TRANSFORMATION OF WORLD TRADE ORGANIZATION ACCESSION FROM INTERFACE TO MARKETIZATION IN THE INTEGRATION OF NON-MARKET ECONOMIES

TRANSFORMATION OF WORLD TRADE ORGANIZATION ACCESSION:

FROM INTERFACE TO MARKETIZATION IN THE INTEGRATION OF NON-

MARKET ECONOMIES

Introduction

In the era of globalization and increasingly dynamic international trade, the

integration of non-market economies (NMEs) into the World Trade Organization (WTO)

poses significant challenges and new opportunities. This study aims to analyze the

transformation of the WTO's approach in dealing with non-market economies from being a

neutral interface to a "marketization" strategy that requires pro-market economic reforms

as a condition of membership. This process reflects an ideological shift in the global trade

regime, where the WTO does not only act as a regulator and facilitator free trade, but also

as a catalyst for economic transformation from NME countries to a market economy

model.

The GATT/WTO trade rules are based on market economy assumptions. The

regime encourages reduced government intervention in international trade activities and

aims to facilitate trade by restricting national governments from adopting measures that

impede the free flow of trade. In contrast, NMEs are characterized by a state monopoly

over foreign trade and a planned approach to all economic activity. From this perspective,

the practice of NMEs has led to significant conflicts with GATT/WTO principles.

There have been many studies that discuss the transformation of market accession

through the WTO such as by, Shaffer & Pabian (2015), Trujillo (2015), Liebman & Tomlin

(2015), Boza & Fernández (2016), who concluded that the reform of WTO rules to allow

the building of public food reserves highlights the need for adaptation and flexibility in

WTO rules to address the global crisis, which is in line with your findings regarding the

expansion of policy interpretation and adaptation in integrating NMEs. In addition, studies

by Theodorou (2017), Cowling et al., (2019), Solomon (2023), Baetens (2023), Hopewell

& Margulis (2023), recognize that the strategic role of the WTO in regulating and

stimulating global principles that support economic growth and innovation.

The difference between this research and previous studies is that this research on

the integration process of NMEs into the WTO with a focus on the evolving trade

diplomacy approach and the challenges of different economic systems has significant

similarities and differences with previous studies. It seeks to examine the transformation

from a neutral interface model to a "marketization" strategy that emphasizes NME reform

as a condition of WTO membership. This is closely related to your research focus on how

the conflict between the market economy assumptions of the WTO and the planned

economy practices of NMEs has led to the development of unique integration strategies.

On that basis, the research question is "How can the WTO integrate NMEs while

maintaining the free-market principles that are the foundation of the organization?"

Multilateral Trade Diplomacy towards Non-Market Economies

The problems that NMEs present to the global trading system essentially arise from

government interference in commercial activities, which causes market distortions and

erodes the norms and principles generally applied in a market-oriented economy. However,

there is still debate on whether the general rules of the GATT/WTO have the ability to deal

with NMEs. This issue dates back to the GATT era. Multilateral trade diplomacy, which is

at the core of international economic cooperation, refers to negotiations conducted between

three or more countries to reach agreements governing aspects of international trade. The

aim is to create a more open and fair trading system, reduce trade barriers by lowering

tariffs and eliminating quotas, and address new issues such as environmental standards and

labor rights. In this context, the GATT/WTO plays an important role in facilitating and

regulating multilateral trade diplomacy, providing a forum for negotiation and dispute

settlement that helps prevent trade conflicts and promote global economic stability.

There are two approaches in explaining multilateral trade diplomacy during the

GATT era. First, the Interface principle emphasizes the function of the international regime

as an intermediary between countries with diverse economic policy preferences. Given that

the GATT was supposed to be neutral towards domestic economic design choices and only

provide a negotiating forum for countries to find solutions to their differences, this meant

that NMEs were not burdened by international trade obligations to reform their domestic

economic structures, as long as there was agreement on a formula to adapt different trade

practices. Second, the principle of liberalism provides insight into the complexity of trade

diplomacy. This theory portrays the GATT as a series of complex compromises reached at

the multilateral level to ensure a balance between trade liberalization and diverse domestic

social policies. From this perspective, accession arrangements for NMEs certainly provide

space for those countries to adjust their domestic economic structures, without intervention

from other GATT Contracting Parties.

Interface Principle

The interface principle of the GATT has mainly been explained by John Jackson

(1989, 1990, 1997, 1995), regarding the adjustment of NMEs within the GATT and even

the friction of the system among GATT members who adhere to a market economy. This

concept is based on two assumptions of the GATT regime. First, GATT was designed to be

'universal'. Jackson traced the history of the International Trade Organization (ITO) and

concluded that since the GATT had to fill the void left by the failure of the ITO, the GATT

had also inherited the basic mission to accommodate all types of economies. As a universal

forum for all types of economies, Jackson emphasized that it is not the purpose or role of

the GATT to put pressure on sovereign states to accept market-oriented economic

principles, as the internal structure of a country's market should be left to that country's

own judgment. The second assumption is that different economic systems will always exist

in the world. Even within the same category of 'market economy', there are still varying

degrees of government intervention in the market (Jackson, 1990).

As global economic interdependence increases, trade diplomacy between different

economic systems also becomes more difficult. Jackson sees this problem as similar to the

difficulties involved in trying to get two computers of different designs to work together,

with the solution being an "interface" mechanism that mediates between the two computers

(Jackson, 1997). In international trade relations, the GATT rules serve as such an interface

between countries with different economic systems. The international regime merely

provides rules and a negotiating platform to reduce the incompatibilities among its

members' market structures. The GATT itself, although based on market principles, is

neutral to domestic economic design choices. With regard to the debate on how to integrate

non-market countries into the GATT, the objective should be designed a set of interface

rules under which the planned economies of the NME countries could trade with the

existing GATT market economies as far as possible (Jackson, 1990).

The integration of Poland, Romania, and Hungary into the GATT system fit

perfectly with the interface principle. Their domestic economic structures were accepted as

they were. The goal during negotiations was to achieve a satisfactory conversion of trade

benefits. Poland and Romania had difficulty in offering reciprocity for the benefits

attributed to membership, due to the state-run nature of their foreign trade. However, the

solution to this problem was not to introduce a tariff system as in a market economy.

Instead, negotiators sought a formula to convert import quotas into trade benefits

equivalent to tariff concessions (Nedumpara & Zhou, 2018). In these cases, the GATT

serves as an interface between the two countries. The choice of economic system is left to

the contracting Parties and the GATT only provides rules aimed at facilitating trade and a

forum where members can negotiate once a dispute arises.

Marketization Liberalism

While not specifically addressing the issue of NMEs, liberalism is another theory

that helps in understanding the GATT's approach to NMEs. This theory, which is very

much synonymous with the works of John Ruggie, points further to the complexity of trade

diplomacy, as it understands the GATT as the amalgamation of a series of complex

compromises- achieved through multilateral bargaining - designed to strike a balance

between trade liberalization and domestic social policies (Ruggie, 1982).

This theory focuses less on the economic justifications for GATT, such as

comparative advantage or the benefits of free trade, than on its domestic political reasons.

Historically, Ruggie suggests that the principles of multilateralism, tariff reduction, and

reciprocity were affirmed during the Bretton Woods negotiations (Ruggie, 1982).

However, Bretton Woods diplomats were not committed to total free trade (Howse, 2002).

Instead, they understood the need for state intervention to ease the disruptions that trade

liberalization might produce (Dunoff, 1999). Therefore, the task of the post-war

reconstruction of international economic institutions was to maneuver between the two

concepts of economic liberalization and domestic stability, GATT was designed to reduce

tariffs and other trade barriers while simultaneously offering various exemptions,

safeguards, and exceptions to protect domestic social policies (Lang, 2006). For example,

although quantitative restrictions were generally prohibited, they were expressly permitted

as a means of protection. Through a series of such compromises, the GATT was structured

in a way that sought the benefits of trade but simultaneously 'promised to minimize

socially disruptive domestic adjustment costs and national economic and political

vulnerabilities' resulting from the international division of labor (Ruggie, 1982).

The underlying 'liberal' compromise was that in return for liberal trade policies,

GATT countries would provide various domestic safety nets. John Ruggie has labeled this

bargain as compromise liberalism (Ruggie, 1998). For John Ruggie, the essence of

liberalism is to devise a form of multilateralism that is compatible with domestic stability

needs (Lang, 2006). This is also reflected in the GATT's approach to NMEs, as accession

arrangements provide new members with room to maneuver their domestic economic

policies. The design to integrate NMEs during the GATT era was about ensuring

reciprocity in trade benefits and offering emergency escape mechanisms. The domestic

economic structures of these countries were left untouched. Viewed from the liberalism

model, countries with planned economies were given wide latitude over their domestic

market structures, free from interference by other GATT Contracting Parties. Multilateral

trade diplomacy in the early period of GATT was thus not simply a way to create one

economic model (marketization) but more about managing trade relations among different

economic models.

Methods

Qualitative methods were used to analyze and understand the complex dynamics

between market and non-market economies within the WTO framework. This approach

allows researchers to delve into the historical, political, and social aspects that influence

the integration of NMEs into the global trading system. Through in-depth text analysis, the

researcher tried to understand how and why these countries sought to enter the WTO, as

well as the resulting impact on domestic and global policies. The data collection technique

used desk research, covering the history of NMEs' accession to the WTO, the theory of

multilateral trade diplomacy, and the GATT/WTO principles. The research collected data

from various sources and then validated the data using data triangulation, including

academic publications, official WTO reports, and other relevant literature to build

arguments and support its findings.

NMEs' participation in GATT

Initially, countries with centrally planned economies, such as Cuba and

Czechoslovakia, were not actively involved in GATT even though they were founding

members. Their affiliation with the socialist bloc, which formed after the signing of the

GATT agreement, made them passive partners who did not participate in tariff reductions

or demand fulfillment of commitments by other GATT members. The question of how to

organize trade relations between Eastern and Western European countries arose in the mid-

1950s, especially when trade between the two blocs began to increase. The issue was first

addressed by Czechoslovakia in the context of anti-dumping practices, which then led to

the addition of an interpretive note to GATT Article VI (Brabant, 1991).

Poland's accession to GATT in 1967 is considered a watershed moment, which

marked the entry of the first planned economies into a system based on free market

principles. Special mechanisms were developed to integrate these planned economies into

the GATT (Kostecki, 1979). The attitude of NME countries towards the multilateral

trading system evolved over time. They initially rejected the multilateral trading order and

its institutions, however, after a period of isolation, their perceptions gradually changed,

mainly due to the growth of trade with Western European countries and the desire to

develop trade relations with Western market economies. This is prompting them to explore

multilateralism as a means to reduce export controls and discrimination against their

products (Nedumpara & Zhou, 2018).

In the mid-20th century, the Soviet Union even proposed the creation of the ITO as

a new framework for international trade, but this proposal did not receive much support.

This inability to establish a new trade organization prompted non-market countries to

eventually turn to the GATT, marking a significant shift in their approach to their post-war

multilateral trading system (Nedumpara & Zhou, 2018).

In the era of GATT membership in the late 1960s and early 1970s, NMEs such as

Poland, Romania and Hungary joined GATT without abandoning their centrally planned

economic systems. Despite the reforms, the economies of these countries remained far

from the market economy model of the West. GATT, which was originally designed for

market economies, found it challenging to integrate countries with strict, state-planned

trading systems. In the membership process, GATT adopted special membership protocols

and mechanisms such as import quotas and special safeguards to bridge the differences in

economic systems. This allowed GATT to maintain market principles while accepting the

planned economy characteristics of new member countries (Kostecki, 1979).

The GATT membership protocols for countries with state trading systems, such as

Poland, Romania, and Hungary, did not change the existing GATT rules much. In terms of

the principle of reciprocity, the protocol simplified the conversion between tariff

concessions and import quotas for Poland and Romania, while for Hungary, which

implemented a new tariff system in line with other GATT members, no special

arrangements were needed. The only special mechanism used was the safeguard clause,

which allowed GATT members to take remedial action against export surges from the new

countries. Beyond this exception, there are no special requirements in the protocol that

address the planned market characteristics of the new joining countries.

Essentially, when these planned market system countries joined the GATT, there

was no formal expectation for them to undertake market reforms. While there was an

expectation from existing GATT members that the trade policies of NME countries would

become more market-oriented, this expectation was not backed by a legal obligation to

implement economic liberalization.

Accession of NMEs to the WTO: From Interface to Marketization

The entry of NMEs into the WTO took place in a very different international

political environment from that of the GATT era. During the Cold War, formal trade

relations between market economies and the Soviet bloc were largely determined by

political and strategic considerations rather than economic concerns. The end of the Cold

War was an important factor in the reintegration of NMEs into global trade and changes in

multilateral trade diplomacy. Along with the end of the Cold War and the collapse of

communist regimes in Eastern Europe and later the Soviet Union, bipolarity in

international politics and economics also diminished. There were no longer two opposing

economic systems: capitalist or communist; market or planned. With the fall of the

communist parties, these previously planned economies all rushed to reform their domestic

economic structures (Huang, 2009).

Reforming countries sought entry into the GATT/WTO system just at the time of

the Uruguay Round of negotiations (from 1987-1994) when existing GATT countries

sought to move beyond the traditional emphasis on trade in goods to deeper economic

integration involving trade in services, intellectual property and strengthened dispute

settlement mechanisms. The increasing global presence of multinational corporations from

developed countries has resulted in demands for market access beyond national borders. As

tariffs have been greatly reduced in previous rounds of GATT negotiations, the concept of

market access is now extended to investment, services and intellectual property protection,

all of which reflect the commercial interests of powerful trading partners such as the

United States and Europe (Nedumpara & Zhou, 2018).

The proliferation of international market opening rules and technology lease

protection led to a shrinking policy space for WTO members, particularly developing

countries. The final outcome of the Uruguay Round resulted in a new trade organization

with new scope of issues - including trade in services and trade-related intellectual property

rights - and more detailed rules for traditional issues. The entire set of WTO Agreements

forms a single package - that is, countries that join must accept or reject the results of

several negotiations in one package, rather than choosing between them. These rules

promote a market economy while providing limited tolerance for state intervention, and as

a result, the policy space available to WTO members in the areas of trade and industrial

policy has shrunk. (McCorriston & MacLaren, 2002)

Along with the expansion of the WTO domain and the adoption of a more rules-

oriented approach, WTO members began to ask for accession commitments on the new

member's compliance with WTO rules, on the introduction of new measures and

regulations, and on the implementation of WTO obligations. Accession to the organization

demanded a comprehensive review of the trade policies of the country that was about to

join, and the time required for negotiations became longer. However, the way to integrate

NMEs was not changed. The WTO did not establish a committee on this issue. No new

agreement attempts to provide a unified approach to accommodate reforming countries

(Wallis, 2010). Although there were academic discussions on how to integrate reforming

countries into the international trade organization in the late 1980s and early 1990s, no

action was taken. Even with the accession of large NMEs such as China and Russia, the

international economic regime remained immobile in developing new mechanisms to

resolve conflicts that might occur due to the accession of these countries (Huang, 2009).

It means the ongoing convergence of economic ideologies. The term 'convergence

of economic ideologies' refers to post-Cold War developments that saw the end of

competition between two economic policy ideologies - planned economy and market

economy. The pursuit of market economic structures in the domestic sphere has become

the only option after the disappointing failure of communism (Ash & Holbig, 2013).

Indeed, the degree of state intervention varies among market economies such as the United

States, Europe, and Japan. However, they are still based on the general principle that

government intervention is the exception, and the rule. The main agents of economic

activity are private entities (Davis & Wilf, 2017). Similarly, reforming countries may adopt

different approaches of market reforms and have different designs of government

involvement in their new economic structures. However, their common goal is to establish

a new market order based on private enterprise, not state planning (Brandt, Van

Biesebroeck, Wang, & Zhang, 2017).

Since the joining countries are pursuing the same goal of a free market economy,

the WTO's response to their applications to join the organization is different from the

GATT era. The main consideration of WTO members now is not how to integrate

countries with features of a planned economy, but how to provide a transition mechanism

before these members become Western-style market economies. As one expert noted, the

fundamental question is no longer 'why can't they be more like us?', but now that non-

market countries have decided to become like market economies, 'what is the most

efficient way, therefore the least painful way, to do it?' Since WTO rules - which represent

the norms of the multilateral trading regime - are regarded by reforming countries that join

as a guide to economic reform, accession negotiations are designed to provide a roadmap

for these countries to adopt a 'WTO-compatible' system, not to provide an interface of the

two systems. The whole purpose of trade diplomacy has changed from a very narrow

means of managing dependency to a more politically driven strategy of encouraging

domestic restructuring - what I refer to as marketization (Davis & Wilf, 2017).

As a result, more recent WTO accession negotiations involving NMEs no longer

emphasize the translation between import quotas and tariff concessions. The emphasis is

now on transforming market structures in countries seeking accession. Centrally planned

economies were previously required to privatize enterprises and establish competitive

market structures. The demands made on countries such as China, Bulgaria, Latvia,

Estonia, Lithuania, and other former Soviet states focused on corporate trading rights and

liberalization programs (Brandt et al., 2017).

Typically, accession countries are required to guarantee the right of individuals and

companies to import and export goods. These obligations are described in detail in the

working group report, which is then integrated into the accession protocol (Qin, 2004). For

example, the working group report on Latvia's accession recorded confirmation from

Latvian representatives that "the state monopoly on foreign trade has been abolished and

there are no restrictions on the right of individuals and companies to import and export

goods into Latvia's customs territory" (Allee & Scalera, 2012). Similar statements are also

contained in the working group reports of Bulgaria, Estonia and Lithuania. These countries

further confirm that "individuals and companies are not restricted in their ability to import

or export by virtue of the registered scope of business", and the criteria for company

registration are generally applicable and published in their national gazette (Pelc, 2011).

In addition to the above requirements on trade rights issues, non-market applicant

countries are also required to provide annual reports to WTO members on the progress of

their privatization programs. Concerns about overall economic policy are also submitted

(Ya Qin, 2003). For example, in its working group report, Latvia described its price control

policy, provided a list of goods under state price controls, and committed to implement

price controls in a WTO-consistent manner that takes into account the interests of

exporting WTO members. This obligation of accession cannot find its basis in the text of

the WTO agreement. Although the preambule of the Marrakesh Agreement Establishing

the World Trade Organization mentions the principle of trade liberalization, there are no

words about market economy or privatization. Accession obligations that exceed the

existing requirements of the WTO agreement are often referred to as "WTO-plus"

obligations (Ya Qin, 2010). Although WTO-plus accession requirements are regarded by

some observers as a potential danger to the integrity of the 'WTO rule of law', at the same

time these 'market economy obligations' are claimed to impose no additional obligations on

the joining countries, as they are necessary to ensure the compatibility of the joining

countries' systems with the WTO system (Qin, 2012).

However, these accession commitments on market structures echo the call for

'meaningful market access commitments' in the first WTO Ministerial, held in Singapore in

1996, as they are designed to ensure that reforming countries have pro-market economic

structures in areas where foreign products and services should be able to compete fairly

with domestic rivals (McCorriston & MacLaren, 2002). Overall, contrary to the GATT

approach of providing an interface to close the gap between market economy contracting

parties and planned economies, the WTO takes a 'like us' approach. The WTO regime in

this context represents a club that is only open to members operating on market principles.

If a country wants to join the club, it has to transform to become like those in the club. The

organization thus abandons its identity as a neutral forum in this regard. Economies that

operate on a non-market basis are subject to pro-market reforms that are part of their entry

ticket to the WTO (Pelc, 2011).

This different approach is related to changes in the international political

environment and the GATT/WTO regime itself. When the first three NMEs entered into

GATT in the 1960s, the focus was still on the elimination of quantitative restrictions and

tariff reductions. As these two border measures were considered the main barriers to free

trade, it was natural that Contracting Parties wanted to exchange tariff concessions for

import quotas as a way to guarantee market access. However, since the Tokyo Round,

which was negotiated between 1973 and 1979, the discourse in the multilateral trading

system has shifted to non-tariff measures. More and more domestic policies or even

domestic market structures are identified as barriers that offset the benefits brought by

tariff concessions (Davis & Wilf, 2017). The Uruguay Round not only established the

WTO, but also expanded the scope of the multilateral trade regime to previously uncovered

areas and which set more detailed rules for areas such as anti-dumping, safeguards, and

agricultural trade. Recent accessions by non-market countries were negotiated in this

environment. It is clear that a regime approach that focuses on a more liberalized domestic

economic/market structure influences the way NMEs are placed in the WTO (Robertson,

2018).

From the perspective of non-market countries, due to the convergence of economic

ideologies, joining the WTO may not only be seen as a disadvantage. Many suggest that

national governments are using the opportunity of joining the WTO to support market

reforms that they had already planned. The two-level game approach developed by Putnam

provides a framework for understanding how domestic and international influences affect

each other simultaneously. The model describes international negotiations as a two-level

game involving national political leaders who must be on both the domestic and

international game boards at all times. At the international level, national political leaders

may seek to get the best deal acceptable to their foreign counterparts. Ultimately, however,

decisions must also be acceptable to the negotiator's domestic constituency. WTO

accession negotiations may play a similar role in reforming countries' domestic

restructuring. Since the internationalization of economic reforms can create more room for

political action at home, it is not surprising that these market commitments can be

integrated into WTO accession protocols without too many objections.

Trade Diplomacy as a WTO Strategy in Designing the Global Economy through

Accession Protocols and Market Reforms

This discussion highlights two key features in the WTO's approach to country

reform, namely country-specific accession protocols and the need for market reforms. This

approach illustrates the convergence of ideologies on building market-based economic

structures, which have become dominant in the way the WTO interacts with its member

countries. More than just free market negotiations, trade diplomacy in the WTO,

particularly in accession negotiations, includes a process of coercion to encourage the

restructuring of a prospective member country's domestic economy.

The convergence of post-Cold War economic ideologies has pushed the world

towards economic liberalism, with the old center-planned economies adopting market

reforms and seeking membership in the GATT and WTO. The accession protocol for

reforming countries requires confirmation of ongoing pro-market reforms and a

commitment to report on the progress of those reforms. This indicates a shift in the

multilateral trading regime represented by the WTO, from integrating countries with

different economic systems to requiring them to transform according to market economy

principles.

This approach emphasizes the "direction of movement" from NMEs to market

economies as an indication of progress, with market economies considered as the goal or

objective. However, ironically, even if newly joined non-market economies have fulfilled

all the required reforms, they are not automatically treated as market economies in the

context of the WTO's anti-dumping or compensatory duties rules, indicating a mismatch

between reform obligations and treatment in regulatory trade remedies.

The pro-market direction of the WTO can be observed by highlighting two aspects

in the treatment of trading countries. Institutionally, the special situation of having an

NMEs system or an economic structure in transition is addressed with country-specific

accession protocols. Second, in terms of substantive accession obligations, the need for

pro-market reforms is irrefutable evidence of this direction.

Accession protocols imply temporary tolerance of planned economies within the

Organization. Although all WTO accession protocols contain a clause stating that the

accession protocol is an integral part of the WTO agreement and accession commitments

are enforceable through the dispute settlement mechanism, the legal status of accession

protocols is not always equivalent to that of WTO agreements. Politically, the planned

economy feature is a special exception granted to trading countries in the accession

protocol. As an exception, the trading country feature is meant to be eliminated in the

course of economic reforms. The use of accession protocols as the main instrument for

integrating NMEs emphasizes the direction of movement towards market economies.

The substantive obligations in the accession protocols of the trading countries even

more clearly reveal the direction set towards a market economy. The required periodic

reports on the progress of reforms put pressure on the accession countries to keep their

direction towards a market economy on track. A thorough examination of domestic policy-

making processes and price mechanisms also emphasizes the importance of establishing

WTO-compliant domestic systems. This obligation not only expressed concerns over

market access to the domestic markets of the joining countries, but also built a roadmap for

future reforms. Many scholars argue that the GATT/WTO is a neutral forum for countries

with all types of economic structures, and that the GATT/WTO does not interfere with the

market structure choices of its members. However, this clearly does not apply to the issue

of state trading countries.

Indeed, negotiations to join the WTO include both bilateral and multilateral aspects.

Bargaining power differs among joining NMEs and therefore their ability to resist or limit

the application of WTO-plus obligations varies as well. Nevertheless, competition policy,

pricing policy, privatization, and periodic reports on reform progress have become

important common features in the accession protocols of some transition economies. The

trend towards harmonization of domestic economic policies is contrary to the principles of

liberalism. The requirement on trading countries to marketize and by implication adopt

Western-style administrative regulatory systems limits their economic reform policy

options. The maneuvering space of national governments is limited by their WTO

obligations.

The WTO's imposition of a single set of standards for NMEs is consistent with the

interpretation of coercive diplomacy, which refers to 'the use of intimidation to make

others comply with one's wishes'. To address the question of how the WTO 'imposes' its

single-rule logic while participation in international economic organizations is actually a

'free choice of states', Grewal's concept of 'network power' (Grewal, 2003) can be used.

Grewal explains how the dynamic operation of economic globalization reflects a kind of

domination. A network is defined as 'a group of people united in a particular way that

makes them capable of recognizing and exchanging with each other'. Such networks come

together through 'standards', which are certain shared norms or practices that members use

to gain access to each other. When seen in the context of the WTO, the standards to which

Grewal refers are actually the overall regulatory framework of the WTO agreement.

Grewal argues that network power comes from two aspects: first, as more people use the

coordination standard, the standard becomes more valuable; and second, as more people

are coordinated into a network, it progressively eliminates alternatives where free choice

among standards can be effectively exercised.

Grewal brings this concept to the WTO agreements. He argues that the WTO has

network power as the coordinator of the multilateral trading system. The WTO is not only

a free trade organization, but also supports certain types of trade regimes. The desire to join

the WTO stems from the desire for freer trade with other countries. With the support of the

world's major economies, the WTO now regulates almost all international trade. Those

who want to access the world's major economies can do so through WTO membership,

provided they comply with WTO standards. However, the formation of WTO regulations

was historically designed for the needs of trade between industrialized countries. When

non-market countries joined the WTO, they could only choose between established

standards or isolation from the main trade organization. Thus, the networking power of the

WTO results in a dominant set of minimum standards in trade policy. Although its

members join voluntarily, they also lose the possibility of other standards that may be more

favorable to them.

The WTO's approach towards NMEs adds to the claim that coercive diplomacy is

applied in the international trade regime. Unlike the GATT interface approach, the

marketization requirement under the WTO became the only option for non-market

economies for reintegration into global trade. It is true that the former planned economies

undertook market reforms on their own initiative, and the attempt to join the WTO was part

of their own project. However, Cold War rivalries have kept most of these countries

isolated from the trade network dominated by the United States and Europe. With the end

of the Cold War and the collapse of the Soviet Union, these countries tried to reconnect to

the network represented by GATT/WTO. Recognition by the international community is a

strong motivation for market reforms. The adoption of international norms is a step

towards recognition, as the strength of the WTO network eliminates other alternatives for

global economic cooperation.

Conclusion

The WTO has taken a strategic approach in integrating countries with non-market

economies (NMEs) by encouraging them to adopt pro-market economic reforms as a

condition of membership. This process represents a shift from the more neutral GATT

interface model, which facilitated system differences without significant pressure on

domestic restructuring, towards a more stringent marketization strategy in the WTO era.

This approach reflects the WTO's tendency to support economic liberalization by

integrating NMEs into a more uniform global regulatory framework. Through active trade

diplomacy, the WTO not only helps resolve trade conflicts arising from diverse domestic

policy preferences, but also encourages NMEs to modernize their economies in accordance

with free market principles. This involves establishing regulatory structures similar to those

of Western countries, considered necessary for effective participation in the global trading

system. Thus, the global economic integration driven by the WTO involves significant

marketing, which marks an ideological shift from the original function of the GATT.