What waits the new Director-General of WTO?

Azevêdo, a Brazilian is an electrical engineer by education and a diplomat by profession was also Brazil’s vice minister and also permanent representative to the WTO. (Reuters photo)

By Ravi Bangar 

Roberto Azevêdo, Director-General, World Trade Organisation in a surprising announcement on 14 May broke the news of his resignation effective 31 August. Azevêdo, a Brazilian is an electrical engineer by education and a diplomat by profession was also Brazil’s vice minister and also permanent representative to the WTO. He is the first DG from Latin America to head the WTO starting in 2013. In 2017, his term was extended till 2021. His decision underlined mounting frustration over an organization increasingly becoming dysfunctional, constraints that have assumed larger significance as the world battles the worst trade crisis since the Great Depression. His departure comes at a difficult time for the organisation.

His assumption was after the then President Lula had handed over the baton to Dilma Rousseff, former President of Brazil. Still, the foreign policy of Brazil had Lula’s strong imprint on the country and of Celso Amorim at Itamaraty (Foreign Office). As a close aide of Celso, he enjoyed the confidence and support of the Brazilian establishment for his candidacy.

Those were the days of President Lula’s bright afterglow who believed that Brazil’s days of being in permanent “take-off” was finally over. And the time had come for Brazil to assert in international structures, enhance Brazil’s engagements with the developing world, especially in Africa and the Middle East. Leave his imprint on Brazil as a more equal and caring society [BolsaFamília (Family allowance) and Fome Zero (Zero Hunger)], his legacy of a modern Brazil which acquired its rightful place in the world under his command.

Those were also the heady days of BRICS gaining high visibility, acceptance and emerging as a credible voice for its possible role in reforming the Bretton Woods institutions.“Change” was the buzzword.

The international politico-economic scene of those days now seems another age, was characterized by the US at least willing to listen, the EU battling a financial crisis, Middle East and North African immigrants escaping wars in Syria, Iraq, the aftermath of the “Arab Spring”, regime change, unemployment and poverty. Japan – the world’s third-largest economy had fallen into recession, hit by sluggish exports to China. A confident China had started taking initial steps and straddling across the world stage. The “Rise of China”, peaceful or otherwise, seemed a given and unstoppable. The “virtuous cycle” of commodity-driven boom economic growth seemed endless, adding to the relative wealth and infrastructure creation in countries and regions as diverse and far as Australia, Latin America and Africa. Those were the days when the world was grappling with GFC 2008 and the era of recognizing the co-option of major emerging economies finding viable and lasting solutions to confront crisis as well as efforts to seek reforms of the institutions of global governance to respond to emerging needs of the new era.

Under Azevêdo’swatch, two WTO Ministerial Conferences (as the Commerce Ministers’ meetings are described in WTO) in Bali (2013) and Nairobi (2015) have taken place. The 2013 Bali meeting’s major outcome was the Trade Facilitation Agreement. It may be relevant to recall this had been on the wish list of the developed members pushed by the global logistics firms for long. The developing countries were quite lukewarm while negotiating as implementation had cost implications which were unlikely to come from the demandeurs.

By 2006-7, Doha Development Agenda negotiations were moving at a snail’s pace, GFC 2008 hit the global economy and the US, EU and the developed world developed cold feet. The Round, instead of a Development Round, turned into one of market access demanded by the developed members in the developing markets especially in those of the emerging economies. India, though a reluctant signatory to the round in 2001, had been the most vocal advocate of sticking with it. It criticised that “some members” had blocked its continuation. The developed members questioned China’s designation as a developing country.

At Nairobi in 2015, the WTO’s members declined to “reaffirm” Doha’s mandate. The Round started in 2001 with much fanfare was officially buried. The US hailed the Nairobi decision, saying it had cleared “the road to a new era for the WTO”. However, the birth of the “New WTO” was left undefined and what it was supposed to do.

The rise of the right-of-centre regimes and their disdain for multilateralism, sentiments of anti-globalisation posed fresh challenges to international trade and headaches to the WTO. Under Trump, the US aggressively pushed “America First” policy and lost appetite for multilateralism in respect of several multilateral agreements and organisations e.g. BREXIT, TPP, Climate Change, UNESCO and now WHO.

The US administration had concluded negotiations on Trans-Pacific Partnership. Enter Trump, with him, came in a strange policy, “if you can’t dump, renegotiate”. The US withdrew from the TPP in January 2017. Interestingly, almost all the things that the Trump administration demanded of China were covered by the TPP. But then since that was a pact under Obama and would need a “new deal” chiselled by President Trump –a self-proclaimed deal maker. Thus, a new US-China trade deal was signed in January 2020.

The 11-members of the dumped TPP signed a slimmed-down Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March 2018.

China focussed its efforts to cut a quick deal with the US and the Regional Comprehensive Economic Partnership. That agreement suffered a major blow with India withdrawing in November 2019.

On the North American Free Trade Agreement (NAFTA) President Trump said, “It’s been a disaster for the United States. It’s caused us tremendous amounts of unemployment, company loss and everything else.” He made it clear as he returned from the Group of 20 Summit in Argentina in December 2018 that he would soon terminate NAFTA. Thus, came into being US-Mexico-Canada Trade Agreement (USMCA), which he signed in January 2020.

The most well-known face of a DG, WTO in India is that of Arthur Dunkel with his eponymous “Draft”. He raised so much passion in India including in rural communities like no other DG before or after him has managed to do.

Immediately preceding Azevêdowas Pascal Lamy, a French. He continued “Green Room” meetings to reach consensus in invited small groups. These were described by participants as “tire out sessions” and as “conspiracy room tactics” by those left out.He held the two terms with aplomb and succeeded in inserting the organisation in G-20 as the GFC 2008 unfolded. He was the face of an active DG the organisation has had in recent times he thought out of the box. Some of his style and work ethics also rubbed on to his staff, Arancha Gonzalez Laya, his Chef du Gabinetis now the Foreign Minister of Spain.

The appointment of Director-General of the WTO is a consensus decision of the General Council, which consists of all WTO members. The candidates need to be nominated by their government. The candidates are invited to meet with members at a special session of the General Council, to make a brief presentation, including their vision for the WTO. This is followed by a Q & A session. The number of candidates has consistently grown—from three in 1995 to four in 1999, five in 2005, and nine in 2013. As the window of nominations closed on 8 July, eight candidates have filed nominations. The candidates this time are from Mexico, Nigeria, Egypt, Moldova, Kenya, South Korea, Saudi Arabia and the UK. The nominations have balanced regional and gender representation.

The candidates this time include- JesúsSeadeKuri from Mexico was the first to throw in his hat. He serves as Undersecretary for North America at the Mexican Ministry of Foreign Affairs. He previously served as Chief NAFTA negotiator for President Lopez Obrador, Ambassador to GATT, Deputy Director-General in the WTO. He is also a vice president at a university in Hong Kong-Shenzen, China. Dr.Amina Mohamed a Kenyan, has a long career in public and foreign service. She has held several positions at the United Nations and the WTO. She worked as the permanent representative for Kenya in Geneva. At the WTO, she chaired the General Council, Trade Policy Review Body and the Dispute Settlement Body. She was also nominated to DG post in 2013. Dr NgoziOkonjo-Iweala, a Nigerian, is an economist and international finance expert. She is a former Nigerian finance minister and served as a Managing Director of the World Bank. Ms YooMyung-hee, Republic of Korea, is a high-ranking official at the Korean Ministry of Trade, Industry and Energy. She has led trade negotiations including with the US, Singapore and ASEAN FTAs. Abdel-Hamid Mamdouh, an Egyptian, has experience as a trade lawyer, member of the WTO Secretariat, and trade negotiator for Egypt. Ambassador Tudor Ulianovschi, a Moldovan is former foreign minister. He also served as Moldova’s ambassador to Switzerland. Mohammad Maziad Al-Tuwaijri from Saudi Arabia, was the Kingdom’s economy and planning minister from 2017 to March 2020 when he was appointed as an advisor to the royal court. Liam Fox (UK), a Conservative politician served as the U.K. trade secretary.

As of now the real contest appears to be between the Mexican, Kenyan and South Korean candidates. The Mexican and Kenyan candidates check all the required boxes as having played a central role in trade and WTO.

In 25 years of its short history, the WTO has done some excellent work. Since 1994 global trade has been stimulated in part by a steady decrease in tariffs, reduced tariff protections has quadrupled in value. It has gone hand in hand with domestic reforms and has contributed to lifting hundreds of millions of people out of poverty.

The protectionism was on the rise even before the COVID pandemic. The WTO’s influence is diminishing as trade negotiations start to take shape in nations’ capitals instead of Geneva. The US a beneficiary of the organisation now complains that the WTO has not kept pace with economic changes. President Trump has regularly criticized the WTO, calling it “broken” and “unfair.” He held the threat of pulling the US out of it. In November last year, the US blocked the WTO’s Appellate Body biennial budget for 2020 and 2021. This has rendered the Appellate Body dysfunctional from December last year.

If the selection process for a new director-general turns into the next battleground at the WTO, the organization will continue to wallow in stasis. As they merrily indulge in raising walls of protectionism, cutting trade deals and likes of “Make America Great Again”, European Sovereignty or self-reliance campaigns. The larger question is- will the key members allow that to happen in the crises the world is faced with?

As India aspires to a $ 5 trillion economy, the trade will no doubt play an important role. It is time for India to play its rightful role in reshaping the post-COVID 19 institutions of global governance. India has the profile and eminent trade experts who could have led this specialised international organisation. India ought to be in the driver’s seat to lead reforms. Alas! That was not to be.

The time of “if it ain’t broke, don’t fix it” is long over as WTO is effectively broke with non-functional Appellate Body. The need for an effective WTO has never been more urgent. The job for new DG is indeed cut out for him/her. The Centre William Rappard office waits for him/her to save it from further drift.

The organisation needs a fix and that too in double-quick time. Regardless of who gets to head, the WTO’s future is ultimately in the hands of its members. Will they rise to the occasion and let DG and the institution to deliver in the challenging times?

(The author is Former Ambassador to Colombia and Ecuador, High Commissioner to Cyprus, Deputy Permanent Representative to the WTO and Deputy High Commissioner to Singapore. At the Ministry, he headed Multilateral Economic Relations, West Africa and East & Southern Africa Divisions. The views expressed are personal.)