Author : Aarshi Tirkey

Expert Speak Raisina Debates
Published on Sep 30, 2020

As countries contemplate which candidate to support, they must keep in mind the many roles played by the WTO DG. They represent the WTO in international forums, facilitate negotiations, head the Secretariat, and serve as the guardian of the WTO system.

Who will be the next WTO Director General?

On 31 August, Mr. Roberto Azevêdo officially stepped down as the Director General of the World Trade Organisation (WTO DG). Mr. Azevêdo’s resignation was unexpected and came a year before the end of his eight-year tenure at the WTO. This development has rendered the WTO leaderless at a time when COVID-19 has bolstered de-globalisation forces, while faith in multilateralism has dwindled across the world. WTO trade negotiations have hit an impasse, its dispute settlement system is paralysed and protectionist trade policies have been on the rise. Meanwhile, the technology and trade war between the US and China is frustrating the norms underpinning global economic governance.

Guiding the WTO through these challenges, while protecting and promoting the mandate of the WTO will be a difficult task for the new director general. This calls for the need to appoint a figure with a higher political profile, armed with extensive experience in trade and diplomatic negotiations. A survey of stakeholders and practitioners — conducted by the European University Institute — revealed that the key attributes they are seeking in the new WTO head is political experience, economic training and competence in handling WTO negotiations.

"This calls for the need to appoint a figure with a higher political profile, armed with extensive experience in trade and diplomatic negotiations."

The WTO DG selection process

The selection process for the WTO DG began soon after Azevêdo announced his resignation in May 2020. Between June and July, WTO members submitted their nominations for the position. Eight candidates belonging to Kenya, Moldova, Egypt, Saudi Arabia, Mexico, Nigeria, Korea and the United Kingdom were nominated for the position. Following nominations, the candidates shared their vision for the WTO with member states and answered questions about their candidacy.

September onwards, consultations were launched with all 164 member states to ascertain their preferences. The purpose of this exercise is to build consensus around one candidate — a gradual process of winnowing down to a single choice. This is carried out by the ‘troika’, which comprises the chairs of three major WTO committees — the General Council (GC), the Dispute Settlement Body (DSB), and the Trade Policy Review Body (TPRB). A stage of this process has already taken place; of the eight candidates, five have moved on to the next stage. This includes Ms. Ngozi Okonjo-Iweala (Nigeria), Ms. Yoo Myung-hee (Korea), Ms. Amina Mohamed (Kenya), Mr. Mohammad Maziad Al-Tuwaijri (Saudi Arabia) and Mr. Liam Fox (United Kingdom). If the process is on track, the new WTO DG will likely be announced by 7 November.

"September onwards, consultations were launched with all 164 member states to ascertain their preferences. The purpose of this exercise is to build consensus around one candidate."

Identifying hurdles to consensus

However, it is expected that the selection process will overrun this timeline. This is partly because Washington may not focus on the DG selection, until the US Presidential elections are completed by 3 November. The other reason would be the impossibility for member states to reach consensus on a single candidate. There are two factors that are likely to contribute to this: first, is the intensification of the geopolitical rivalry between US and China which can politicise the selection process, and the second is the increasing divergence between developed and developing countries before the WTO. The inability of member states to appoint a Deputy DG to head the WTO in the interim — an arrangement under its 2002 procedures — already points towards a weakening of consensus building.

Selecting heads of international organisations is a political process, often maneuvered by diplomatic lobbying from influential member states. For instance, election of the United Nations Secretary General depends upon the concurrence of the P5 — a process that institutionalises the political preference of a select few. The WTO DG selection process can be fairly smooth if countries agree on whom they would like to choose for the position. However, frictions often arise, particularly due to differences between developed and developing countries. In 2013, the WTO DG selection was to be finalised between Azevêdo, Brazil’s WTO ambassador and chief trade negotiator and Herminio Blanco, Mexico’s former trade minister. While Azevêdo had the support of developing countries and emerging economies, Blanco was supported by developed countries given his strong commitment to free trade. When Azevêdo was finally elected in 2013, India’s trade minister Mr. Anand Sharma approved and welcomed the election stating that this signaled the growing importance of emerging economies and developing countries in the WTO.

"Selecting heads of international organisations is a political process, often maneuvered by diplomatic lobbying from influential member states."

The dissonance between developed and developing countries was more pronounced during the 2002 director general selection. Matters came to a head as countries tried to choose between Thailand’s Supachai Panitchpakdi (a former Deputy Prime Minister) and New Zealand’s Mike Moore (a former Prime Minister). While the US supported Moore’s appointment, developing countries from Latin America and Asia — in addition to Japan — sought to appoint Panitchpakdi. Asian countries — even India — noted their anger when manipulation by Washington and Europe intensified support for Moore, even though Panitchpakdi had a clear lead.

This development lead to deterioration of relations between the US and Thailand, and a diplomatic showdown delayed the selection process by a year. Eventually, a messy compromise was reached: Moore and Panitchpakdi were to both serve three-year terms in succession as the WTO director general. Unfortunately, the politically charged process resulted in the selection of candidates with predisposed political leanings. Moore’s legacy illustrates this, as analysts note that under his leadership the Secretariat promoted the position of selected countries and proposed the introduction of new issues on the agenda for negotiations — a position that was deeply contested by developing countries.

Conflicting interests

Currently, divergence between developed and developing countries have reached an all time high on issues such as agriculture subsidies, public stockholding and developing country status. Of particular concern is a 2019 proposal by the Trump administration, which seeks to remove the self-declaratory mechanism for availing developing country status. According to the proposal, countries that are members of the G20, the Organisation for Economic Co-operation and Development (OECD) or those who are classified as ‘high income’ countries by the World Bank would no longer be considered as developing countries. This prohibits India from availing special and differential rights reserved for developing countries, such as longer time periods for implementing agreements and legal assistance before the dispute settlement system.

"India has refrained from expressing support for a particular candidate, but has said that it will back a candidate who favours a global trade facilitation pact for services, ensures food security for poorer nations, and will be committed to talks on developmental issues."

To be sure, countries rarely reveal their views on which candidate they are supporting in the selection process. Nonetheless, trade officials from the US, EU and Canada have said that the next WTO DG should come from a developed country, while African member states argue that it is time for one of their own to take up the role. There is also a strong push for a woman to take up the position of the WTO DG for the first time. India has refrained from expressing support for a particular candidate, but has said that it will back a candidate who favours a global trade facilitation pact for services, ensures food security for poorer nations, and will be committed to talks on developmental issues.

There are two candidates from developed countries, namely Korea’s Yoo Myung-hee and UK’s Liam Fox. Fox is a former UK trade secretary and a strong supporter of Brexit; given his background, it is unlikely that the EU will support his candidature. Myung-hee is more likely to receive the united support of developed countries — she worked with Korea’s trade ministry and was a key negotiator for the Regional Comprehensive Economic Partnership Agreement (RCEP). Saudi Arabia’s Al-Tuwaijri is a former economy and planning ministry — but lacks negotiating experience in comparison with the other candidates. Ngozi Okonjo-Iweala from Nigeria has a very compelling resume; she served as the Managing Director for the World Bank and was in the running to be its president in 2012. However, in terms of political profile and negotiating experience, Amina Mohamed (formerly with UN Environment Programme) from Kenya is a strong candidate. She has extensive experience before the WTO, was the first woman to chair a WTO ministerial meet, and mediated between the US and China to help formulate an agreement to reduce export subsidies in agriculture.

Conclusion

Regardless of the strengths and weaknesses of each candidate, the WTO DG selection process is likely to take longer than expected. As countries contemplate which candidate to support, they must keep in mind the many roles played by the WTO DG. They represent the WTO in international forums, facilitate negotiations, head the Secretariat, and serve as the guardian of the WTO system. COVID-19 has brought new challenges to global trade and economic governance, at a time when fractures between the global community have widened. The WTO runs the risk of becoming irrelevant, as the world find itself at the brink of recession and a worldwide economic crisis. The need of the hour is to select a candidate who can revive the multilateral trading system and guide the WTO to promote growth and development, as the organisation promised to do so when it was first created.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.