDC) to become a Member of the World Trade Organization (WTO) through the accession process in April 2004. Apart from achieving broad-based growth, Nepal envisaged using WTO membership for disciplining its trading partners, improving market access, benefiting from the special and differential treatment (S&DT) within the WTO system for LDCs and securing transit rights to the sea.

Given that a number of LDCs are at various stages of the WTO accession process, learning from Nepal's experience can prove vital for ensuring that they gain maximum benefit from their WTO membership. Several lessons have emerged out of the analysis of Nepal's accession process, commitments and implementation:

Key findings:

• Nepal's accession process for WTO membership was strenuous and time-consuming. Despite a commitment by WTO Members to simplify and streamline the negotiating process for LDCs, Nepal had to complete the same complex steps as non-LDCs. Nepal faced difficulty especially in the six rounds of bilateral negotiations as Members usually made stringent demands during these negotiations.

• Despite an assurance by the WTO membership to exercise restraint in seeking concessions and commitments on trade in goods and services from acceding LDCs, Nepal's commitments in the WTO are more stringent than incumbent LDC Members and even many developing country Members. Acceding LDCs have been asked to make commitments that are not commensurate with their level of economic development, capacity and their trade and financial needs.

• The technical assistance Nepal received during its accession process proved vital to prepare the complex documentation and build capacities of the private sector and government officials on WTO issues. In contrast, the technical assistance that the country received after WTO membership has been inadequate. In particular, assistance has been lacking to help the country address supply-side constraints that prevent it from benefiting from WTO membership. As a result, Nepal's WTO membership has not helped the country to achieve its policy objectives related to trade, i.e., trade diversification and narrowing the trade deficit.

• Compared to the commitments made by Cambodia, another recently acceded LDC Member, Nepal has been able to negotiate better terms of accession. This was possible due to stakeholder participation and the technical assistance Nepal received during the accession process. However, while analyses and discussion forums offered by civil society groups allowed the Nepalese government to avoid more onerous commitments in some cases, the majority of stakeholders felt that they were left out from the accession process.

Key recommendations:

• There is an urgent need to translate Members' commitment to simplify the accession process for LDCs into action. In particular, the WTO should incorporate a specific provision that acceding LDCs will not be required to enter into bilateral negotiations on market access.

• Acceding LDCs should not be required to undertake higher level of commitments than those made by the founding LDCs of the WTO, nor should they be asked to make commitments on any of the WTO's plurilateral agreements or to participate in other optional sectoral market access initiatives.

• Moreover, given the importance of the agricultural sector in the economies of LDCs, particularly its role in human development, food security and rural development, LDCs should not be required to make commitments on tariffs. LDCs should also have access to simplified safeguard mechanisms.

• More emphasis needs to be placed on providing technical assistance to implement LDCs' accession commitments. In order to make technical assistance binding, implementation of the commitments should be made conditional on the receipt of timely and effective assistance.

• There is also a need for technical assistance to enable LDC Members to harness the potential benefits of WTO membership as a tool for promoting human development, including by addressing supply-side constraints.

• To enhance the ownership of the WTO accession and implementation processes, acceding countries should be supported to put in place a formal, institutionalized mechanism for involving all the stakeholders in the process.