RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/OV/6
22 November 2000
(00-4770)
Trade Policy Review Body
OVERVIEW OF DEVELOPMENTS IN THE INTERNATIONAL
TRADING ENVIRONMENT
Annual Report by the Director-General
This Annual Report for the period from Septembe r 1999 to October 2000 is submitted to the Trade
Policy Review Body (TPRB) in accordance with Sect ion G of the Decision on the Trade Policy Review
Mechanism (TPRM), Annex 3 of the Marrakesh Agreement Establishing the WTO, which states:
An annual overview of developments in th e international trading environment which
are having an impact on the multilateral tr ading system shall also be undertaken by
the TPRB.  The overview is to be assisted by an annual report by the Director-General
setting out major activities of the WTO and highlighting significant policy issues
affecting the trading system.
I. INTRODUCTION
1. For the WTO, the last year was one of stiff challenge and significant opportunity. The Third
Ministerial Conference met in Seattle in November 1999 and considered the launch of a new round of
multilateral negotiations.  WTO Members were not able to reach a consensus since differences ofview remained significant, despite intensive preparatory work.  One major difference of view
concerned whether the launch of a new round was propitious given the ongoing implementation of
Uruguay Round commitments, which gave rise to problems or concerns for certain Members.
Another major difference was on the scope of the agenda for the negotiations, beyond those on
agriculture and services which were called for in the respective Uruguay Round agreements.  There
were also differences of view on the negotiations on the built-in agenda.  In the course of the
Conference, questions of process also came to the fore.
2. In 2000, the WTO rose to address these issues by:
/g167 establishing a mechanism to consider implementation-related issues and concerns;
/g167 starting on schedule the mandated negotiations on agriculture and services;
/g167 engaging in constructive and positive dialogue on ways to ensure the fuller participation of all
Members in the work of the WTO and to improve consultative procedures;
/g167 giving priority to the integration of LDCs and other low-income WTO Members into the
multilateral trading system to help them secure th e benefits that can be derived therefrom; and
/g167 continuing to explore, at the political and technical levels, the possibility of reaching a consensus
on a broader negotiating agenda.
In addition, the WTO maintained a busy schedule of regular meetings of Councils, bodies and
working groups on matters within its mandate.  In addition to assisting the WTO Members in these
activities, the Secretariat maintained a high level of  activity in providing technical assistance, as well
as an active programme of outreach.WT/TPR/OV/6
Page 2
3. A vote of confidence in the WTO is the growing number of Members, which rose to 140 in
November 2000, with Jordan, Georgia, Albania, Oman and Croatia acceding in the course of the year.
Lithuania is poised to accede, and another 28 accession negotiations are engaged.  Also in 2000,
China reached the final stage of its accession negotiations.  Although each accession is significant inits own right, both for the new WTO Member concerned and the organization, there is no doubt that
China's decision to join the WTO is particularly momentous.  Opening its markets to foreign trade and
investment will make China more prosperous, and committing China to world-trade rules will foster
and consolidate market-based reforms.  WTO Members stand to gain by better access to an economy
of 1.3 billion consumers, which is growing at an average of 8% a year.  The significance of these
benefits – both for China and for WTO Members – explain the efforts that are being made on all sides
to bring to a conclusion the accession process.
4. A further sign of confidence in the WTO is the continuing recourse to its dispute settlement
procedures.  Since 1995, more than 200 complaints have been filed by a broad cross-section of WTO
Members, large and small, poor and rich.  Commitments open the channels of commerce, which stay
open by respect for the rules, but the dispute settlement procedures are ultimately available if a breach
is alleged.  A WTO Member may obtain an authoritative ruling, which is binding.  Enforcement ofobligations through dispute settlement thus ensures the integrity of the process of multilateral
negotiation, agreement, and implementation.
5. WTO Members have an abiding interest in preserving the open nature of the trading system
by rules on the use of policy instruments affecting markets for goods and services, as well as
intellectual property rights protection.  The WTO ac ts as a check against protectionist 'solutions' to
domestic economic crises, as was demonstrated during the recent Asian and emerging markets crisis.
Indeed, recent economic data show that the global economy recovered much more quickly than
originally anticipated.  One reason was that markets of WTO Members stayed open and became more
so due to the implementation of Uruguay Round commitments and new WTO liberalization initiatives
in services and information technology products, as well as due to liberalization initiatives undertakenon an autonomous basis, often as part of wider programmes of domestic economic reform.
6. The WTO is forward-looking.  The most outstanding recent example is the telecoms
agreement, which brought competition to a sector long the preserve of government-owned
monopolies, helping to expand the variety of communication services and bring prices down.  This
has given a major boost to connectivity to the Internet, which rose sharply in the past year.  As a vast
and growing store of readily accessible information about individuals, enterprises, and countries, the
Internet is vital to fostering a better understanding of the possibilities of exchange both within acountry and among WTO Members, including through e-commerce.  The Internet is also central to the
emergence of the 'new economy' on a global basis.  The telecoms agreement has spurred the
development of wireless communication services and the advent of the "mobile information society",
which makes the WTO the basic framework to launch the next major revolution in telecommunication
services – the third generation or 3G – to benefi t consumers, enterprises, and governments alike.
7. While the situation of the WTO is generally satisfactory, a number of challenges lie ahead for
the organization.
8. The expansion of the world economy was sustained in 2000 and was broadly based across all
regions, but the downside risks are higher, accordin g to the IMF.  This warning should bring into
sharper relief the gains to be realized by consumers, producers and the environment from removingthe significant impediments to open markets that remain in place in virtually all Members.  Progress
towards removing such impediments autonomously has proved slow;  even the WTO Members that
have advanced in this regard could realize addition al benefits from 'locking in' liberalization in WTO
schedules.  Outside the WTO, liberalization has mainly been focused on partners in regional trade
agreements, a significant and strengthening trend, which risks net trade diversion.WT/TPR/OV/6
Page 3
9. In developed countries, average tariffs are generally low except in 'sensitive' sectors, such as
textiles and clothing, and agriculture.  Average tariffs of developing countries are relatively higher,
but also have peaks in sensitive sectors, such as textiles and clothing, or on intermediate products,
providing a disincentive to development of the industrial base.  Furthermore, developing countries
have bound tariffs in their WTO schedules at ceiling levels, above applied rates, leading to uncertaintyfor economic operators.  A trend common to a number of WTO Members, both developed and
developing countries, is a rising use of anti-dumping measures to limit imports.  Furthermore,
dissimilar technical regulations and product standards, as well as conformity assessment, are
emerging as significant potential impediments to market access.
10. On textiles and clothing products, the quotas brought into the WTO from the Multi-Fibre
Arrangement, by Canada, the European Communities and the United States, are still largely in place,
despite two completed stages of integration into GATT 1994.  For agricultural products, tariffs aregenerally high and developed countries use a panoply of measures to support agricultural producers
and processors of basic products.  The Uruguay Round did lead to reform of the domestic agricultural
policies of many developed countries, but support levels remain high, and may be rising in certain
countries.  This underlines the importance of WTO Members making meaningful progress on the
current WTO negotiations on agriculture.
11. WTO Members should also be concerned by barriers to trade in services, a vital sector for
development and consumer well-being.  Competitiveness of goods on world markets is directly
impaired by poor quality or costly business-related services.  While recognizing the significant steps
taken by WTO Members to liberalize financial services and telecoms, the scope of GATS
commitments is not comprehensive and restrictions on the supply of services through all four modesof delivery remain, most notably on the movement of natural persons.  Reducing or removing
restrictions gives the possibility of exporting services based on comparative advantage.  In many
countries, autonomous liberalization initiatives in the sector have moved policies well ahead of
commitments, whose benefits could be better assured by binding existing access conditions.  These
objectives underline the significance to WTO Members of meaningful progress in the currentlyengaged negotiations on services.
12. Another key priority on the international agenda  is helping LDCs up the development ladder.
The WTO has a role to play in this regard.  Experience has shown that development requires
macroeconomic stability and market-friendly refo rms, complemented by institution-building that
fosters developmental capacity and good governance, including more open and transparent regimes
for trade and trade-related policies.  Countries poor in human and financial resources, or lacking the
requisite experience in administering or enforcing WTO obligations, have asked for assistance inunderstanding their commitments and implementing them domestically.  Technical assistance
activities are important in this regard, but the ability of the WTO to respond is limited and sustained
only by the generous extra-budgetary donations of certain WTO Members.  Increased funding for
technical assistance in the core budget of the WTO is one way of creating a more permanent basis for
such activities.
13. WTO Members have the opportunity to do more for LDCs.  The Plan of Action for LDCs
launched at Singapore in 1996 gave priority to improvements in market access to remove external
obstacles to development, and led to the Integrated Framework for technical assistance related to trade
development.  Since that time, a number of WTO Members have improved the market access for
LDCs through preferential programmes, and further actions could be taken to achieve the goal oftariff-free and quota-free access for all trade of LD Cs.  And, following a review of its operation, the
Integrated Framework is to be improved as a mechanism for the six participating agencies – the ITC,
IMF, UNCTAD, UNDP, World Bank and WTO – to deliver trade-related technical assistance to
LDCs.  Donor support is now needed.  As the WTO in itiative on LDCs falls into place, its effects will
reinforce others taken in 2000 to ease the plight of Africa, home to most LDCs, such as debt reductionto liberate domestic resources to build human capital and alleviate poverty.  These actions, takenWT/TPR/OV/6
Page 4
together, will help LDCs establish the basis for sustainable development and reverse their increasing
marginalization in the world economy.
14. WTO Members are rightly concerned by the misunderstandings of the public over
globalization and the role of the organization in this process.  The anti-globalization protests in Seattle
were the most extreme manifestation of these misunderstandings, re-staged for UNCTAD X inBangkok in February, for the meetings of the World Bank and IMF in Washington in April and in
Prague in September, and for other high-profile gatherings.  The target is not the WTO per se , but all
institutions, political parties or even individuals th at promote or support or do not openly condemn the
policies considered to advance the process of globalization.
15. Democratic societies legitimize and indeed encourage dialogue between citizens and
representatives on all topics of concern.  Adjustment to globalization is a valid element of this
dialogue, while recalling that openness to trade is associated with growth and reduced poverty overtime.  Within its mandate to help move trade flows as smoothly, predictably and freely as possible, the
WTO can assist the efforts of member governments to dialogue with citizens by highlighting the
benefits of open markets and trade rules.  Understanding of the WTO could be further enhanced
through greater transparency in the day-to-day activities of the organization. The Secretariat has
already made considerable efforts in this regard within the guidelines laid down by the Members in
1996.
16. This broad overview of the situation of the WTO, on which details are provided in the body
of this report, points to the following key challenges for the period ahead:
/g167 addressing the issues and concerns on implementation;
/g167 maintaining the momentum of liberalization through the mandated negotiations and guarding
against increased barriers to trade;
/g167 ensuring the full participation of all Members in the WTO, notably the LDCs and other
low-income WTO Members;
/g167 more effectively communicating the nature and ac tivities of the WTO and the benefits of the
multilateral trading system; and
/g167 considering the question of a broader negotiating agenda.
The Secretariat has worked this year to improve the climate and the confidence in which these
challenges are to be met, and will continue to do so in the future.WT/TPR/OV/6
Page 5
II. INTERNATIONAL TRADING ENVIRONMENT
A. ECONOMIC ENVIRONMENT
1. Global economic trends
A healthier world economy in 1999 and 20001
17. The improvement in global economic activity seen in 1999 has continued in 2000, confirming
an unexpectedly rapid and robust recovery from the slowdown of 1997-98.  The IMF expects world
economic growth to reach 4.7% in 2000, up from 3.4% in 1999 and 2.6% in 1998.
18. All regions are participating in the stronger growth "led by the continued strength of the U.S.
economy;  the accelerating upswing in Europe;  the consolidation of the recovery in Asia; and arebound from last year's slowdowns in emerging ma rkets in Latin America and the Middle East and
Europe, aided by respectively a successful adjustment programme in Brazil and higher oil prices".
2
Although the IMF also expects a higher growth rate for Africa in 2000, the rate remains - at 3.4% -below that of other regions.
3  Africa also is stricken by a high incidence of poverty, armed conflict and
natural disasters, in addition to being at  the forefront of the HIV/AIDS epidemic.4  The situation of
many countries in Africa thus continues to be of serious concern to economic policymakers, and at the
forefront of the activities of international organizations, including the WTO (Section III).
19. Growth in North America has remained particul arly high, with the U.S. economy expected to
grow by 5.2% in 2000 and Canada by 4.7%.  Growth of the European Union is expected to accelerate
to 3.4% in 2000 (from 2.4% in 1999), on strengthened business and consumer confidence, as well as
the improved external environment.  Growth in Asia  is expected to be the highest among the regions,
due to the rebound of developing countries hit by the crisis, the recovery in Japan, and the continuedstrong growth performances of China and India.
5  On the assumption of continuity in these economic
trends, the IMF expects the growth rate of the world economy in 2001 to remain close to the level
achieved in 2000.
More significant downside risks20. The IMF notes, however, that "while the overall outlook is encouraging, there are real
significant risks and uncertainties".
6  The first is due to the economic and financial imbalances
identified by the Fund, including the lopsided pattern of growth in the three main currency areas, and
the associated imbalances in their external accounts;  currency misalignments, in particular between
the euro and the U.S. dollar;  and the high level of equity market valuations in the U.S. and othercountries.  If these imbalances unwind in a disorderly manner, there is a risk of a hard landing of the
U.S. economy, adversely impacting on growth pros pects in other regions, mainly through reduced
opportunities to export to the U.S. market.
                                                     
1 Based mainly on IMF (2000a), World Economic Outlook , Washington, D.C., and  IMF (2000b),
World Economic Outlook , September 2000 [Online].  Available at:  http://www.imf.org [31 October 2000].
2 IMF (2000b), p. 1.
3 The IMF has scaled back forecasts for the region as a whole from earlier in the year due to the
adverse terms-of-trade effects of higher oil prices on countries not producing oil (notably LDCs), notinghowever that net oil exporters (e.g., Algeria, Nigeria) have in contrast benefited.
4 Of the 34.2 million adults and children living with HIV/AIDS in the world, 24.5 million (71%) are in
Sub-Saharan Africa (UNAIDS (2000), Report on the global HIV/AIDS epidemic  [Online].  Available at:
http://www.unaids.org/epidemic_update/report/Epi_report.htm [6 September 2000]).
5 Asian Development Bank (2000), Asian Development Outlook 2000  [Online].  Available at:
http://www.adb.org [1 September 2000].  The ADB has scaled back its growth forecasts for the region fromearlier in the year due to the adverse terms-of-trade eff ects of higher oil prices on countries not producing oil.
6 IMF (2000b), p. 6.WT/TPR/OV/6
Page 6
21. Another risk to the growth prospects of the global economy is posed by the continued rise of
oil prices in recent months.  Monetary policy may need to be further tightened to contain inflationary
pressures, noting the impact of oil price developments.  Finally, turbulence in financial markets could
adversely affect growth prospects of emerging markets.  If these risks materialize, the IMF expects
global growth rates to be lower.7
2. Trade developments8
Real trade growth of 5% in 1999
22. For 1999 as a whole, the WTO estimates world trade growth unchanged from 1998, at 5% in
real (volume) terms.  Trade was boosted by the recovery in Asia and the continued high growth of
demand in North America, counterbalancing the imp act on trade of slower growth in Western Europe
in the first half, and declining activity in Latin America as a whole (Chart II.1).
-10-5051015
North America Latin America Transition
EconomiesWestern Europe Africa AsiaChart II.1
Merchandise trade developments by region, 1999
Growth in volume terms (%)
Source : WTO (2000), International Trade Statistics, Report 2000 , Geneva.Exports
Imports
Value of trade up by 3.5%
23. The value of world merchandise trade in 1999 was US$5,470 billion in 1999, up 3.5% from
1998.9  World exports of commercial services rose by 1.5% to US$1,350 billion.
                                                     
7 The IMF's forecasts for world economic growth are based on an average for 2000 of US$26 per
barrel, compared to an average of US$28 for the second and third quarters of 2000.  The IMF has stated thatworld growth could slip to 3.8% in 2001 from the current forecast of 4.2% if oil prices remained US$5 above
the IMF's forecast high (Reuters, 19 October 2000).
8 Based mainly on WTO, FOCUS Newsletter, March-April 2000, and WTO (2000), International
Trade Statistics, Report 2000 ,  Geneva.
9 Figures include goods exchanged between the Member States of the European Union, estimated at
US$1,385 billion in 1999.  If such flows are excluded, th e value of world trade is estimated at US$4,090 billion.WT/TPR/OV/6
Page 7
24. Among the regions, North America was a major factor in the world trade expansion,
accounting for one half of the increase in global imports.  In contrast, imports of Latin America fell,
despite double-digit growth of Mexico, due mainly to the recession-battered economies of Argentina
and Brazil.  In Western Europe, the dollar value of imports and exports stayed about the same in 1999,
while volumes rose by about 4%, a development explained by the declining value of the euro againstthe U.S. dollar.  Led by the sharp decline in the imports of the Russian Federation, a steep plunge was
recorded in the trade of transition economies as a whole.
25. Major commodity price developments were a significant factor in trade performances of other
regions and individual countries in 1999.  The sharp rise in oil prices, which continued in 2000,
compared to much more modest growth or even declines in prices of other commodities.
10  F u e l
exporters thus saw the value of their exports rise sharply;  exports of the Middle East rose by 24% in
1999, the highest rate of increase among all regions, and Africa's exports rose by 9%.  At the sametime, fuel importers saw the value of their imports rise;  higher fuel prices were a factor in the
double-digit import growth of Asia, on top of the rebound in intra-regional trade.
26. The merchandise exports of developing countries rose by 9% in 1999, well above the 3.5%
rate of growth for world trade as a whole, to reac h a higher share of world exports of 27.5%;  least
developed countries also saw their merchandise exports increase faster than world merchandise trade.Exports of developing countries were boosted by the higher value of trade in oil, as well as buoyant
trade in manufactured products.  In the latter group, strong gains were posted by the categories of
office and telecom equipment, automotive products, and chemicals.  In contrast, exports of
agricultural products of developing countries declined by 5%.
27. An outstanding feature of trade developments in 1999 –and more generally, the decade of the
1990s – is the sharp increase in the current account deficit of the United States.  That country's
imports rose by 12.2% to more than $1 trillion, compared to exports of $695 billion, up just 1.9%,
leading to a current account deficit of 3.6% of GDP.
Trade trends to strengthen in 200028. The strengthening of activity in Western Europe and Latin America in the course of 1999,
combined with the continued strong pace of activity in North America and Asia, has raised WTO
estimates for world trade growth in 2000 to 10%, matc hing the best annual trade growth in the 1990s.
The WTO Secretariat has based this scenario on the assumption that downside risks remain contained.
29. Data for the first six months of 2000 indicate that the value of world merchandise trade grew
by 14% (in value terms), four times faster than in 1999.  Oil exporting countries achieved above
average growth due to the continued rise of oil prices, which edged above US$30 per barrel on thespot markets in the second quarter.  Asia's imports and exports rose by about one quarter.  China's
trade expanded by more than one third.  In the first six months of 2000, imports of the five Asian
developing countries most affected by the financial crisis 1997/98 again exceeded their pre-crisis
level.  United States imports rose by 21% while exports increased by 14% contributing to a current
account deficit of US$208 billion;  if sustained, the annualized deficit would be a record 4.5% ofGDP.  Western Europe's exports and imports rose in dollar terms by 4% and 6%, respectively.  Latin
America's imports recovered and exports rose by about 20%.
30. Price developments for major commodities in world trade again diverged sharply, with the
average oil price up 90% in the first half of 2000, compared to a 5% rise in average non-fuel
commodity prices.
                                                     
10 International Energy Agency, "Highlights of the Current Oil Market Report", 11 September 2000
[Online].  Available at:  http://www.iea.org [15 September 2000].WT/TPR/OV/6
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B. WTO A CTIVITIES
1. Activities related to the multilateral agreements11
Full schedule of meetings in the WTO
31. WTO Members are engaged on a daily basis in regular meetings of the various Councils and
Committees, established under the multilateral agreements, and directed towards monitoring and
compliance.  These notably concern the receipt and examination of regular and periodic notifications
by Members of policy instruments covered by the agreements12, regional trade agreements, and
balance-of-payments measures, as well as the periodic review of the agreements as required.  WTO
Members also participate in the various Committees es tablished to consider issues such as trade and
development or trade and the environment.  Working groups have also been established to examine
the relationship between trade and investment, the interaction between trade and competition policy,
as well as transparency in government procurement.  Additional activities by WTO Members include
the monitoring of trade policy regimes in the Trade Policy Review Body, and dispute settlement in the
Dispute Settlement Body.  Annual reports on these activities are submitted by WTO bodies to the
General Council for review.13
Steps taken on internal transparency and the effective participation of WTO Members14
32. Following up on concerns over transparency and process that emerged around the Third
Ministerial, the Chairman of the General Council and the Director-General began early in the year a
series of consultations with Members on possible improvements in procedures and practices.
Numerous contributions were received from members in the course of these consultations.  It becameclear that Members in general see no need for radical reform of the WTO, that they firmly support the
practice of reaching decisions by consensus, and that informal consultations continue to be a useful
tool provided that certain improvements regarding inclusiveness and transparency are applied.
33. On 17 July, the Chairman provided Members with a progress report which emphasized the
general recognition that significant improvements in the consultative processes have taken place in thefirst half of the year 2000.  The Chairman emphasized that while such tangible progress on internal
transparency was important the full membership has a collective responsibility to keep this issue
under close scrutiny as the organization moves forward on the substantive agenda.
34. From the outset of the debate on internal transparency the Director-General also instructed the
WTO Secretariat to find immediate practical ways in which to improve and speed up the information
flow to Members, including the Members who do not have representatives resident in Geneva.
                                                     
11 Based mainly on WTO (2000), Annual Report 2000 , Geneva;  and "WTO Highlights January –
August 2000" [Online].  Available at:  http://www.wto.org [1 September 2000].
12 For the notifications required by the multilateral agreements on goods, see G/L/223/Rev.4 of
10 March 2000 and by the GATS, see S/L/5 of 4 April 1995.
13 WT/L/105.  See WT/GC/M/50 for the review of WTO activities in 1999.
14 WTO News:  2000 News Items, "Internal Transparency and the effective participation of Members"
[Online].  Available at:  http://www.wto.org [31 October 2000].WT/TPR/OV/6
Page 9
Implementation concerns addressed
35. All WTO Members are bound to observe the multilateral agreements concluded in the
Uruguay Round and to implement, if applicable, post-Uruguay Round commitments on basic
telecommunications and financial services.  Certain Members have, however, identified difficulties ofimplementation in connection with the end of transition periods on 31 December 1999 for developing
and transition economies
15;  certain transition periods for LDCs are still in effect.  Extensions were
requested by certain Members notably with respect to the TRIMs and Customs Valuation
Agreements.16  WTO Members are considering the requests for extensions to TRIMs transition
periods within a framework established by the General Council at its meeting of 3 and 8 May 2000.17
36. A wide range of other implementation-related issues and concerns has also been put forward.
These are being considered by the General Council in the Implementation Review Mechanismestablished for the purpose, which has met twice in Special Sessions.
18  This activity has been
identified by Members, especially developing countries, as a priority area for the WTO's attention.  At
the Special Session held on 17 October the General Council Chairman and the Director-General
reported in detail on the progress made in consultations so far.  These had focused primarily on
possibilities for action in the shorter term.
Mandated negotiations start on schedule, and discussions continue on a broader agenda
37. The mandated negotiations on agriculture and services started in 2000.  The negotiations
under Article 20 of the Agreement on Agriculture are to continue the reform process set out in the
agreement, which brought into the multilateral rules,  largely for the first time, the policy instruments
used by many WTO Members to support domestic agricultural producers.  In addition to their effects
on domestic consumers and producers, these support policies have spillover effects on world markets
and on the export opportunities of trade partners, many of which are developing countries
(Section II(C)(1)).  The transition period to full im plementation of current commitments in the sector
is the year 2000 for developed countries (2004 for developing countries).  The tabling of proposals isto take place by December 2000 (with some flexibility for refined or additional proposal up to
March 2001) and a stock-taking exercise is to be held in a Special Session of the Committee on
Agriculture in March 2001.
38. On services, the negotiations are to address further rule-making and to "achieve a
progressively higher level of liberalization" (GATS Article XIX), building on the market-access
                                                     
15 A number of WTO agreements include clauses providing for transition periods ending on
1 January 2000 for developing countries and transition economies to full implementation of certain provisions,notably with respect to intellectual property protection, the elimination of trade-related investment measures
(measures that depart from the GATT national treatment obligation, such as local-content requirements),
methods of customs valuation, the prohibition on subsidies contingent on the use of domestic over importedgoods;  other transition periods apply to export subsidy disciplines.
16 Argentina, Chile, Colombia, Malaysia, Mexico, Pakistan, Philippines, Romania, and Thailand
requested extensions to the five-year transition period under the TRIMs Agreement.  Certain Members haverequested extensions to the Committee on Customs Valuation;  of the 45 Members that were due to implement
from 1 January to August 2000, the Committee has agreed to 13 requests for extensions of the delay period and
four additional requests are pending.
17 See also "India - Measures Affecting the Au tomotive Sector", complaint by the European
Communities (WT/DS146/1);  "Philippines – Measures Aff ecting Trade and Investment in the Motor Vehicle
Sector", complaint by the United States (WT/DS195/1); "Brazil – Certain Automotive Investment Measures",complaint by Japan (WT/DS51);  "Brazil – Certain Measures Affecting Trade and Investment in the Automotive
Sector", complaints by the United States (WT/DS52 an d WT/DS65);  "Brazil – Measures Affecting Trade and
Investment in the Automotive Sector", complaint by the European Communities (WT/DS81/1).  Dispute settlementprocedures have been completed in "Indonesia – Certain Measures Affecting the Automobile Industry", complaintsby Japan (WT/DS55),  the European Communities (WT/DS54), and the United States (WT/DS59).
18 WTO Press Release 184/2000.WT/TPR/OV/6
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commitments already contained in the schedules.  It should be recalled that the services sector – the
leading sector of economic activity in many WTO Members – was brought into the multilateral rules
for the first time in the Uruguay Round, and additional substantial agreements were reached in 1997
on telecommunications and financial services.  In 2000, to date, WTO Members have agreed on a
'roadmap' for the first phase of negotiations and that the second phase of these negotiations wouldbegin with a stock-taking exercise by a Special Session of the GATS Council in March 2001, to
consider progress made and how to move forward.
39. While the mandated negotiations got under way in 2000, WTO Members continued to discuss
at the political level a wider agenda of negotiations, to address other outstanding market access
barriers (Section II(C)) or extend the framework of the multilateral rules to new areas.  In the latter
case, proponents view the stakes as being the relevance of the WTO as the main framework of rules
for the conduct of international economic relations, notably with respect to competition policy and
investment matters.  In addition, certain Members ar e of the view that securing a wider agenda for
negotiation will have an impact on the final outcome of those mandated on agriculture and services by
expanding the scope for mutually beneficial trade-offs.  Other Members, however, continue to have
doubts on whether it is appropriate to consider launching a new round of negotiations in the presence
of implementation issues and concerns related to the Uruguay Round.
Technical assistance activities and training remain vital
19
40. A very substantial increase in the technical assistance and cooperation activities of the
Secretariat took place in 1999 in response to the requests received.  The number of such activities was
382 in 1999, up by 24% over 1998.  Activities covered 127 countries, including most WTO Members(100), countries and territories in accession (20), and countries that have expressed an interest in
joining the WTO (7);  a large number of least developed countries were covered (27).
41. Technical assistance activities aim to improve the understanding of the agreements and
facilitate implementation of obligations;  at the same time, emphasis is increasingly being placed on
enhancing the capacity of countries to integrate into the world economy to realize the benefits of themarket access opportunities that are available to them as a result of being WTO Members.  Despite
their vital nature, technical assistance and cooperation activities in 1999 and 2000 have been sustained
only by the generous extra-budgetary voluntary dona tions of certain WTO Members, given that the
regular budget for such activities has remained inadequate to respond to needs, funding just 10% of
activities in 1999.
20  Increased funding for technical assistance in the core budget of the WTO is one
way of creating a more permanent basis for such activities.21
42. Least developed countries have been a major focus of WTO technical assistance and
cooperation activities, since resource constraints weigh most heavily on their ability to participate in
the multilateral trading system.22  In addition to its own activities on behalf of this group, the WTO
participates in activities organized by other institutions, and cooperates with some of them on joint
projects or programmes, notably the Joint Integrated Technical Cooperation Programme (JITAP) for
Selected Least Developed Countries and other African Countries (WTO, UNCTAD and ITCSecretariats), and the Integrated Framework (IF) of technical cooperation for least developed
                                                     
19 WT/COMTD/8 contains the guidelines, WT/COMTD/W/70 contains a report on technical
cooperation and assistance activities, and WT/COMTD/W/68 reports on training.
20 Donations have been disbursed by some 25 WTO Members since 1995, totalling over
CHF 31 million.  For major pledges in 2000, see WTO Press Releases 188/2000, 162/2000, 164/2000,168/2000, 186(Rev.1)/2000, 188/2000 and 192/2000.
21 A proposal for additional funding through the regular budget of the amount of CHF 10 million over a
three-year period is under consideration by the Budget Committee in the framework of the budget for 2001.
22 Another aspect of the WTO activities on behalf of LDCs is the pledge by WTO Members to remove
virtually all the outstanding barriers to market acces s, to extend the opportunity for export-led growth
(Section III).WT/TPR/OV/6
Page 11
countries (WTO, ITC, UNCTAD, World Bank, IMF, UNDP).  In 2000, the IF was independently
reviewed, and lead agencies decided on steps to improve the delivery of trade-related technical
assistance, including by establishing a trust fund, which now needs donor support (Section III).
43. In addition to materials, seminars, workshops, technical missions, and courses on trade policy,
as well as regular briefings, the Secretariat has been very active in establishing WTO ReferenceCentres, supported by donations from WTO Members.
23  Such centres provide access to trade-related
information resources on the Internet, notably those developed by the WTO, as well as PC-based
resources;  they play a vital role in linking tr ade ministries in remote capitals to Geneva.  By
October 2000, the Secretariat had set up 90 centres, up from 68 at the end of 1999 and 42 at the end of
1998.  The majority of such centres are in Africa.  Unfortunately, not all the centres have remained
fully operational (an estimated 65% is operational).
2. Dispute settlement24
A heavy case-load for the system
44. In 2000, the number of complaints filed since the start of the WTO topped 200, indicating a
continued heavy use of the dispute settlement procedures by WTO Members.  The complaints concern
allegations of inconsistency with WTO obligations, mainly with regard to the use of trade defenceinstruments (anti-dumping, countervailing and safeguard measures), taxes on imported and domestic
like products, subsidies, automotive investment regimes, product regulations, protection for patents or
copyright, and market access for foreign service suppl iers.  The measures at issue in some complaints
have been recently introduced, while others are part of legislation or regimes that have been in place
for decades.
45. Developed countries filed about three quarters of the complaints under the Dispute Settlement
Understanding (DSU), and were the respondent in the same share of complaints.  Developing
countries filed the remaining one quarter of complaints, against developed countries in over 50% of
complaints and the rest against other developing countries.
25  The United States and the European
Union are the most frequent complainants to the WTO, and in a number of instances, complaintsconcern a measure maintained by the other, confirming the important role of the WTO in resolving
conflicts in the transatlantic relationship.
                                                     
23 The WTO Reference Centres are available to LDCs and small island developing countries on a
'supply-driven' basis, according to which the WTO is the source of the equipment, software and training, as well
as advising the local authorities on Internet access.  For other developing countries or entities, the WTO
provides training and its materials only.  The WTO Reference Centre programme is supported by donationsfrom Hong Kong, China;  the Netherlands;  Norway;  Poland;  Sweden;  and the United States.
24 WTO (ongoing), "Overview of the State-of-play of WTO Disputes" [Online].  Available at:
http://www.wto.org [31 October 2000].
25 To overcome human and financial resource constraints that limit the participation of developing
countries in the dispute settlement procedures, legal assistance is made available by the Technical Cooperation
Division of the WTO Secretariat.  A new development in 1999 is the establishment, in parallel with the ThirdMinisterial Conference of the WTO in Seattle, of the Advisory Centre on WTO Law (http://www.itd.org) toprovide training and legal advice in WTO matters to its developing country Members and all least developedcountries.  The Centre is expected to be fully operational in 2001.WT/TPR/OV/6
Page 12
Satisfactory settlement is generally the outcome, but retaliation is being used
46. Roughly three quarters of complaints do not proceed beyond consultations to the panel stage,
indicating that a satisfactory adjustment of the matter obtains at an early stage of the WTO
procedures, just as was the case under GATT 1947.26  For those complaints that proceed to the panel
stage and on which panel reports are issued, most rulings are the subject of appeal to the Appellate
Body;  37 such appeals have been filed since the start of the WTO.
47. When complaints have completed the panel and Appellate Body process, the record on
prompt compliance with the recommendations or ru lings of the Dispute Se ttlement Body (DSB) is
good.  When such recommendations or rulings call for the respondent WTO Member to remove or
modify the measure in dispute, such action is not liberalization as such – given the measure's status of
incompatibility with the WTO agreements – but effective market-opening sometimes obtains becausethe measures have been in place for years or even decades.  The WTO's dispute settlement system is
thus, by and large, successfully attaining the stated objective of preserving the rights and obligations
of WTO Members, and thereby playing a key role in ensuring the integrity of the process of
multilateral negotiation, agreement, and implementation, which contributes to the process of trade
reform.
48. However, certain complaints that have completed the panel and Appellate Body process, and
where action to implement was required of the respondent WTO Member, have yet to result in an
effective resolution of the dispute.  Eight requests for review under Article 21:5 of the DSU have been
filed with the DSB because the complainant disagrees with the actions taken by the respondent to
implement rulings and recommendations.  In such instances, the matter is referred to the original
panel, which issues a report;  four such reports have been issued to date.  These may in turn be the
subject of an appeal;  two such appeals have been filed with the Appellate Body since 1995.
49. Article 22 of the DSU makes retaliation the last resort in the WTO system of dispute
settlement, within a carefully circumscribed framework for the exercise of this instrument of trade
diplomacy.  In the event a Member fails to implement the DSB's rulings and recommendations withina reasonable period of time, negotiations to agree mutually satisfactory compensation is the preferred
remedy available to the complainant.  Failing such agreement, the complainant may then request
authorization from the DSB for the suspension of concessions or other obligations, which is granted
unless the DSB decides by consensus to reject the request.  Such suspension is, however, subject to
rules to ensure that its level is not excessive, and arbitration is available to this end.  Finally, the
suspension is conceived as a temporary measure, in place only for as long as implementation is
outstanding or a mutually satisfactory solution is not found.
50. Five instances of recourse to Article 22 of the DSU have been made, leading to authorization
by the DSB of four instances of retaliation:  in the matter of the EC's ban on hormone-treated beef,
Canada and the United States have both retaliated by raising duties on imports from the EC;  in the
matter of the EC's regime for bananas, retaliation was requested by and authorized for the
United States and Ecuador, and has been carried out by the United States.
27
                                                     
26 Although Article 3:6 of the Dispute Settlement Understanding (DSU) states that "mutually agreed
solutions to matters formally raised under the consultation and dispute settlement provisions of the coveredagreements shall be notified", notifications of outcomes have not been made in a portion of complaints that havenot proceeded to the panel stage, indicating apparently dormant status.
27 In "European Communities – Measures Affecting Meat and Meat Products" (WT/DS26 and 48), the
United States was authorized to suspend tariff concessions on products of a value of US$116.8 million, and
Canada was authorized to suspend tariff conce ssions on products of a value of C $11.3 million.
In "European Communities – Regime for the Importation, Sale and Distribution of Bananas"
(WT/DS27), the DSB authorized the United States to su spend tariff concessions on products of a value of
US$191.2 million, and Ecuador was authorized to suspend TRIPS obligations of the value of US$201.6 million.WT/TPR/OV/6
Page 13
51. WTO Members need to fully consider the implications of the use of retaliation.  The first is
that it is the consumers of the retaliating  country that bear the cost of higher duties on the products
concerned or their unavailability.  The second is that the economic impact goes well beyond the
directly concerned producers, trading firms, distributors, with repercussion effects on all the links in
the chain of production, trade, and distribution, and th e workers that each link employs.  Finally, with
respect to the WTO Members involved, retaliation is a sign that alternative methods of resolving the
dispute have failed.  The multilateral trading system prospers by opening channels of trade, and WTO
Members, prior to seeking authorization to retaliate, have the responsibility to explore to the utmost of
their ability the available alternatives, such as compensation, which create rather than limit trade.
3. Accessions
52. A vote of confidence in the WTO is the growing number of Members, which rose to 140 in
November 2000.28  Jordan, Georgia, Albania, Oman and Croatia acceded in 2000 (in chronological
order), bringing to 12 the number of Members that have acceded to the WTO since 1995.29  Lithuania
is also set to join the WTO.
53. Two new accession working parties were established in 2000, for Cape Verde and Yemen.
The other 26 working parties in process are those for:  Algeria, Andorra, Armenia, Azerbaijan,
Belarus, Bhutan, Bosnia-Herzegovina, Cambodia, China, Former Yugoslav Republic of Macedonia,
Kazakhstan, Laos, Lebanon, Moldova, Nepal, Russ ian Federation, Samoa, Saudi Arabia, Seychelles,
Sudan, Chinese Taipei, Tonga, Ukraine, Uzbekistan, Vanuatu, and Vietnam.  China entered the final
stage of the working party process in 2000, and a number of other accession processes advanced.
54. Each accession has the same 'win-win' quality for the WTO.  The acceding party operates a
more transparent and predictable trade regime, by assuming WTO obligations on goods, services, andintellectual property protection (possibly with transitional periods to full implementation).  It opens its
markets for goods and services to its trading partners, and thus locks-in reforms and gains the benefit
of more competitively-priced imports.  In turn, the new WTO Member gains the right to similar rights
and terms of access on the markets of other WTO Members.  These commitments are enforced – on
both sides – by dispute settlement.  Domestic reform and integration into the world economy thus gohand-in-hand to strengthen growth and investment prospects of the acceding country, and of WTO
Members.
55. Although each accession is significant in its own right, both for the new WTO Member
concerned and the organization, there is no doubt that China's decision to join the WTO is particularly
                                                                                                                                                                    
Section 407 of the U.S. Trade and Development Act of 2000 amends Section 306 of the Trade Act of
1974 to provide for the mandatory revision of the products on the retaliation list, in whole or in part, every
180 days.  The USTR initiated the process of revision on 26 May 2000 for the retaliation lists affecting productsof the European Union in connection with the beef and bananas cases, respectively, with the goal of announcingmodifications on 19 June 2000 (USTR Press Release 00-41).  The European Union has initiated a disputesettlement proceeding on the matter in "United States – Section 306 of the Trade Act of 1974 and AmendmentsThereto" (WT/DS200/1).
An outstanding matter under Article 22:2 is "Brazil – Export Financing Programme for Aircraft"
(WT/DS46), where the arbitrator found that a suspension  by Canada of the application of WTO obligations to
Brazil covering trade in a maximum amount of C$344.2 million was appropriate.
A matter in which the EC has stated that it may request authorization to suspend concessions or other
obligations under Article 22:2 is its complaint on "United States – Tax Treatment for "Foreign Sales Corporations"(WT/DS108).  The parties notified the WTO of an agreement on the follow-up to the panel and Appellate Body
reports adopted by the DSB (WT/DS108/12).  The European Commission has stated its intention to publish a
sanctions list on 17 November 2000.
28 As one headline put it, "Nations queue to join maligned world trade body", Reuters, 17 July 2000.
29 Ecuador and Bulgaria acceded in 1996;  Mongolia and Panama acceded in 1997;  the Kyrgyz
Republic acceded in 1998;  and Latvia and Estonia acceded in 1999.WT/TPR/OV/6
Page 14
momentous.  Opening its markets to foreign trade and investment will make China more prosperous,
and committing China to world-trade rules will foster and consolidate market-based reforms.  WTO
Members stand to gain by better access to an economy of 1.3 billion consumers, which is growing at
an average of 8% a year.  The significance of these benefits – both for China and for WTO Members
– explain the efforts that are being made on all sides to bring to a conclusion the accession process.
56. Each accession follows the same pattern (Box II .1), starting with the submission of a request
to the WTO and culminating with the General Council's adoption of a decision approving the
accession, followed by domestic ratification.  The pace of the accession process depends mainly on
the state of readiness of the trade regime and the need to conclude bilateral negotiations with WTO
Members, at their request.  The Kyrgyz Republic, which joined the WTO in 1998, conducted the
speediest accession to date, concluding in 2 years and 4 months, closely followed by Ecuador at
2 years and 8 months.30  In contrast, China's accession process has been the longest to date, spanning
both the WTO and GATT 1947.  WTO Members have from time to time considered the time and
effort required to complete the process of accession as an issue, notably for LDCs, of which nine are
in the process of accession.31
Box II.1:  Steps to acceding to the WTO
In accordance with the vocation of the WTO to have a global reach in its membership, the WTO Agreement
invites applications from interested governments.  According to Article XII of the Marrakesh Agreement
Establishing the World Trade Organization (WTO Ag reement), a government may accede to the Agreement
"on terms to be agreed between it and the WTO".
All accessions begin with a letter from the requesting government addressed to the Director-General.  The
item is then placed on the agenda of the WTO General Council for action, which generally establishes a"working party", composed of representatives of Me mbers, to examine the application.  The applicant
generally obtains observer status in the WTO to become familiar with its activities.
The applicant submits a Memorandum on its Foreign Tr ade Regime in one of the three official languages
(English, French or Spanish), describing in detail the regime (including copies of relevant legislation) andproviding data.  Questions may then be submitted by Members, to which the applicant is invited to respond,to establish a basis for dialogue on the regime and its conformity with WTO obligations, with a view toensuring a good match.  Technical assistance may be requested from the Secretariat or may be provided byindividual Members.
When the examination of the foreign trade regime is sufficiently advanced, members of the working party
may initiate bilateral market access negotiations on goods and services and on the other terms to be agreed.At their successful conclusion, the results of the negotia tions are reflected in the schedules appended to the
draft Protocol of Accession.  The market-opening commitments of acceding WTO Members, althoughnegotiated on a bilateral basis with individual WTO Members at their request, apply to all other WTO
Members through the application of the most-favoured-nation clause.
The working party concludes its activity by submitting a report to the WTO General Council, a draft
Protocol of Accession and a draft Decision.  Such a decision on accession is, in practice, approved by
consensus.  The accession takes effect 30 days after domestic ratification by the applicant.
Source: WT/ACC/1, 4, 5, 8 and 9.  For a comprehensive overview of the accession process in practice, see 
WT/ACC/7/Rev.1.
                                                     
30 WT/ACC/7/Rev.2, Table 1, p. 10.
31 Bhutan, Cambodia, Cape Verde, Laos, Nepal, Samoa, Sudan, Vanuatu, and Yemen.WT/TPR/OV/6
Page 15
4. Transparency and outreach
(a) Transparency
57. Since the establishment of the WTO in 1995, the WTO Members and the Secretariat have
taken a number of steps to improve the exchange of information about the nature and goals of the
organization.32  For its part, the Secretariat has greatly expanded the human resources devoted to
information and outreach activities.  Regular press briefings are held, a publications service and the
WTO web-site (http://www.wto.org) are maintained, information products are developed, and
responses are given to the many requests for information on the WTO received each day.  In
particular, the WTO web-site receives an average of 200,000 visitors each month, from 145 countries,
at last count.
58. In addition to obtaining information on the WTO, the web-site gives open access (without
charge) to the Document Dissemination Facility (DDF), containing virtually all public WTOdocuments.
33  According to the current policy, established in 1996, a presumption of public
circulation status applies to notifications by Members, unless a restricted status is requested, and
documents related to the regular activities of the WTO are circulated to the public after six months or
when the activity has been completed.34  Although not formally articulated as such, the policy on
document availability adopted by the WTO Members appears to rely on the twin foundations of(a) the domestic transparency requirements of WTO Members for measures covered by the
multilateral agreements;  and (b) confidentiality fo r the jointly undertaken activities of the WTO
Members until the activity is completed in accordance with the traditions of diplomacy.
59. Of the some 5,500 WTO documents issued in 1999, this policy resulted in 62% being made
available immediately to the public.  Of the remainder, half were circulated within six months, and therest remained restricted mainly because the activity  (e.g., accession) was still in process.  Over the
years, this policy has led to the cumulative release to the public of 99.6% of WTO documents, which
is a good record on transparency.
60. In 2000, WTO Members have been conferring on improvements that could be made to
accelerate public availability of documents of particular interest to citizens, such as minutes ofmeetings of WTO bodies and panel reports.
35  One obstacle is technical – WTO documents are in
principle issued simultaneously in the three official languages (English, French and Spanish),
requiring time to translate the original document.  With respect to improvements to the general policy
on public availability, differences of view remain among the Members, mainly because the benefits to
quicker derestriction are weighed differently.  While some Members see instant public availability of
documents as not detracting from the efficiency of the WTO as an organization, others are more
cautious, and see confidentiality for the time required to complete the activity as promotingdeliberation and fruitful dialogue.
61. There is no doubt that greater transparency of documents and of WTO activities could dispel
myths that have no legitimate reason to exist.
36  However, transparency alone may not suffice to
                                                     
32 An informal consultation on questions of External Transparency was held in November by the
General Council Chairman, based on submissions from Members.
33 An important exception are the Trade Policy Reviews of Members (WT/TPR/- series), protected by
copyright and distributed to the public in book form and on CD-ROM by the publisher.
34 WT/L/160/Rev.1.
35 Paragraph 7 of WT/L/160/Rev.1 provided that: "In the light of the experience gained from the
operation of these procedures and changes in any othe r relevant procedures under the WTO, the General
Council will review, and if necessary modify, the procedures two years after their adoption."
36 The IMF and World Bank have also been encouraged to expand disclosure and have responded to
this end.  In August 2000, the IMF approved a new publications policy to enhance transparency, which is to bearticulated in a policy statement and reviewed at the end of 2001 (IMF, Public Information Notice 00/81WT/TPR/OV/6
Page 16
communicate effectively the content of the WTO agreements and the substance of the organization's
activities, mainly because of their complexity.  Developing information products appropriate to meet
the different requirements of citizens is a priority for the WTO.  This objective is of particular
importance to enable producers to take full advantage of the new trading opportunities made available
by market-opening agreements.37
(b) Outreach to civil society
62. Outreach has also been an important activity of WTO Members and the Secretariat.  The
public has access to WTO headquarters in Geneva, and the Secretariat handles a large number of
visits;  121 groups visited the WTO Secretariat in the first nine months of 2000.  The Secretariat has
organized symposia on various issues of particular concern to segments of the NGO community,
maintains an "NGO Room" on the WTO web-site, receives material from NGOs and keeps WTO
Members informed thereof.38  The Director-General, his deputies and staff members frequently meet
with representatives of civil society.  In 2000, activity has focused on outreach to – in addition to
NGOs – parliamentarians, universities and other research centres, and representatives from
transnational parliamentary groups.
63. In October 2000, an on-line Forum on "Trade and Sustainable Development" was sponsored
by the WTO and the World Bank.  The forum is the first initiative of the WTO Network, which linksthe WTO with universities and research centres to build and disseminate knowledge on international
trade issues.  Several of these participating institutions contribute to a World Bank project on building
a trade negotiating agenda for developing countries.  The first two weeks of the forum focused on
"effects of trade on poverty"; and the final two w eeks on "how to ensure that trade and environment
are mutually supportive".
64. The current policy on NGO participation in the WTO, established in 1996, recognizes that
NGOs are "a valuable resource, [which] can contribute to the accuracy and richness of the public
debate", but "there is currently a broadly held view that it would not be possible for NGOs to be
directly involved in the work of the WTO or its meetings"
39, mainly as a result of the
intergovernmental character of the WTO and the prerogative of Member governments to channel tothe WTO the results of consultations with domestic constituencies.  NGOs may observe Ministerial
Meetings, and registration has risen sharply – from 108 NGOs at the first meeting in Singapore in
1996, to 128 NGOs in Geneva in 1998, and 686 NGOs in Seattle in 1999.
40
                                                                                                                                                                    
[Online].  Available at:  http://www.imf.org [1 October 2000]).  The World Bank launched in September 2000 a
public consultation on proposed revisions to its disclosure policy ("World Bank Policy on InformationDisclosure" [Online].  Available at:  http://www.worldbank.org [1 October 2000]).
37 For example, the UNCTAD/WTO International Trade Centre (ITC/CCI) requested the views of more
than 600 businesspeople on the WTO Agreements on information technology products and found that thesewere either unknown or poorly understood.  CCI (2000), Le Forum du commerce international , 1/2000.
38 For details see http://www.wto.org/english/forums_e/ngo_e/pospap_e.htm.
39 WT/L/162.
40 The procedures regarding the attendance of NGOs are:  (i) NGOs are allowed to attend only the
Plenary Sessions of the Conference (without the right to speak);  (ii) applications from NGOs are to be
registered and are to be accepted on the basis of Article  V, paragraph 2 of the WTO Agreement, i.e. such NGOs
"concerned with matters related to those of the WTO";  and (iii) a deadline is to be established for theregistration of NGOs that wish to attend the Conference.   For the procedures on IGOs and NGOs for Seattle, see
WT/GC/M/40/Add.3.WT/TPR/OV/6
Page 17
(c) Outreach to international intergovernmental organizations (IGOs)
65. Outreach also concerns relations with other international intergovernmental organizations.41
A formal policy on such relations was established in 1995 for the IMF and the World Bank, as
provided for in their respective agreements with the WTO.  The basis is the 'coherence' mandate,
which requires closer cooperation between the multilateral institutions with key roles in theformulation and implementation of different elements of the global economic policy framework.  In
addition to the IMF and World Bank, observer status in the General Council also applies to the United
Nations, UNCTAD, FAO, WIPO and OECD.  WTO Members have been conferring for some time on
the IGOs to be granted observer status in the General Council and other WTO bodies.
66. Regarding outreach to other IGOs, many of which have expressed an interest in the WTO and
its activities, arrangements were made for IGOs to observe Ministerial Meetings.
42  This opportunity
was taken up by 42 IGOs at the first meeting in Singapore in 1996, by 40 IGOs in Geneva in 1998,and by 50 IGOs in Seattle in 1999.
C. T
RADE POLICY TRENDS IN WTO M EMBERS43
1. Market access conditions for goods in selected markets
(a) Trade links
67. WTO Members accounted for just under 90% of world merchandise trade in 1999.44
Significant traders still outside the multilateral trading system, but in the process of accession to the
WTO, include China, Chinese Taipei, the Russian Federation, and Saudi Arabia.  Among WTO
Members, the Quad – Canada, European Union, Japan and United States – accounts for just over half
of world merchandise trade.  In addition to substa ntial two-way trade links between each other, their
markets continue to be the main destination for the exports of most developing countries andtransition economies.  Trade between developing c ountries has been growing in importance, however,
especially between partners in regional trade agreements, such as MERCOSUR, ASEAN or SADC.
(b) Tariff policies
68. Average applied tariffs of WTO Members vary widely:  with countries having higher per
capita incomes tend to maintain, on balance, lowe r tariffs, to the benefit of their consumers and
producers (Chart II.2).
                                                     
41 Article V, paragraph 1 of the Marrakesh Agreement Establishing the World Trade Organization
provides that the General Council shall make appropriate arrangements for effective cooperation with other
intergovernmental organizations that have responsibilities related to those of the WTO.  Annex 3 to the GeneralCouncil’s rules of procedure provides further guidance on relations with other intergovernmental organizations,specifically in respect to observer status.  Paragraph 4 of that Annex suggests that the main factors to be
considered in granting observer status to other intergovernmental organizations are: the nature of work of the
organization concerned, the nature of its membersh ip, the number of WTO Members in the organization,
reciprocity with respect to access to proceedings, documen ts and other aspects of observership, and whether the
organization has been associated in the past with the work of the CONTRACTING PARTIES to GATT 1947.
42 The procedures on participation of IGOs are the same as for NGOs.
43 Based mainly on the information contained in Trade Policy Review documents (WT/TPR/G/, S/, M/)
circulated between July 1999 and October 2000 for the re views of Israel (58), the Philippines (59), Romania
(60), Nicaragua (61), Papua New Guinea (62), Thailand (63), Kenya (64), Iceland (65), Tanzania (66),Singapore (67), Bangladesh (68), Peru (69), Norway (70), Poland (71), the European Union (72), Republic ofKorea (73), Bahrain (74), Brazil (75), and Japan (76).
44 Excluding flows between Member States of the European Union.WT/TPR/OV/6
Page 18
05101520253035
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000Chart II.2
Simple average MFN tariff and GDP per capita for selected countries, 1999
Source : WTO Secretariat; IMF, IFS, June 2000.Tariff (%)
GDP per capita (US$)EGY
BGD
THA
HUNCAMKEN , MDG and 
TZN
KOR PERGHA
PHLMOZ
BHRISR
CAN
JAP
SGPISLUSANORCHEBRA
EU(15)BFA
ROM
IDN
PNG
NIC
AUSPOL
69. Since the establishment of the WTO in 1995, tariff liberalization has proceeded through the
implementation of Uruguay Round commitments, plus subsequent liberalization initiatives, notably
on information technology products, as well as through autonomous action.  Trends in applied tariffs
over time are difficult to determine, however, because WTO Members often assess tariffs on
agricultural products in specific terms (i.e. volume, weight, physical content), whose ad valorem
equivalents depend on commodity price trends, as well as the implementation of commitments.
70. In addition to the levels of applied tariffs, a key aspect of tariff policy is the degree of
predictability in the tariff regime.  Experience has shown that the economic benefits associated with
an open trade regime are more readily available if economic operators have confidence that policy
reversals are contained.  An anchor is provided by the commitment to bind tariffs in the WTO.  This
was required of WTO Members for tariffs on agricultural products, but the extent to which countries
made use of this opportunity on other products varied widely, including with respect to the gapbetween applied and bound rates.  Greater predictability could be assured by achieving a more
comprehensive coverage of bindings and bringing bound rates down to applied rates.
71. In this regard, the situation of WTO Members on which up-to-date information is available
through Trade Policy Reviews is:
− all items are bound for the European Union, Norway, and Switzerland-Liechtenstein, and
close to comprehensive coverage applies to Canada (24 items unbound), Iceland (6% of linesunbound), Japan (99 items unbound), and the United States (2 items unbound), and levels of
applied tariffs are at or close to bound levels;
− Brazil, Nicaragua, Papua New Guinea, Peru, and Romania have a comprehensive coverage of
bindings at ceiling rates, higher than levels currently applied;
− Bahrain, Israel, Republic of Korea, Philippine s, Poland, Singapore, and Thailand have a
less-than comprehensive coverage of bindings;
− Bangladesh, Kenya, and Tanzania have a low coverage of bindings.WT/TPR/OV/6
Page 19
72. Most newly acceding countries to the WTO have made significant efforts to achieve a
comprehensive scope of bindings and lock-in tariff liberalization.  Ecuador, Mongolia, Bulgaria,
Panama, Kyrgyz Republic, Latvia, and Estonia, which acceded between 1996 and 1999, bound
virtually lines, and the new Members of the WTO in 2000 – Jordan, Georgia, Albania, Oman andCroatia – have also each pledged comprehensive bindings.
45  The average levels at which tariffs were
bound were in double-digits for agricultural products, ranging from a high of 34.9% for Bulgaria to
10.6% for Albania.  Average bound levels were much lower for non-agricultural products, ranging
from a high of 20.1% for Ecuador to a low of 5% for Croatia.
73. Another key aspect of tariff policy is the extent of dispersion across sectors (notably 'peaks')
or by degree of processing, which affects resource allocation, as well as the transparency and scope
for rent-seeking in the tariff regime.  Among the Quad, tariffs well above the average continue toprotect a number of industries from imports, and tariff escalation is evident in a number of sectors.  In
Japan, tariff peaks affect footwear and headgear, and in Canada, the European Union, and the
United States, tariff peaks affect the textiles and clothing sector, on which quotas also apply (see
below).  Tariffs on agricultural products are generally substantially higher than on other products
(Table II.1), notably on temperate-zone products, and subsidies are an additional distortion affectingmarket access conditions in the sector (see below).
Table II.1
Simple average tariffs of Canada, the European Union, Japan, and the United States
(per cent)
CanadacEuropean UniondJapancUnited Statesd
Total 7.2 6.9 6.5 5.7
WTO agriculturea22.9 17.3 18.2 11.0
WTO non-agricultureb4.4 4.5 4.0 4.7
Petroleum 2.6 2.9 6.5 2.3
a Annex 1 of the WTO Agreement on Agriculture defines the scope of agriculture as HS Chapters 01 to 24 less fish and fish
products (Chapter 3), plus selected items from Chapters 29, 33, 35, 38, 41, 43, 50, 51, 52 and 53.
b Excluding petroleum.
c 2000.
d 1999.
Note: Simple average tariffs on WTO agriculture are estimated using the ad valorem  equivalents (AVEs) of duties assessed on a
non-ad valorem  basis, and should be interpreted with caution.
Source : WTO Secretariat estimates, based on data provided by the authorities.
74. A number of developing countries have made efforts to achieve a more uniform tariff
structure, and thereby remove or reduce distortionary effects on resource allocation.  For the countries
on which up-to-date information is available through Trade Policy Reviews, notable efforts in this
regard were made by Bolivia, which adopted a uniform rate of 10% (with some exceptions), and asimplified multi-tier tariff structure was established by Bangladesh, Nicaragua, Peru, and Tanzania.
75. The scope of application of MFN tariffs by WTO Members is reduced, however, by
preferences granted to partners in regional trade agreements (with a few notable exceptions, see
Section II(B)(4) below), agreements providing pref erences on a non-reciprocal basis, or preferences
granted to countries in transition and developing countries under the Generalized System of
Preferences (GSP), with supplementary preferences for least developed countries.  The proliferation
of regional trade agreements in recent years and their prospective expansion (Section II(B)(4)), lookset to further erode the scope of application of MFN tariffs.  On GSP, an important development in
the scheme operated by the European Union is the special incentive arrangement for countries
demonstrating adherence to internationally recogn ized worker rights or environmental standards;
                                                     
45 WT/ACC/7/Rev.2.WT/TPR/OV/6
Page 20
eligibility under the U.S. GSP programme requires a country to take or be taking steps to afford
internationally recognized worker rights.  Another important development is the extended scope of
preferences for least developed countries, granted by developed countries in the context of GSP, and
granted autonomously by a rising number of developing countries (Section III).
Slow pace of elimination of quotas on textiles and clothing
76. Canada, the European Union, and the United States currently maintain quotas on textile and
clothing imports from countries in transition and developing countries, under the WTO Agreement on
Textiles and Clothing (ATC).  These were carried over into the WTO from the long-standing
Multi-Fibre Arrangement (MFA) in 1995, and are slated to be eliminated by 31 December 2004.  The
first two phases of the ATC product integration programme, to bring this sector fully into GATT 1994
rules, were completed in 1995 (not less than 16% of base line 1990 imports) and in 1998 (not lessthan 17%), respectively.  Market access was also required to be improved in the first and second
stages of integration, by quota growth rates of at least 16% and 25%, respectively.
77. For Canada, the EU, and the United States, the evidence strongly suggests that market access
for textiles and clothing products has been improved under the ATC mainly by the application of
quota growth rates in the first and second stages of the integration programme, since the eliminationof quotas has, to date, been modest, with the exception of Norway:
− Canada's first stage integration programme contained a product previously subject to
restriction (work gloves)
46, and its second stage integration programme contained two
categories subject to quotas (tailored collar shirts and textile handbags);47
− the EU's first stage integration programme cont ained only products not subject to restriction,
and its second stage integration programme contained products in 12 restricted categories,
affecting five Members to varying extents;48
− Norway progressively removed quotas autonomously:  14 in 1996, 32 in 1997, 5 in 1998, and
the remaining three are to be eliminated on 1 January 2001;49
− the United States' first stage integration programme contained products not subject to
restriction, and its second stage integration programme contained all or part of 24 product
categories, with specific limits affecting three of these categories or combined categories and
six Members, and the other product categories in group or aggregate limits.50
78. Preparations are being made for the third stage of integration on 1 January 2002 (not less than
18% of base line 1990 imports).  In this regard, the European Commission has announced its
proposed integration programme.51  Third stage integration programmes are to be notified to the WTO
by the end of 2000.  Also in the third stage, quotas are to be increased by a factor of 27%.
                                                     
46 Canada stopped enforcing its quotas on tailored-collar shirts, affecting 22 WTO Members
(G/TMB/N/316).
47 Canada also removed quotas on certain clothing products in six additional product categories, though
not integrating these products, and provided a one-time 10% increase in the quota level on products in another
category (G/TMB/N/214/Add.2).
48 G/TMB/N/207/Add.1.
49 G/TMB/N/131, 306 and 356.
50 G/TMB/N/213/Add.1.
51 European Commission Press Release IP/00/767 states that "the proposal will result in the elimination
of 37 bilateral quotas vis-à-vis  WTO Members (56 quotas if China is included) or a fifth of the total quotas it
still maintains".  The press release states that "in view of the significant restrictions that EU exporters face in
many non-EU countries, the Commission has at this stage considered appropriate to retain a number of quotas in
the most sensitive products where further liberalisatio n could be envisaged in exchange for better access to
non-EU countries textiles and clothing markets".WT/TPR/OV/6
Page 21
79. Quotas on textiles and clothing products are al so maintained by India, as well as on other
products, for a transitional period ending in April 2001.52  Pakistan maintains quotas on textiles and
clothing products under the cover of the ba lance-of-payments provisions of GATT 1994.53  Turkey's
quotas on such products are subject to implementation of the results of the dispute settlement
proceeding on the measures by February 2001.54
Rising trend of anti-dumping and countervailing measures
80. WTO Members notified 360 initiations of anti-dumping investigations in 1999, up 42% over
1998 (Chart II.3). In 1999, the European Union and India each reported the highest number of
initiations, at 68, followed by the United States with  45 initiations (Table A.1).  Counted together, the
European Union and its Member States were the WTO Members most affected by initiations of
anti-dumping investigations (47), followed by the Republic of Korea (34) and Japan (23), althoughmany other exporters were also affected, notably China (Table A.1).
10 7162542156224243255360
050100150200250300350400
1995 1996 1997 1998 1999Chart II.3
Initiations of anti-dumping and countervailing investigations, 1995-99 
Number
Source : WTO Secretariat.Countervailing
Anti-dumping
81. Available data for the first half of 2000, howev er, indicate that the trend is sharply down.
Between mid-1999 and mid-2000, reports have been received of 235 investigations initiated,
compared to 323 in the same year-earlier period.55  Most WTO Members are reporting fewer
initiations of investigations.  The European Union continues to lead, with 49 initiations, followed by
India and the United States, each reporting 27 initiations, and Argentina, with 23 initiations.
                                                     
52 "India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products",
complaint by the United States (WT/DS90/1).
53 WT/BOP/R/51.
54 "Turkey – Restrictions on Imports of Textile and Clothing Products", complaint by India (WT/DS34).
55 Based on notifications for the period ending June 2000 (G/ADP/N/65/).  The data should be
interpreted with caution because the reports received for the earlier period are more comprehensive in coverage.WT/TPR/OV/6
Page 22
82. On average, about half of initiated anti-dumping investigations are terminated without
measures being imposed, and the rest end with a definitive anti-dumping measure in the form of a
duty or, much less frequently, a price undertaking by the exporter.  Despite a sunset clause of five
years under the WTO Anti-Dumping Agreement, the accumulated stock of anti-dumping measures is
rising steadily.  As of mid-2000, an estimated 1,119 final anti-dumping measures were in place, of
which the United States had the most (28%), followed by the European Union (18%), South Africa
(9%), India (8%) and Canada (8%).56  Counted together, the European Union and its Member States
were the WTO Members most affected by final anti-dumping measures in place (16%), although
exporters from China are the most affected on the whole (17%).  Such measures are relatively
common on chemical products and base metals, notably steel.
83. The use of countervailing procedures – both in terms of the number of user WTO Members,
initiations, and measures in force – remains much lower than for anti-dumping, although also on arising trend in 1999 (Table A.2).  As of mid-2000, an estimated 85 final countervailing measures were
in place, of which the United States had the most (54%), mainly on steel products, followed by
Mexico (12%).
57
84. It should be noted that although a number of WTO Members have trade defence legislation in
place, the procedures are either not used at all or very infrequently.  Furthermore, some WTOMembers do not use trade defence instruments as a matter of principle, notably Hong Kong, China.
Subsidies remain an issue, in particular support to agriculture, again on the rise
85. Another area of concern is subsidies.  In 2000, support granted to aircraft manufacturers was
of particular controversy, leading to dispute settlement procedures.
58  Some $4 billion of subsidies to
exporters was involved in the dispute settlement procedure on Foreign Sales Corporations (FSC)
brought by the European Union against the United Stat es;  this was the largest sum ever involved in a
dispute brought to the WTO.
86. In 1999, the OECD estimated total support to agriculture at € 306 billion, up 5.6% over 1998,
a rise explained by "low world commodity prices, and the resulting pressure they put on farmincomes, [which] led many OECD countries to introduce new measures or to provide additional
support to farmers".
59  Producer support granted in the area was estimated at € 236.7 billion, of which
the largest single share is accounted for by the European Union (45%), followed by Japan (23%) and
the United States (21%);  it should be noted that the OECD figures do not segregate less from more
distorting measures of support, notably support in the 18 "green box" categories of Annex 2 of the
Agreement on Agriculture.60  The OECD also notes that levels of support to producers have risen to
                                                     
56 Based on notifications received from Argentina (45), Australia (48), Brazil (42), Canada (88),
Chile (0), Colombia (12), European Union (205), Egypt (10), India (91), Israel (5), Japan (1), Republic of Korea(27), Mexico (80), Malaysia (9), New Zealand (13), Peru (14), Philippines (0), Poland (1), Singapore (2),
Thailand (4), Trinidad and Tobago (5), Turkey (13), South Africa (104) and United States (300).
57 Figures are based on notifications of final me asures in place, for the period ending June 2000
(G/SCM/N/62/), received from Argentina (3), Australia (5),  Brazil (5), Canada (6), Chile (0), Mexico (10), New
Zealand (2), South Africa (0), and United States (46).  The notifications for the period from the European Union
and Venezuela are pending, and the figures for final measures (5 and 3, respectively) are for end-1999(G/SCM/N/59/EEC and G/SCM/N/VEN).
58 "Brazil – Export Financing Programme for Aircraft" , complaint by Canada (WT/DS46); "Canada –
Measures Affecting the Export of Civilian Aircraft", complaint by Brazil (WT/DS70).  The United States has alsoraised the matter of development support for the Airbus A3XX aircraft, to be produced by the consortium in the
European Union, in the Committee on Trade in Civil Aircraft established under the plurilateral agreement.
59 OECD (2000), Agricultural Policies in OECD Countries – Monitoring and Evaluation , Paris, p.11.
Figures are based on estimated support from all sources, both direct and indirect producer subsidies, includingfrom consumers through higher prices.
60 G/AG/NG/S/2.WT/TPR/OV/6
Page 23
match previous highs established a decade ago (C hart II.4), when the Uruguay Round was under way.
In relation to the commitments of WTO Members under the Agreement on Agriculture, the OECD
notes, however, that:
The Uruguay Round Agreement on Agriculture (URAA), with its disciplines on
market access, export subsidies and domestic support, provided a framework foropening up trade in agricultural products.  Implementation of these commitments in
1999 – as in every year since the URAA went into effect in 1995 – has helped further
integrate agriculture into the multilateral trading system.  But many trade distortions
remain.
61
01020304050607080
Canada United States European Union JapanChart II.4
Producer Support Estimates (PSE) for Canada, the United States, the European Union and Japan, 1986-99
Source : OECD (2000 ), Agricultural Policies in OECD Countries - Monitorin g and Evaluation , Paris.Per cent
1986-88
1998
1999
87. In addition to their effects on domestic consumers and producers, the support policies for
agricultural producers have spillover effects on world markets and on the export opportunities of trade
partners, many of which are developing countries.62  This underlines the importance of WTO
Members making meaningful progress in the currently engaged negotiations under Article 20 of the
Agreement on Agriculture, to continue the reform process.
                                                     
61 OECD (2000), Agricultural Policies in OECD Countries – Monitoring and Evaluation , Paris, p.11.
62 World Bank (2000), World Development Report 2000/2001:  Attacking Poverty  [Online], p. 45.
Available at:  http://www.worldbank.org [1 October 2000].WT/TPR/OV/6
Page 24
Product regulations and standards may impede market access
88. Products placed on the markets of WTO Members, whether of domestic or imported origin,
must comply with the relevant regulations, where th ey exist, to meet health, safety, and environmental
objectives.  Such measures may include outright bans, notably in the context of the implementation ofmultilateral environmental agreements such as the Montreal protocol, the Basel Convention or
CITES.  Also important are sanitary and phytosanitary measures, which are taken to protect human,
animal or plant health.  Apart from SPS measures, imports may be subject to product regulations and
standards to meet public policy objectives.  Generally, the entry of imported products is permitted
subject to conformity assessment procedures conducted on the territory of the destination market.
89. The WTO Agreements on Technical Barriers to Trade (TBT), and on Sanitary and
Phytosanitary Measures (SPS) recognize and encourage activities at the international level designed toreduce barriers to trade resulting from product and product-related regulation, in particular, the
development of international standards, guidelines, and recommendations.  Such activities at the
international level reduce potential market access barriers for imports on the home market of each
WTO Member, and reduce the potential barriers to its exports on third country markets.  A new
development, encouraged by the SPS and TBT Agreements, is the conclusion of mutual recognitionagreements on the results of conformity assessment procedures, concluded between countries having
established confidence in each other's testing entities and procedures.  The trend to conclude such
MRAs is confined – to date – to developed countries.
63
90. The significance of SPS measures appears to have expanded in recent years.  Developed
countries are heavy users of such measures, mainly to protect food safety, although developingcountries are also using them with greater frequency.  By October 2000, the United States had notified
the WTO of the highest number of SPS measures (341), followed by the European Union and its
Member States (170), Mexico (165), and Australia (120).  The significance of TBT measures also
appears to have expanded, rising from 365 notified measures in 1995 to 672 measures in 1999, in part
due to the expanded use of such measures by developing countries (Table II.2).
Table II.2
TBT notifications of technical regulations and standards, 1995-99
1995 1996 1997 1998 1999
Argentina 0 1 0 1 16
A u s t r a l i a 2 01 82 61 23 5
Brazil 1 9 35 43 17
Canada 29 20 30 115 24
Czech Republic 12 14 1 6 28
European Uniona123 123 437 276 185
J a p a n 5 04 13 52 83 0
Korea, Rep. 13 9 14 8 22
M a l a y s i a 11 91 22 89 8
Mexico 29 27 29 35 34
Switzerland 4 12 21 7 22
T h a i l a n d 71 32 23 42 2
United States 33 40 33 35 49
Total 365 460 796 648 672
a The European Union and its Member States.  For details of Member State notifications, see WT/TPR/S/72, p. 62, Table III.6.
Source : WTO Secretariat.
                                                     
63 For example, the European Union has concluded mutual recognition agreements (MRAs) for the
results of conformity assessment with Australia, Canada, New Zealand, Switzerland, and the United States.WT/TPR/OV/6
Page 25
2. Market access conditions for services
91. The services sector, as is well known, plays a dominant role in the economies of most WTO
Members, both in providing consumer benefits directly through health, education, and leisure
services, and as a support to business activities, through finance, communications, and
transportation.64  Services is the leading sector of economic activity in all high-income countries, its
importance is less in lower-income countries, with some exceptions.  The importance of the services
sector in the world economy greatly exceeds its share in world trade, which was estimated at one fifth
in 1999, mainly because these statistics only count cross-border transactions and not services provided
through affiliates.65  Furthermore, the same basic policy prescriptions as in the goods sector also
apply, such as ensuring that policies encourage rather than impede competition and that economic
operators have some certainty regarding the stability of the policy framework.  In addition to domestic
benefits from a greater variety and competitive pricing of services, trading partners gain theopportunity for trade-related development, based on services trade.
92. A key development in the multilateral trading system was therefore the GATS Agreement,
which established a framework of commitments by WTO Members to bind, reduce or eliminate
impediments to the supply of services by foreign providers, followed up by the agreements on basic
telecoms and financial services in 1997 (Fourth and Fifth Protocols to the GATS, respectively).  Justas is the case of the policies affecting market access for goods, WTO Members display a wide variety
of approaches to service sector liberalization (Table II.3).  Within the sectoral commitments, all
modes of delivery are generally provided for, although a number of WTO Members maintain
restrictions on commercial presence, and the scope of access for delivery by mode 4 – natural persons
– is severely limited (just business travellers and intra-corporate transferees).
Table II.3
Sectoral coverage of schedules
Sectors
committedNumber of
MembersWTO Members
≤20 44 Angola, Bahrain, Barbados, Benin, Botswana, Burkina Faso, Cameroon, Central African Republic,
Chad, Congo, Congo (Republic), Costa Rica, Cyprus, Fiji, Gabon, Guinea, Guinea-Bissau, Guyana,
Haiti, Honduras, Madagascar, Malawi, Maldives, Mali, Malta, Mauritania, Mauritius, Mozambique,
Myanmar, Namibia, Niger, Paraguay, Rwanda, St. Kitts & Nevis, St. Lucia, St. Vincent & the
Grenadines, Solomon Islands, Sri Lanka, Suriname, Swaziland, Tanzania, Togo, Uganda, Zambia
21-40 23 Bangladesh, Bolivia, Brunei Darussalam, Burundi, Côte d'Ivoire, Djibouti, Dominica, El Salvador,
Ghana, Grenada, Guatemala, Kenya, Macau, Mongolia, Nigeria, Papua New Guinea, Peru, Qatar,
Senegal, Sierra Leone, Tunisia, Uruguay, Zimbabwe
41-60 10 Antigua & Barbuda, Belize, Cuba, India, Morocco, Netherlands Antilles, Nicaragua, Pakistan,
Trinidad & Tobago, United Arab Emirates
61-80 12 Brazil, Ecuador, Egypt, Hong Kong (China), Israel, Jamaica, Kuwait, Liechtenstein, Poland,
Romania, Singapore, Venezuela
81-100 12 Argentina, Chile, Czech Republic Dominican Republic, Indonesia, Lesotho, New Zealand, Panama,
Slovak Republic, Slovenia, South Africa, Turkey
101-120 7 Australia, Bulgaria, Gambia, Canada, Philippines, Switzerland, Thailand
≥121 24 EC (15), Iceland, Japan, Columbia, Korea (Rep. of), Malaysia, Mexico, Norway, Hungary,
United States
Source : WT/S/C/W/94.
93. Although the GATS commitments are of relatively recent vintage, a number of WTO
Members have actively pursued privatization and deregulation, accelerating the pace of autonomous
liberalization in the services sector, and leading to policies in place that are generally more liberal – in
some instances, much more so – than those specified in schedules.  A compounding factor in the
telecommunications sector is the rapid rate of technological change, notably with respect to wireless
                                                     
64 WT/S/C/W/26 and Add.1.
65 WT/S/C/W/27.WT/TPR/OV/6
Page 26
communications, which is leading regulation.66  These developments in the sector underline the
significance of meaningful progress on expanding the scope of commitments in the negotiations
currently engaged under Article XIX of the GATS, and boosting investor confidence by making better
use of the GATS framework to lock-in reforms.
94. A more comprehensive approach to GATS sectoral commitments has been taken by newly
acceding Members of the WTO, although the limitations on market access and national treatment for
the four modes of supply, as well as MFN exemptions, are similar to those of original Members.67
The 12 most recently acceded Members – Albania, Bulgaria, Croatia, Ecuador, Estonia, Georgia,Jordan, Kyrgyz Republic, Latvia, Mongolia, Oman and Panama – have undertaken commitments in
professional services (mostly accounting, legal, taxation, architecture, and engineering), business
services (a very wide range), communication services (but the coverage of basic telecom is uneven),
financial services (in some cases with important exclusions), construction services and distribution
services.  Coverage is most comprehensive in construction, distribution, and financial services.
Eleven Members have undertaken commitments in environmental, tourism, and transport services, ten
Members  in health and social services, and in education services, nine Members in recreational
services, and five in audio-visual services.
95. Major developments in the service sector were noted for the WTO Members on which
up-to-date information is available through Trade Policy Reviews:
− Bahrain made commitments under the GATS and the Fifth Protocol only on certain financial
services, binding the existing regime in banking services, while the current regime on
insurance services is more liberal than the GATS commitments;
− Bangladesh has pursued privatization of basic infrastructural services such as
telecommunications, power generation, and transport, the inefficient provision of which
constitute a major impediment to the country's economic development by raising the cost ofdoing business;
− Brazil has reduced state involvement in services through privatization, opened the market for
financial services to foreign banks in 1996, eliminated the monopoly of the state-owned
telecommunications operator and opened the market to competition;
− the European Union opened the telecommunications market to competition in 1998 under the
Internal Market programme, reinforcing and extending the resulting access to foreign services
providers under the Fourth Protocol to the GATS, and made progress on the Internal Marketfor financial services, also extending the "single passport" to foreign service providers under
the Fifth Protocol;
− Iceland's open regime for the provision of services in all sectors by foreign suppliers (except
by mode 4) was bound in the GATS;
− Israel, which retains a state-owned telecoms operator, has opened the mobile telephony
market and the international calls segment of the fixed-line market to competition by private
investors, with foreign equity participation;
− Japan has pursued financial sector liberalization since 1997 and, in accordance with the
Financial System Reform Law, liberalized the setting of brokerage commissions in 1999 andeliminated the compartmentalization of securities business;
− Kenya has begun to open the domestic telecoms market to competition, proposing to privatize
the state-owned telecoms operator (foreign stakes would be subject to a 30% ceiling);
− the Republic of Korea opened its services sector to foreign investment, notably financial,
telecom, broadcasting, maritime and air transportation services, and made commitments under
                                                     
66 World Telecommunications Standardization Assemb ly, Opening Address by the Secretary-General
of the International Telecommunications Union, 27 September 2000, Montreal [Online].  Available at:http://www.itu.org [31 October 2000].
67 WT/ACC/7/Rev.2, Annex 4.WT/TPR/OV/6
Page 27
the Fourth and Fifth Protocols to the GATS which improved conditions of market access for
foreign providers of financial and telecom services;
− Nicaragua eliminated the state monopolies in insurance and postal services in 1996, has
scaled back state involvement in banking, and decided the privatization of the state-ownedtelecoms operator in 1998, also opening up segments of the telecoms market to competition;
− Norway opened financial services to foreign competition, with conditions on commercial
presence, and fully liberalized telecommunications in 1998, eliminating the monopoly rights
of the state-owned operator;
− Papua New Guinea has begun to open the domestic telecoms market to competition, planning
for the state-owned telecoms operator to lose  its monopoly in 2002, when foreign suppliers
will be allowed entry;
− Peru dramatically reduced or eliminated stat e involvement in financial, transport, power
generation, and telecom services through privatization, and encouraged foreign investment in
these sectors, including by commitments under the GATS;
− the Philippines has reduced state intervention in the services sector through privatization, and
has liberalized foreign equity participation in financial services;
− Poland has opened the mobile telephony market and on fixed line services, removed the state
monopoly on long-distance and local telephone calls in 1999, for domestic telex and
telegraphic services in 2000, and is to remove the monopoly on long-distance calls in 2003;
− Romania has dramatically reduced or eliminated state involvement in services through
privatization, adopted a policy of open non-discriminatory access for the establishment of
banks (subject to prudential regulations), and on telecoms, opened the market for mobiletelephony and is to open basic services to competition in 2003;
− Singapore has removed foreign ownership restrictions in banking services and advanced to
April 2000, by two years, the full opening of the telecoms sector, removing all restrictions on
foreign investment;
− Tanzania has dramatically reduced or elimin ated state involvement in services through
privatization, and opened services to competition, notably in telecoms and financial services;
− Thailand made use of the Fifth Protocol to the GATS to open financial services to
competition, as a key aspect of its action to overcome the effects of the crisis that began in
mid-1997, and increased competition in telecom services, which are to be opened in 2006.
3. Intellectual property protection
96. A key development in the multilateral trading system is the WTO TRIPS Agreement, which
established a framework of rules on minimum levels of protection for intellectual property rights
(IPRs) and the means to ensure their enforcement.   Intellectual property protection, which refers to
creations of the mind, is divided into two categories:  industrial property, which includes inventions(patents), trade marks, industrial designs, and geographic indications of source; and copyright, which
includes literary and artistic works such as novels,  poems, plays, films, musical works, paintings,
photographs, sculptures, and architectural designs, as well as the rights of performers, producers of
sound recordings and broadcasting organization.
68  Protecting intellectual property rights such as
patents and copyright preserves the incentive for creativity and inventiveness, while in the area ofdistinctive signs, such as trade marks and geographical indications, its main purpose is to protect the
consumer and prevent unfair competition between producer s.  In the area of patents, another benefit is
to foster disclosure of inventions.  The protection of intellectual property rights has also been found to
                                                     
68 WIPO, "About Intellectual Property" [Online].  Available at: http://www.wipo.org/about-ip/en/
[1 October 2000].  See also WTO, "What are inte llectual property rights?" [Online]. Available at:
http://www.wto.org/ [1 October 2000].WT/TPR/OV/6
Page 28
be conducive to foreign direct investment and technology transfer, which are particularly important
considerations for developing countries adopting IPR regimes.69
97. When the WTO agreements took effect on 1 January 1995, developed countries had one year
to ensure that their laws and practices conformed with the TRIPS Agreement, developing countries
and (under certain conditions) transition economies had five years, and least developed countries had11 years.  Thus, as of 1 January 2000, developing countries were required to have implemented the
TRIPS Agreement, and the TRIPS Council has been receiving notifications to this effect and
established a schedule for the post-2000 review of legislation.
70  Implementation of the TRIPS
Agreement has also been at issue in dispute settlement proceedings.
98. Major developments in the area of intellectual property rights were noted for the countries
that were the subject of Trade Policy Reviews during the period covered by this Report:
− Bahrain is in the process of updating its national legislation to reflect TRIPS obligations,
including on patents, trade marks and industrial designs, and has made efforts to step up
enforcement, especially with regard to copyright protection;
− Bangladesh (a least developed country) is updating its intellectual property right laws with a
view to bringing them into line with the provisions of the TRIPS Agreement by 2006;
− Brazil has passed revised copyright, patent, and trade mark legislation since 1996, and
appears to have made considerable gains on enforcement of Brazilian laws against video andsoftware piracy, and foreign and domestic copyright holders have successfully used the
domestic legal system to pursue their rights (although the deterrent value of fines eroded byinflation is an issue);
− the European Union has taken new harmonization initiatives for the legal protection of
biotechnological inventions and of designs, plans to do so for the patentability of computer
programs, and intends to establish new unitary rights through a "Community design" and a
"Community patent";
− Iceland amended its patent and copyright legislation to achieve compatibility with the TRIPS
Agreement in 1996, notably granting full protection to pharmaceutical products;
− Israel has been amending its laws to comply with the TRIPS Agreement by 2000, and has a
special police unit dedicated to enforcement since May 1999;
− Japan amended the Patent Law in 1998 to provide additional measures against patent
infringements, and in 1999 to shorten the period for requesting patent examination from seven
years to three years, improve the registration system for patent term extension as well as
reduce patent fees, and also amended the Copyright Law in June 1999 to comply with 1996
WIPO treaties;
− Kenya has been amending its laws to comply with the TRIPS Agreement by 2000;
− the Republic of Korea launched in April 1998 the "Intellectual Property Great Leap Forward
Policy" to raise competitiveness through strengthened inventive activities and enhancedprotection of IPRs, enacting legislation on IPRs, notably patents in 1999, trade marks and
designs in 1998, and enhancing enforcement by raising the ceiling on fines by 150%;
− Nicaragua, under the terms of a bilateral agreement with the United States, enacted a level of
IPR protection that exceeds commitments under the TRIPS Agreement and advanced its
implementation date by six months, to mid-1999;
− Norway issued new regulations on copyright in 1997 to implement the obligations to foreign
right holders stemming from the various international treaties to which Norway is party, andprovisions on IPR protection at the border in 1996;
                                                     
69 K. Maskus (2000), Intellectual Property Rights in the Global Economy , Institute for International
Economics, Washington, D.C.
70 IP/C/19.WT/TPR/OV/6
Page 29
− Papua New Guinea (a least developed country) intends to adopt legislation on IPRs (which
currently covers only trade marks);
− Peru enacted laws on industrial property and copyright in 1996, and seeks to promote the
protection, at the international level, of th e traditional knowledge of local and indigenous
communities;
− the Philippines enacted the Intellectual Property Code in 1998, and also established a Bureau
to which complaints on IPR-related cases may be addressed, as an alternative to judicial
avenues;
− Poland introduced new legislation on industrial  property protection along with amendments to
copyright laws effective from 1 January 2000, aimed at meeting TRIPS commitments andharmonization with the European Union;
− Romania revised its legislation to meet commitments under the TRIPS Agreement and
harmonize with the European Union, notably by new laws on copyright in 1996, theprovisional protection of patents, new plant varieties, and the protection of trade marks and
geographical indications in 1998, notifying its legislation for review to the WTO before theend of the transitional period;
− Singapore introduced a new patents law in 19 95, copyright protection for computer programs
and sound recordings in 1998, a new Trademarks Act in 1998, and a new Geographical
Indications Act in 1998, notifying its legislation for review to the WTO before the end of the
transitional period, and has a special police unit dedicated to enforcement;
− Tanzania (a least developed country) introduced the Copyright Act in 1999 and intends to
comply with the TRIPS Agreement by 2006; and
− Thailand introduced a new Patent Act in 1999, amended its Trademarks Act, notifying its
legislation to the WTO before the end of the transitional period, and established a judicialinstance to hear complaints on IPR infringements in 1996.
4. Regional trade agreements
71
99. Virtually all WTO Members are partners in at least one regional trade agreement (RTA), and
many are partners in two or more;  the exceptions are Hong Kong, China;  Japan;  Macau, China;  and
Mongolia.72  Cross-regional trade agreements are also on the rise, linking partners in North and Latin
America, as well as linking partners in Europe with countries in the western hemisphere.  Such links
are also planned by countries in Africa, Asia, and Europe.
100. In the western hemisphere, NAFTA links Canada, Mexico, and the United States since 1994.
In recent years, Canada has concluded a free-trade agreement with Chile, the negotiations with EFTA
are in the final stages, talks with Costa Rica and with MERCOSUR are under way, and the possibility
of such negotiations with Singapore is being explored.  Mexico and the European Union concluded a
free-trade agreement, which entered into force in July 2000 and secures NAFTA-like treatment for
European enterprises on the Mexican market.  The United States concluded a free-trade agreement
with Jordan in 2000 (which contains , as an integral part of the FTA, provisions on internationally
recognized worker rights and environmental standards)73, and fast-track negotiating authority exists
for free-trade agreements with Chile, the Republic of Korea, Singapore, and Turkey.
                                                     
71 Based mainly on WT/REG/W/39, notifications by WTO Members, and Trade Policy Reviews.
72 Regional trade  agreements are distinct from regional integration  agreements insofar as the former
provide for partners to grant each other preferential ta riff treatment on a reciprocal basis, while the latter
promote open trade and cooperation.  The Asia-Pacific Economic Cooperation (APEC), established in 1989, is
an example of "open" regionalism.  APEC members are:  Australia;  Brunei Darussalam;  Canada;  Chile;
China;  Chinese Taipei;  Hong Kong, China;  Indonesia;  Japan;  Republic of Korea;  Malaysia;  Mexico;New Zealand;  Papua New Guinea;  Peru;  Philippines;  Russian Federation;  Singapore;  Thailand;United States;  and Viet Nam (http://www.apecsec.org.sg/).
73 USTR Press Release 00-75 [Online].  Available at:  http://www.ustr.gov [31 October 2000].WT/TPR/OV/6
Page 30
101. In the Caribbean, the 13-member CARICOM concluded free-trade agreements with the
Dominican Republic and Cuba.74  Other customs union agreements are in place in Central and Latin
America, such as the CACM (Costa Rica, El Sa lvador, Guatemala, Honduras, and Nicaragua), the
Andean Community (Bolivia, Colombia, Ecua dor, Peru, and Venezuela), and MERCOSUR
(Argentina, Brazil, Paraguay, and Uruguay).  An initiative to link each of these customs unions withMERCOSUR and with each other was launched in August 2000.  For the western hemisphere as a
whole, the goal of a Free Trade Area of the Amer icas (FTAA) by 2005 remains in place, with work
continuing in 2000 on non-tariff barriers to trade.
75
102. In 2000, the pace of conclusion of RTAs in Central and Latin America continued to be very
rapid.  CACM is negotiating an agreement with Chile, the Andean Community is negotiating an
agreement with Brazil, and MERCOSUR is negotiating an agreement with Panama.  Mexico, which
already has agreements with Bolivia, Costa Rica, and Nicaragua, concluded agreements withEl Salvador, Honduras, and Guatemala, started negotiations on a free-trade agreement with
MERCOSUR, and has numerous bilateral agreements under negotiation, notably with Brazil,
Ecuador, Peru, and Uruguay.
103. In Europe, the European Union is linked by bilateral free-trade agreements to the countries in
Central and Eastern Europe, a group of which are linked by CEFTA (Bulgaria, the Czech Republic,
Hungary, Poland, Romania, the Slovak Republic, and Slovenia), while another group is linked by the
Baltic Free-Trade Area (Estonia, Latvia, and Lithuania).  Each of these countries is engaged in
accession negotiations with the EU, and are therefore concluding free-trade agreements with partners
to parallel those concluded by the EU.  For its pa rt, the EU is considering in 2000 the institutional
changes needed to accommodate enlargement to the east.
104. The EU is negotiating second-generation bilateral free-trade agreements based on a reciprocal
exchange of preferences with partners in the Mediterranean and North Africa, as part of the process of
establishing a Euro-Med free-trade area by 2010.  Th e EU also concluded a free-trade agreement with
South Africa, which entered into force in 2000.  Following its strategy of concluding free-trade
agreements with dynamic emerging market economies, the EU began discussions on an agreementwith MERCOSUR, in March 2000.  The EU has also proceeded with discussions with the Gulf
Cooperation Council (GCC).
105. Also in Europe, the remaining members of EFTA are linked to the EU by free-trade
agreements, complemented by the EEA or bilatera l agreements in the case of Switzerland.  EFTA
itself has concluded free-trade agreements with a number of countries in parallel to those concluded
by the EC.  Currently, EFTA is pursuing free-trade agreements with extra-regional trade partners,
notably Canada and Mexico.
106. A number of recent RTAs in Europe and Central Asia concern the integration of countries of
the former USSR, as well as with their neighbours.  In 1994, the CIS States agreed to create a
free-trade area linking Azerbaijan, Armenia, Belarus, Georgia, Moldova, Kazakhstan, the Russian
Federation, Ukraine, Uzbekistan, Tajikistan, and the Kyrgyz Republic.  A customs union agreement
between the Kyrgyz Republic, the Russian Federation, Belarus, and Kazakhstan entered into force in1997 and is to be fully completed by 2003.  A large number of bilateral agreements have also been
concluded, notably among the Kyrgyz Republic, Kazakhstan, Moldova, the Russian Federation,
Ukraine, and Uzbekistan.
                                                     
74 CARICOM links Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada,
Guyana, Haiti, Jamaica, Montserrat, Trinidad and Tobago, St. Kitts and Nevis, St. Lucia, St. Vincent and theGrenadines, and Surinam.
75 http://www.ftaa-alca.orgWT/TPR/OV/6
Page 31
107. In Asia, the members of ASEAN – Brunei, Ca mbodia, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and Viet Nam – met to agree the final phase of tariff
liberalization to establish a free-trade area by 2005.76  ASEAN and the Australia-New Zealand CER
are considering a linkage through a free-trade agreement.  In the meantime, Singapore and
New Zealand have concluded a free-trade agreement.  Also in Asia, Japan has shifted itslong-standing policy of multilateral-only trade liberalization to consider the conclusion of bilateral
agreements to deepen trade and investment interdependence with Singapore and the Republic of
Korea, as well as other trade partners, and to meet the challenge of the trend to regional integration in
other regions and between regions.
77  The Republic of Korea, which began negotiations on a bilateral
free-trade agreement with Chile in 1998, is now cons idering regional and bilateral trade agreements as
a useful means of securing greater market access for Korea's exports in response to the recent
financial crisis and growing regionalism elsewhere.  Sri Lanka and India agreed to implement theirfree-trade agreement concluded in 1998.
108. In Africa, certain members of the Economic Community of West African States (ECOWAS)
– Benin, Burkina Faso, Ghana, Mali, Niger, Nigeria, and Togo – agreed to establish a common
external tariff by 2001 and took steps to liberalize the movement of natural persons.  The Southern
African Development Community (S ADC) treaty has been ratified by ten countries – Botswana,
Lesotho, Malawi, Mauritius, Mozambique, Namibia, Tanzania, South Africa, Swaziland, and
Zimbabwe – and aims to achieve a free-trade area by 2004.
78  The 20 members of the Common
Market for Eastern and Southern Africa (COMESA) agreed to launch a free-trade area by
October 2000, supported by closer monetary cooperation.79  The Economic and Monetary Community
of Central Africa (CEMAC), which is composed of Cameroon, the Central African Republic, theCongo, Gabon, Equatorial Guinea, and Chad, aims to progress towards economic union.  The
members of the Union économique et monétaire de l'Afrique de l'Ouest (UEMOA) established their
customs union on schedule at the start of 2000.
80
109. In the Middle East, the Gulf Cooperation Council (GCC), which is composed of Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates, agreed in November 1999 to establishcommon external tariffs by 2005, fulfilling the Council's long-standing ambition to achieve a customs
union.  The members of the GCC are also part of the effort launched by the Arab League (in addition
to GCC members, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, and Tunisia) to establish a
common market by 2007.
110. On the basis of these developments, there is no doubt that the trend to the conclusion of
RTAs, which took off in the 1990s, continued to be very strong in 2000;  indeed, perhaps the term
"regional" is increasingly superfluous to describe the plethora of new agreements linking countriesaround the globe.
81  The motivation is that such agreements permit the partners to accelerate and
deepen trade and investment liberalization on a bilateral or plurilateral basis, as well as address other
issues of commercial significance in economic relations, notably technical standards and regulations,
government procurement, intellectual property protection or cooperation on competition policy.  As a
result, participants reap the advantages of closer economic integration and their growth prospects arecorrespondingly strengthened, of wider benefit to trading partners.  On the negative side, regional
                                                     
76 AFTA provides for tariffs to be cut to between 0 and 5% by 2002.  Malaysia has postponed to 2005
the liberalization of car tariffs originally scheduled for the start of 2003, subject to negotiations on compensationwith principally affected suppliers.
77 On 28 September 2000, the joint study group of the Governments of Japan and Singapore completed
its work, recommending the initiation of negotiations on an "Agreement on a New Age Partnership".
78 Botswana, Lesotho, Namibia, South Africa, and Swaziland are members of the Southern African
Customs Union (SACU).
79 Angola, Burundi, Comoros, Congo, Djibouti, Egyp t, Eritrea, Ethiopia, Kenya, Madagascar, Malawi,
Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.
80 Benin, Burkina Faso, Guinea-Bissau, Côte d'Ivoire, Mali, Niger, Senegal, and Togo.
81 GATT (1994), Regional integration and the world trading system , Geneva.WT/TPR/OV/6
Page 32
trade agreements generally comprise aspects of prefer ential treatment, notably with respect to trade in
goods, that result in trade diversion to the detriment of third parties and undermine the bedrock
principle of the most-favoured-nation.  (APEC, by c ontrast, is an example of "open" regionalism since
preferences are not part of its liberalization agenda.)  On balance, however, experience has shown that
the twin-track approach of regional and multilateral liberalization can fruitfully co-exist if WTOprinciples on such agreements are fully respected.
111. It has been argued that the post-Seattle trend to regional integration could strengthen, if
disappointment with the multilateral trading system is allowed to take hold.
82  Although it is too early
to draw any conclusions on this issue (noting the forward agenda of the WTO, described in previous
sections), certain aspects of the interface between  regional and multilateral integration need to be
emphasized.  A first aspect is that preferential access remains of abiding commercial interest in areas
where tariffs remain high, leading WTO Members to continue to be attracted to the regional option –just like access through GSP or similar programmes.  At the same time, one country's preference is a
third party's discrimination, including through rules of origin, of particular concern at a time of rapid
proliferation of RTAs.  A second aspect is that many countries seeking to achieve the gains of
economic integration consider the regional option to yield quicker results than when a multilateral
consensus needs to be secured, although many also consider that regional integration prepares theround for a multilateral process.  A third aspect is that negotiation of multiple RTAs burdens the
already scarce negotiating resources of developing countries, while multilateral negotiations provide
scope for more concentrated action and results in this regard.
112. More generally, the WTO, with its large and growing membership and its effective dispute
settlement procedures, is the most effective forum for wide-ranging market access agreements or for auniversal framework of rules on trade measures.  Thus, the protection of intellectual property rights is
more valuable on a global basis than on a bilateral or plurilateral basis.  Achieving the reform of
policies in certain issues – notably support policies to agricultural producers – has proved more
feasible at the multilateral level.  Furthermore, securing open markets for goods and services on a
global basis is more appropriate to the commercial strategies of enterprises in globalized markets thanthe regional option.  Hence, even as WTO Members explore the regional option, significant
centrifugal forces also favour the multilateral trading system.
                                                     
82 World Bank (2000), Trade Blocs , Oxford University Press, p. 115.WT/TPR/OV/6
Page 33
III. INTEGRATING LDCS IN THE WORLD TRADING SYSTEM
1. Overview
A low level of participation in world trade83
113. The United Nations has classified 48 countries as least developed countries (LDCs), based on
social and economic criteria, of which 29 are WTO Members and nine are in the process of
accession.84
114. The most obvious manifestation of the difficult situation of LDCs in the world trading system
is their almost continuously declining share in world merchandise exports.  This share was down to
0.4% in 1999, from 0.7% in 1980, while these countries accounted for 10.4% of the world's
population.  The decline largely reflects the continued importance of primary commodities in LDC
exports, accounting for 80% or more of total merchandise exports in all but a handful of LDCs.85
Commodity prices have also exhibited a significant degree of volatility, leading to unstable export
earnings and import expenditures for the LDCs.  In contrast, manufactures have been the fastest
growing component of world trade.
115. Significant differences are apparent between LDCs in terms of the magnitude of trade, its
composition, and performance over time.  Of the 48 countries in the group of LDCs, just 15 accountfor some 80% of LDC exports.  Furthermore, not all LDCs saw their share in world merchandise trade
decline over time (Chart III.1).  Countries that ar e exporters of manufactures have (with the exception
of Madagascar) performed above the world average;   for example, Bangladesh, whose exports are
mainly manufactured products, saw its share of world exports rise (although still tiny).
Above-average export and import growth was also e xperienced by a few countries whose exports are
dominated by primary commodities.  Negative export and import growth (left bottom quadrant) was
present only in countries that have been suffering from prolonged civil strife.
                                                     
83 WT/COMTD/W/65.
84 WTO Members are Angola, Bangladesh, Benin, Bu rkina Faso, Burundi, Central African Republic,
Chad, Congo, Djibouti, Gambia, Guinea-Bissau, Guinea,  Haiti, Lesotho, Madagascar, Malawi, Maldives, Mali,
Mauritania, Mozambique, Myanmar, Niger, Rwanda, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda,
and Zambia.  LDCs in the process of accession to the WTO are Bhutan, Cambodia, Cape Verde, Laos, Nepal,Samoa, Sudan, Vanuatu, and Yemen.  Other LDCs are Afghanistan, Comoros, Equatorial Guinea, Eritrea,Ethiopia, Kiribati, Liberia, Sao Tomé and Principe, Somalia, and Tuvalu.
85 Exceptions are: Bangladesh, Cambodia, Haiti, Laos, Madagascar, and Myanmar.WT/TPR/OV/6
Page 34
-15-10-505101520
-15 -10 -5 0 5 10 15 20 25 30 35Chart III.1
LDC average annual rates of growth of trade, 1987-97
Source:  WTO (1999).Exports, average annual growth in %
World average
Growth reduces poverty and openness to trade improves growth prospects
116. The WTO Secretariat has recently noted that "trade liberalization is generally a strongly
positive contributor to poverty alleviation – it allows people to exploit their productive potential,
assists economic growth, curtails arbitrary policy interventions and helps to insulate against shocks".86
117. This conclusion is backed by empirical research.  Openness of the economy has proved to be
a major factor in economic growth, strongly associat ed with per capita income growth.  In a study of
122 countries for 1970-90, "open" economies outperformed "closed" economies on economic growth,
avoidance of extreme macroeconomic crisis, and stru ctural change:  growth rates of "open" economies
averaged 4.49% between 1970 and 1990, compared to just 0.69% for "closed" economies.87  T h i s
concurs with a new study from the World Bank which, using data from 80 countries over four
decades, confirms that openness boosts economic growth and that the incomes of the poor rise
one-for-one with overall growth.88  Openness to trade has also been found to be correlated with
reduced poverty.  When countries were grouped according to their degree of openness (measured as
low anti-export bias), a World Bank study found that "integrating" countries improved in all importantsocial indicators, from life expectancy to infant mortality rate, to adult illiteracy rate (Chart III.2).
                                                     
86 Winters, L.A. (2000), "Trade and Poverty:  Is there a Connection", in Trade, Income Disparity and
Poverty , WTO, Geneva.
87 Sachs and Warner (1995).  A "closed" economy had combined protection through tariffs and
non-tariff barriers of 40% or more, a black market exchange rate premium of 20% or more, state monopoly onmajor exports, or a planned economy.
88 D. Dollar and A. Kraay (2000), "Growth Is Good for the Poor" [Online].  Available at:
http://www.worlbank.org/research [31 October 2000].WT/TPR/OV/6
Page 35
2262
3568
3838
7058
-150.0-100.0-50.00.050.0100.0150.0Chart III.2
Life is better in the countries that are integrating into the global economy
Source : World Bank (1996 ): Global Evconomic Pers pectives for Develo ping Countries, Washin gton D.C.Per cent
Life expectancyInfant mortality rate
Secondary school
enrollmentAdult illiteracy rateIntegrating Not integrating
118. The World Bank recently noted that:
As countries become richer, on average the incidence of poverty falls.  Other
indicators of well-being, such as average levels of education and health tend to
improve as well.  For these reasons, economic growth is a powerful force for poverty
reduction.  This observation is not the end of the story, for it raises the questions ofwhat causes economic growth and why countries with similar rates of economic
growth can have very different rates of poverty reduction.
89
The World Bank goes on to note that the poverty-reducing effects of economic growth are enhanced
by policies to promote social development, such as education and institution-building, and thereforeeconomic growth and social development have to be viewed together, and not in a sequence.
119. Based on these studies, least developed countries seeking to improve their growth prospects
are encouraged to, inter alia , open their trade regimes and implement appropriately sequenced
outward-oriented reforms that will permit trade di versification and expansion.  The World Bank has
underlined that, in addition to the growth-promoting policies that can be adopted, poverty reduction
requires appropriate policies of support, notably education and institution-building.
120. In addition to the efforts to be made by countries and the communities within them, global
actions are also needed.   Thus, the WTO has established a Plan of Action for LDCs, to remove
market access barriers and support trade development through technical assistance.  At UNCTAD X,a proposal for a Plan of Action for LDCs was agreed with a view to the Third United Nations
Conference on the Least Developed Countries ( UNLDC III), which is to be held in May 2001.
90
Furthermore, the IMF-World Bank initiative for Heavily Indebted Poor Countries (HIPC) makes
                                                     
89 World Bank (2000), World Development Report 2000/2001:  Attacking Poverty , p. 45 [Online].
Available at:  http://www.worldbank.org [1 October 2000].
90 Reference.WT/TPR/OV/6
Page 36
available debt relief for the 42 heavily indebted LDCs.91  In all cases, increasing attention is being
paid to bringing together reforms and capacity-bu ilding programmes in various areas of policy in a
comprehensive and multi-faceted development strategy.
WTO Plan of Action for LDCs: Market  access and the Integrated Framework
121. The Plan of Action for LDCs was adopted at the First WTO Ministerial Meeting, held in
Singapore in 1996.  The "Declaration for a Plan of Action" asked WTO member countries to provide
enhanced market access for LDC exports and asked multilateral institutions – WTO, WB, IMF,
UNDP, UNCTAD and ITC – to provide an integrated framework for trade-related assistance.  This
was followed up with the High-Level Meeting (HLM) on Integrated Initiatives for Least-Developed
Countries Trade Development held on 27-28 October 1997, which established the Integrated
Framework.
122. To a large extent, market access is determined by the range of tariff and non-tariff barriers in
foreign markets.  Strategies for improving market access for LDCs include reductions and
eliminations of tariffs on a most-favoured-nation (MFN) basis, in which case all trading partners
benefit, or on a preferential basis and therefore ta rgeted at LDCs specifically, notably through GSP or
similar programmes.  However, LDCs' capacity to use the market access opportunities available tothem – both existing and enhanced – is also strongly affected by, and linked to, domestic supply-side
and policy constraints, which are addressed through the Integrated Framework.
92
2. Initiatives to improve market access for LDCs
123. Approximately 70% of the 112 tariff lines that fo rm the bulk of LDC exports to their 23 main
markets are duty free, either on an MFN basis or in the context of GSP programmes, leaving 30%subject to tariffs.
93  These tariffs are often above-average by virtue of the "sensitive" nature of the
underlying product (notably textiles and clothing, and agricultural products).  Other tariff barriers to
trade development include tariff escalation, according to which the level of the tariff rises with the
stage of processing, discouraging more intensive manufacturing.  LDCs have also called attention to
quantitative restrictions on textiles and clothing items, and on sugar, and to other non-tariff barriers,such as non-automatic import licensing, prior authorization, state trading, other administrative
restrictions, standards and SPS restrictions, etc. affecting products such as fish and fish products,
frozen foods, meat, hides and skins, and leather.
124. A number of WTO Members have identified ways of improving market access for LDCs on a
preferential basis, either through their GSP programmes or on another basis.  At the HLM, several
Members provided details on existing or planned measures of enhanced market access for LDCs – the
European Union, Norway, Morocco, United States, Mauritius, Hungary, Republic of Korea,Singapore, Canada, Japan, India, Switzerland, Thailand, Egypt, Turkey, Australia, and Bulgaria.
94
Notifications of improvements were made to the WTO by the European Communities95,
Switzerland96, Canada97, Republic of Korea,98 Turkey99, Egypt100, Mauritius101 and the
United States102;  Singapore had notified improvements at the HLM.103
                                                     
91 IMF, "Debt Initiative for the Heavily Indebted Poor Countries (HIPC)" [Online].  Available at:
http://www.imf.org/external/np/hipc.hipc.htm [6 October 2000].
92 WT/COMTD/W/11 and Rev.1.
93 A compilation of market access barriers is available in WT/LDC/HL/14.
94 WT/LDCHL/M/1.
95 WT/COMTD/W/41.
96 WT/COMTD/N/7.  (The coverage of the Swiss sc heme was also considerably extended to other
developing countries, particularly in agriculture.)
97 WT/COMTD/LDC/M/11.WT/TPR/OV/6
Page 37
125. At the Third Ministerial Conference in Seattle in November 1999, the European Union and
Japan announced their intention to open their markets to essentially all products from LDCs.  This
undertaking was followed by the proposal by Canada, the European Union, Japan, and the
United States – the Quad Proposal - at the General Council in May 2000 to implement "both
tariff-free and quota-free treatment, consistent with domestic requirements and internationalagreements, under their preferential schemes, for es sentially all products originating in LDCs", joined
by the Czech Republic, Iceland, Poland and Slovenia.
104  The WTO was also informed by
Hong Kong, China that it grants duty-free and quota-free access to imports from all sources, including
the LDCs, and by Hungary and the Slovak Republic, that unconditional duty-free and quota-free
access is granted to imports from LDCs.
126. Major developments in the market access conditions for LDCs in the Quad, in 2000, include:
− Canada extended the scope of its Generalized Preferential Tariff (GPT) scheme to encompass
550 additional items for which duty-free access is granted for imports from LDCs as of
1 September 2000, raising to 90% the share of duty-free lines for LDCs105;
− the European Union and the ACP States (one third are LDCs) concluded the Cotonou
Agreement to succeed the Fourth Lomé Conven tion, which contains the pledge to implement
duty-free treatment for the LDCs by 2005106, and the European Commission proposed in
September 2000 to the Council of the European Union to modify the European Union's GSP
programme to grant duty-free and quota-free access for "everything but arms" of the LDCs107;
− Japan is establishing a new, special preferential system for LDCs, separate from its GSP
programme; and
− the United States enacted the African Growth and Opportunity Act (AGOA) and the
Caribbean Basin Trade Partnership Act (CBTPA), which grant preferential treatment on
covered items from beneficiary countries meeting the eligibility conditions under the
respective Acts.108
                                                                                                                                                                    
98 WT/COMTD/N/12/Rev.1.  This is the first notification of preferences made under the waiver
adopted in 1999 (WT/L/304) to permit preferences from developing countries to least developed countries.  Thenotification concerns measures announced by th e Republic of Korea at the HLM (WT/COMTD/12).
99 WT/COMTD/W/39 and Corr.1.
100 WT/COMTD/W/47.
101 WT/COMTD/W/53.
102 WT/COMTD/N/1/Add.2.
103 Annex I of WT/LDCHL/M/1.
104 WT/GC/M/55.
105 "Order amending the Schedule to the Customs Tariff (Least Developed Country Tariff)"
(WT/TPR/S/78, p.19).
106 WT/C/187/Rev.3.
107 "Proposal for a Council Regulation amending Council Regulation (EC) No 2820/99 applying a
multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 so as toextend duty-free access without any quantitative restrictions to products originating in the least-developedcountries."
108 USTR Press Release 00-67.  African country design ations are based on the eligibility criteria set out
in the AGOA, including whether a country has established or made progress toward a market-based economy,the rule of law, economic policies to reduce poverty, internationally recognized worker rights, a system tocombat corruption, and the elimination of barriers to United States trade and investment.  The 34 beneficiary
countries (LDCs in italics) are Benin , Botswana, Cape Verde , Cameroon, Central African Republic , Chad ,
Congo , Djibouti , Eritrea , Ethiopia , Gabon, Ghana, Guinea , Guinea-Bissau , Kenya, Lesotho , Madagascar ,
Malawi , Mali , Mauritania , Mauritius, Mozambique , Namibia, Niger , Nigeria, Rwanda , Sao Tomé and Principe ,
Senegal, Seychelles, Sierra Leone  (effective date to be determined by USTR), South Africa, Tanzania , Uganda
and Zambia .  Of the 24 beneficiary countries of the CBTPA, which expands on the Caribbean Basin Initiative
programme to allow duty-free and quota-free treatment for imports of certain apparel from the region, andextends NAFTA-equivalent tariff treatment to a number of products previously excluded from the CBIWT/TPR/OV/6
Page 38
3. Integrated Framework to build capacity
(a) First experiences with the Integrated Framework
127. The Integrated Framework (IF) for the LDCs is a partnership between six agencies – IMF,
ITC, UNCTAD, UNDP, WB, and WTO – and LDCs to provide them with assistance to integrate in
the world economy.  The six agencies manage the IF process through an Inter-Agency WorkingGroup (IAWG), chaired by the WTO.
109
128. A key principle of the IF is participation and ownership by the LDCs.  For that reason, the
WTO invited every LDC to submit a "Needs Assess ment" for trade-related assistance, including
physical infrastructures, human and institutional capacity-building, at the outset of the IF exercise.  In
their assessments, the authorities in most countries identified the major obstacles to trade expansion as
supply constraints and lack of capacity.  The needs ranged from training in information technology
and assistance to improve customs administration, through transport and storage infrastructures, toissues such as telecommunications, and electrical power.  Another major need was trade analysis and
policy expertise for export promotion, for the implementation of WTO agreements, and to build
capacity to participate more effectively in the WTO.
129. The six core agencies provided "Integrated Responses" based on existing programmes and
budgetary commitments by each agency, coordinated among agencies in order to avoid overlap.
110
The Needs Assessment and Integrated Response also formed an input into the "Round Table"
organized with donors during the High-Level M eeting that launched the Integrated Framework in
Geneva in October 1997.  Countries ranked and updated their needs in order to present them at trade-
specific donor consultations in the context of Consultative Group meetings organized by the World
Bank or roundtable meetings organized by UNDP, where an endorsement of the multi-yearprogramme of trade-related assistance was anticipated.  These consultations were expected to produce
additional pledges of assistance by donors.
130. Five countries organized trade-related Round Tables in the context of the IF between
December 1998 and March 2000:  Uganda, Tanzania, Haiti, Gambia, and Bangladesh.
111  F o r  t h e
countries involved, the process of designing programmes of proposed trade-related assistancepresented an important opportunity to build capacity and coordination on trade issues.  Each country
established a steering committee to coordinate the different agencies of its administration that deal
with trade issues, in consultation with representatives of the private sector, interested donors, and
representatives of academia.  Steering committees formulated objectives for trade policy and priorities
for trade-related assistance consistent with the overall development strategy.
131. In Uganda, the presence of donors and private sector representatives in its steering committee
facilitated a consistent ranking and full financing of the priorities identified by the programme at theConsultative Group in 1998.  At the Consultative Group of March 2000, the pledges for the Integrated
Framework and JITAP programmes were renewed, with trade an integral component of the country's
Poverty Reduction Strategy Paper (PRSP).  Tanzania also received the expected support for
trade-related technical assistance in the context of the Consultative Group meetings organized by the
World Bank.  The expectations of the Gambia and Haiti were unfilled as bilateral donors indicated a
                                                                                                                                                                    
programme, the only LDC beneficiary is Haiti.  Eligibility criteria include those in the CBI plus new criteria on
implementation of WTO commitments, participation in FTAA negotiations.
109 Within the WTO Secretariat, the Working Group on LDCs was established in June 2000 to increase
the profile of and the resources made available to the IF.
110 These are published, after consultations with the country concerned, in the document series
WT/COMTD/IF/1-40.
111 Bangladesh, Guinea, Mali, Togo, and Tanzania received additional support for the IF by WTO in
the context of their Trade Policy Reviews.  In 1999, Launch Workshops to raise political attention to the IF
process were organized in Bangladesh, Zambia, Tanzania, and Djibouti.WT/TPR/OV/6
Page 39
preference for trade-related assistance that was integrated into broader programmes of reform and a
commitment to liberalize.  For Bangladesh, the IF mainly helped accelerate the approval process for a
World Bank-supported project of export diversification.
(b) Review of the Integrated Framework
132. The IAWG commissioned a comprehensive revi ew of the Integrated Framework in 1999.
The review found that the IF was generally viewed as an important exercise by all stakeholders –
LDCs, donors, and the six agencies – but that the an ticipated results in terms of capacity-building had
fallen short of expectations, while recognizing that the process of creating capacity is lengthy.
However, there were "different perceptions regard ing the objectives of the IF between LDCs and
donors: LDCs expected additional funding; donors expected the IF to realize greater efficiency and
effectiveness by coordinating trade-related TA"… and "coordination was found more complex than
anticipated between the LDCs and donors, among donor s, and between the six agencies themselves".
Another problem identified was that the IF has been a generally under-funded mandate, with varying
degrees of priority being given to the IF by different donors and agencies.
133. The review led the IAWG to conclude that trade reform and liberalization were key elements
of national development and poverty reduction strategies.  The IAWG agreed on recommendations to
improve the functioning of the IF: (a) mainst reaming the IF into the existing development
architecture; (b) the necessity of resources;  and (c) enhanced management and governance of the IF.
The IAWG consequently decided to:
/g167 mainstream trade into national development priorities through development frameworks, as
expressed in the Poverty Reduction Strategy Papers (PRSPs) and the United Nations
Development Assistance Framework (UNDAF), with the World Bank taking the lead;
/g167 seek donor support for and voluntary contributions to an Integrated Framework Trust Fund
(IFTF), with a funding objective of US$20 mill ion for 2001-03, which is to be administered by
UNDP on behalf of the core agencies of the IF;  and
/g167 invite representatives from LDCs and donor coun tries to serve, along with Heads of the core
agencies, in a Steering Committee, to which the IAWG will periodically report.WT/TPR/OV/6
Page 41
APPENDIX TABLES
Table A.1
Initiations of anti-dumping investigations by reporting WTO Member and affected exporter, 1999
Reporting WTO Member Affected exporter
Name Number Name Number
Argentina 24 Algeria 2
Australia 23 Argentina 3
Brazil 16 Australia 3
Canada 18 Austria 3
Colombia 2 Bahrain 1
Czech Republic 1 Belarus 3
Egypt 5 Belgium 2
European Community 68 Brazil 14
India 68 Bulgaria 1
Indonesia 10 Chile 1
Korea, Rep. of 6 China, P.R. 39
Malaysia 2 Chinese Taipei 22
Mexico 11 Croatia 1
New Zealand 4 Cuba 1
Peru 8 Czech Republic 6
Philippines 6 Denmark 2
Poland 7 European Community 5
Slovenia 1 Finland 2
South Africa 16 France 8
Trinidad and Tobago 3 Germany 13
Turkey 8 Hong Kong 2
United States 46 Hungary 4
Venezuela 7 India 14
Total 360 Indonesia 20
Iran 2
Italy 2
Japan 23
Korea, Rep. of 34
Lithuania 4
Macedonia 1
Malawi 1
Malaysia 7
Mexico 4
Netherlands 2
New Zealand 2
Pakistan 1
Poland 3
Romania 5
Russia 19
Saudi Arabia 2
Singapore 5
Slovak Republic 3
South Africa 4
Spain 5
Table A.1 (cont'd)WT/TPR/OV/6
Page 42
Reporting WTO Member Affected exporter
Name Number Name Number
Sweden 1
Switzerland 1
Thailand 18
Turkey 6
Ukraine 10
United Kingdom 2
United States 15
Uruguay 1
Venezuela 2
Viet Nam 1
Yugoslavia 2
Total 360
Source : WTO Secretariat.
Table A.2
Initiations of countervailing investigations by reporting WTO Member and affected exporter, 1999
Reporting WTO Member Affected exporter
Name Number Name Number
Australia 1 Australia 1
Canada 3 Brazil 1
Chile 4 Chile 1
European Community 20 Chinese Taipei 5
South Africa 2 Czech Republic 1
United States 11 European Community 1
Venezuela 1 Former Yugoslav Rep. of 1
Total 42 France 2
India 6
Indonesia 5
Italy 1
Korea, Rep. of 4
Malaysia 2
Philippines 1
Poland 1
Singapore 1
South Africa 1
Thailand 5
United States 1
Venezuela 1
Total 42
Source : WTO Secretariat.
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