Incumbent World Trade Organization (WTO) Director-General (DG) Mr. Roberto Azevedo’s recent announcement of his resignation a full year before concluding his second term of office took the world by surprise, and presents another plot twist among the mounting challenges confronting the guardian of the multilateral trading system. The incoming DG – whoever he or she may be – faces the herculean task of tackling these challenges head on in an atmosphere of growing protectionism, the COVID-19 pandemic and deafening calls for WTO reform.
This SRC Trading Thoughts offers a Caribbean perspective on the on-going DG race at this critical juncture in the WTO’s history and why Caribbean Community (CARICOM) Member States have a vested interest in this process and its outcome.
The WTO DG’s role is largely administrative as the organisation’s 164 members determine the policy agenda and make the policy decisions by consensus. However, despite lacking any real formal power, the DG can exert considerable soft power to help Members build consensus. For example, the DG is the ex officio chair of the Trade Negotiations Committee and the Dispute Settlement Understanding also empowers the DG, in an ex officio capacity, to offer his/her good offices to assist Members to settle a dispute.
As such, the DG is mandated under the Marrakesh Agreement to be a neutral and impartial actor regardless of his or her nationality. He or she is not to ‘seek or accept instructions from any government or any other authority external to the WTO’. Members are to ‘respect the international character’ of the DG and Secretariat Staff’s responsibilities and ‘not seek to influence them in the discharge of their duties’.
Mr. Azevedo of Brazil is the WTO’s sixth DG. To date, all the WTO DGs have been male, half were European nationals, and all originated from developed countries or large emerging economies. None has come from a small State or from a Caribbean, Middle Eastern or African country. All have served either as senior government officials in their countries and/or as high-level diplomats or international civil servants throughout their impressive careers.
The DG is appointed by the General Council, comprising all WTO Members, by consensus, although the new DG selection procedures of 2002 require Members to consider the possibility of recourse to a vote as a last resort if a decision by consensus by the deadline provided cannot be made. The appointment process for Mr. Azevedo’s successor started on June 8 and nominations will be accepted until July 8, 2020.
Why does it matter?
All CARICOM Member States, except The Bahamas which has begun the accession process, are WTO Members. Lacking meaningful bargaining power and highly dependent on international trade, Caribbean countries need the rules-based multilateral trading system because it establishes the rules for the conduct of cross-border trade and ‘in theory’ allows Members to hold other Members to account if they violate those rules. Of course, there is always a gap between the ideal and the reality as the outcome of the US-Antigua Gambling dispute demonstrates.
CARICOM Members States must consider at least three central questions. First, should the region nominate its own candidate? As only WTO Members may nominate candidates, CARICOM Member States are well within their right to do so. Our nationals have held top positions in some international organisations such as the Commonwealth Secretariat and the now Organisation of Africa, Caribbean and Pacific States (OACPS), and are among the WTO Secretariat’s staff members. The more likely scenario, however, is that CARICOM Member States will support an existing nominee instead of nominating their own candidate(s).
Five candidates have so far been officially nominated by their governments: Mr. Jesús Seade Kuri (Mexico), Dr. Ngozi Okonjo-Iweala (Nigeria), Mr. Abdel-Hamid Mamdouh (Egypt), Mr. Tudor Ulianovschi (Moldova) and Ms. Yoo Myung-hee (Republic of Korea). Ireland has also indicated its intention to nominate current EU trade commissioner, Phil Hogan, for the post. Additional nominations will likely be made before the deadline.
Second, should CARICOM unite behind a single candidate? There will be much diplomatic haggling and deal-making by candidates to court WTO Members, including CARICOM Member States, for their support. The Revised Treaty of Chaguaramas mandates CARICOM Member States to coordinate their foreign and foreign economic policies, and this issue would fall under either or both of these policy areas. While ‘coordination’ does not necessarily mean reaching a common position, uniting behind a single candidate would indeed be the more strategic approach, increasing the region’s bargaining power in the DG selection process.
While the race is still young, the next DG could well be African if the African Union (AU), which accounts for a significant bloc in the WTO’s membership, unites behind a single candidate. The Economic Community of West African States (ECOWAS) has expressed support for the Nigerian candidate, but the possibility of AU consensus is not a fait accompli seeing that Egypt – another African powerhouse – also has a nominee.
Third, what should the region look for in a candidate that it wishes to support? Let us first consider what the seventh DG will be facing. Everyone agrees that the WTO badly needs reform, but there is lack of consensus on the solutions required. The organization is ‘fighting fires’ on a variety of fronts, from the inability to update its rulebook due to the near paralytic state of its negotiating function to its now defunct Appellate Body which motivated some members to create the Multiparty Interim Appeal Arbitration Arrangement. The COVID-19 pandemic has further depressed global merchandise trade flows, which were already negatively impacted by the US-China trade tensions and growing unilateral and protectionist action by powerful Members.
Moreover, there appears to be growing bipartisan US congressional support for that country’s withdrawal from the WTO over the US’ concerns that current WTO rules cannot ‘discipline’ China’s alleged ‘unfair trade practices’ and are costing American manufacturing jobs. Indeed, the approach to China was one of the factors US Trade Representative, Robert Lighthizer, outlined in his congressional testimony last week, in determining which candidate would obtain US support.
This panoply of challenges behooves a DG who can command the respect, confidence and trust of all Members and possesses the political acumen and negotiation skills to bridge the concerns raised by both powerful and weaker Members. For example, there is the divisive issue of whether a Member’s self-designation as a ‘developing country’ should continue to determine its eligibility for special and differential treatment (S&DT) under the WTO’s agreements. Most developing countries staunchly defend this status quo, but developed countries increasingly call for a case-by-case approach or the introduction of objective criteria for determining S&DT eligibility.
CARICOM Member States should support a candidate not just with proven good character and integrity, knowledge of trade, and diplomatic, international and/or senior government experience, but a demonstrable track record of consensus-building, support for multilateralism and a sensitivity towards some of the unique challenges faced by the most vulnerable Members.
The DG, though not an all-powerful figure, has considerable soft power that can be responsibly wielded to help rescue a sinking WTO ship. At this crossroads in the organisation’s quarter century of existence where its relevance and efficacy are increasingly being questioned and the rules-based trading system is under threat, CARICOM Member States have a vested interest in determining who is ultimately entrusted with such power.
Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade researcher with the Shridath Ramphal Centre for International Trade Law, Policy & Services of The University of the West Indies Cave Hill. Learn more about the SRC at www.shridathramphalcentre.com.