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A New Trade Horizon for Afghanistan

Afghanistan’s accession to the World Trade Organization is the culmination of more than a decade of legislative and business reforms to better position the country on the global trade stage.

December 17, 2015 marked a historic moment for Afghanistan. On that day, ministers formally approved the country’s terms of accession to the World Trade Organization (WTO) at the 10th Ministerial Conference (MC10) in Nairobi, Kenya. Although WTO accession is not yet fully complete —Afghanistan has until June 30, 2016 to ratify the deal and become a full-fledged member — the approval at MC10 was hailed as a significant milestone in the Central Asian nation’s evolution as a participant in international trade.

December 17, 2015 marked the culmination of over a decade of domestic governmental and trade reforms for Afghanistan.

How does WTO accession change the trade landscape for Afghanistan? After the process is complete, Afghanistan will begin to follow internationally recognized rules and dispute resolution mechanisms that govern 95 percent of global trade. Adhering to these rules opens many lucrative markets for Afghan businesses and provides protection and avenues for dispute resolution to the country under established trade laws.

Humayoon Rasaw, head of the Ministry of Commerce and Industries, the main government organization involved in shepherding the country through this process, described the long-term economic value of accession: “We view adherence to WTO agreements as critical for strengthening the rule of law, increasing transparency, and building the foundation for sound economic development in Afghanistan.”

WTO membership also sends a strong message to the rest of the world. It shows that Afghanistan’s business environment has improved; it is now much more predictable, transparent, and cost-efficient. Membership also signals to potential investors that their rights will be protected and that a strong legal system is in place.

Afghanistan’s road to the WTO began more than a decade ago, when it first submitted a request for accession in 2004. Yet, despite the formation of a working party soon after to begin the process, progress stalled in the years immediately following. The necessary institutional and technical support simply did not exist.

Afghanistan's WTO membership will go a long way in encouraging future investment from international groups.

This changed in 2009, with the launch of the USAID Trade and Accession Facilitation for Afghanistan (TAFA) program, implemented by Chemonics. Although TAFA had several goals, its main priority was to support the government in moving toward WTO accession. A big element was to provide guidance on legislative and business reforms that would create the environment to support WTO-adherent policies at the regional and international level. The Ministry of Commerce and Industries became a key partner in this process, developing policy reforms and educating government officials on the benefits of accession.

Chemonics and USAID also supported the working party meetings, the first of which was in Geneva in January 2011. Through five meetings, Afghanistan presented its Memorandum of Foreign Trade Regime, held multilateral negotiations on rules and market access, discussed agricultural support and export subsidies, and finalized its terms of accession.

Following the end of TAFA II in November 2013, the USAID Afghanistan Trade and Revenue (ATAR) project, also implemented by Chemonics, has continued to support trade policy with an even more explicit goal of WTO accession. ATAR activities have built on previous projects’ efforts, collaborating with the Ministry of Commerce and Industries to support new trade legislation that conforms to WTO rules at every level of review and approval. Since 2009, these programs have assisted Afghanistan with developing more than 30 trade reforms covering trade policy, intellectual property, customs, and food safety.

Five working party meetings, spanning 2011 to 2015, were a time for facilitated discussions around achieving WTO membership.

Most recently, from August to September 2015, ATAR staff assisted the Ministry of Commerce and Industries and other ministries to prepare responses to 90 questions from the WTO to fine-tune the Draft Working Party Report, the last step in the long process. Answering these last questions set the stage for the voting in December at MC10 in Nairobi.

Beyond these formal changes, the ATAR project has developed materials and presentations to educate media officials, government figures, and the private sector on the benefits and challenges of accession. These seminars and workshops will continue after accession is complete as part of a bigger public outreach campaign to build awareness.

There is still much to do, but the Afghan business community and government alike can take comfort in the fact that this accession should usher in a new era of international trade for the country.

WTO accession signals a new era of optimism around domestic reforms and international trade.

Afghan President Ashraf Ghani affirms that WTO accession "will serve as a catalyst for domestic reforms and transformation to an effective and functioning market economy that attracts investment, creates jobs and improves the welfare of the people of Afghanistan."

WTO Director-General Roberto Azevêdo’s speech at MC10 reflected this optimism. “Afghanistan’s WTO accession is a clear sign for all of the world to see that the country is building a business-friendly environment,” he said. “I am confident that the WTO membership will contribute to establishing a firm foundation for Afghanistan’s future development and prosperity.”

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