WASHINGTON, DC, 15 December 2005 – As members of the World Trade Organization huddle in Hong Kong this week to negotiate further trade liberalization, much of the world’s attention is focused on giving farmers from developing countries - especially those in Africa - greater access to developed country markets.

The countries of Europe and Central Asia (ECA) are seldom mentioned in these discussions. Ten of the region’s countries - all part of the Commonwealth of Independent States - are not even members of the World Trade Organization.

Many, however, are knocking at the door. Azerbaijan, Belarus, Bosnia and Herzegovina, Kazakhstan, Russia, Serbia and Montenegro, Tajikistan, Ukraine and Uzbekistan are in various stages of the WTO accession process. Only Turkmenistan has not yet formally applied.

Whatever the schedule of accession, membership is clearly a must, argued Harry Broadman, lead author of an upcoming World Bank study on trade and the international integration of Eastern Europe and the Former Soviet Union, in an interview today.

“The main benefit of WTO membership is that it provides members with greater access to markets and a rules-based system under which to trade,” said Broadman. “But other benefits, while not immediately apparent, could be even more profound by helping transition countries lock in their domestic, “behind-the-border,” reforms. WTO accession could have an important impact on improving governance, enhancing inter-enterprise competition, deregulating services, and promoting trade facilitation.”

Preliminary results of a study simulating the benefits of WTO membership for Ukraine show that the country’s GDP could grow by an additional 2.3 to 2.8 percent, if the services sector were opened to foreign direct investment, import tariffs lowered and access to foreign markets improved for Ukrainian exports.

But gaining market access abroad is only one piece of the puzzle for countries to realize their full trade potential, cautioned Broadman.

Fighting corruption, streamlining customs procedures and removing competitive obstacles to starting new businesses are also crucial if countries are to enjoy the benefits of increased growth that greater trade can engender. “Even if markets abroad were opened fully, businesses in many transition countries would not be competitive enough to actually exploit those new market opportunities.”

The case of Georgia, which joined the WTO in 2000, is instructive. It wasn’t until the popular uprising known as the “Rose Revolution” put a failed state to rest in November 2003 that Georgia began to reap the benefits of trade liberalization, said Rosalinda Quintanilla, Lead Economist for Georgia at the World Bank, in a separate interview.

Under a new leadership, the country has been able to expand foreign trade and attract more foreign investment - well beyond investments related to oil and gas pipelines, and despite the economic slow-down in Europe. “They understand that the only way for a small poor country to prosper is by integrating into EU and global markets,” she said.

One of the decisive measures taken by new Georgian government was to fire the entire corps of traffic police who were extracting bribes from truck drivers at every stop. The government also embarked on a clean-up of customs, launched sweeping tax reforms and simplified the regulatory environment.

“Georgia is now a better place to do business;” said Quintanilla. “Being part of an international trading system is essential to Georgia's growth prospects and gives the country a framework for adopting international practices.” Together with membership in the European Neighborhood Policy, being part of an international institution like the WTO is a “powerful modernizing tool,” she said.

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To view recent trade and business indicators from the World Bank's database, select a country in the drop-down menu:

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Visit http://www.worldbank.org/eca/tradereport

The World Bank's Georgia website is at: http://www.worldbank.org/ge

Also on the web: A discussion of the potential importance of WTO accession for Russia.