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FRIDAY, December 09, 2022
Who will lead the WTO and help it avoid collapse?

Who will lead the WTO and help it avoid collapse?

THURSDAY, October 08, 2020

The campaign to lead the World Trade Organization during the most turbulent period of its 25-year existence has entered its final stage.

Playing out against the backdrop of a pandemic, a worldwide recession, the U.S.-China battle for trade supremacy and the American presidential election, there couldn't be more at stake. But the decision by Brazilian Roberto Azevedo to step down as director-general at the end of August, a year before his term ends, also offers an opportunity for the U.S., the European Union and other nations to reshape the organization.

1. What's at stake?

The Geneva-based WTO's mission of economic integration is under threat from protectionist policies around the globe, and without reform it risks being sidelined during the biggest economic crisis in a century. The world's largest economies agree that the organization must evolve to address the shifts in technology and the global trading system that have occurred since 1995. If members can align behind a candidate committed to modernization, it could break bureaucratic logjams and help unleash a wave of global growth at a time when it is needed most. If that isn't possible, the WTO risks receding further into irrelevance.

2. What's precipitated the crisis?

The WTO's appellate body, the main forum for settling worldwide trade disagreements, lost its ability in December 2019 to rule on new dispute cases. That resulted from a U.S. refusal over the previous two years to consider any nominees to fill vacancies on the panel. WTO members can still bring disputes to the trade body and receive an initial ruling, but that can be appealed into legal limbo. The U.S. imposition of hundreds of billions of dollars worth of tariffs against China, and use of the WTO's national security loophole to levy duties on steel and aluminum, have also weakened the organization.

3. What is the WTO's selection process?

The chairman of the WTO general council launched a selection procedure in June to confirm the trade body's next director-general. The WTO general council has been narrowing the field of candidates by holding confidential consultations with each of the WTO's 164 members. The second phase of consultations, with five candidates still in contention, was completed on Oct. 8, when the WTO announced the two finalists. The last phase of the selection process runs until Oct. 27, after which the WTO will seek to name a consensus winner.

4. Who is still in the running?

Two women, which is significant since the WTO has never had a female leader in its 25-year history. They are Nigeria's Ngozi Okonjo-Iweala, who served two stints as finance minister and one term as foreign affairs minister, and South Korea's trade minister Yoo Myung-hee. Okonjo-Iweala, 66, has experience working at international governance bodies as a former managing director of the World Bank and as a chair at the Global Alliance for Vaccines and Immunization. She is running as an outsider, arguing that she can bring a "clear set of eyes" to a deeply dysfunctional organization.

Yoo, 53, has had a 25-year career in government, during which she helped expand her country's trade network through bilateral accords with China, the U.K. and the U.S. Yoo told Bloomberg TV in September that she wanted the WTO to offer a meaningful platform for the U.S. and China to discuss their trade disputes. She vowed to play the role of mediator, if chosen to lead the organization and to work as a force for multilateralism.

5. What kind of leader are nations looking for?

Governments hope the next director-general can persuade members to complete much-needed reform of the organization. Trade officials in Geneva broadly argue that Azevedo's successor should have sufficient leadership authority and capability to marshal broad support around the WTO's reform agenda. The remaining contenders are current or former ministers, something that trade officials had previously said was an important characteristic for a future director general.

6. Is there a nationality requirement?

Other than being a national from a WTO member country, no. However, the issue of nationality can be a key factor for some WTO members who may view a candidate's citizenship status as a plausible reason to oppose them. In July, China opposed an American nominee to serve as the interim director-general and as a result the organization is now leaderless.

7. Are there any other considerations?

The candidate must also thread a narrow diplomatic needle by displeasing neither the U.S. nor China, whose bitter conflict over a growing array of issues including technology and the pandemic is testing their fragile economic truce. The administration of President Donald Trump has actively sought to undermine the WTO's ability to function, saying it has infringed on American sovereignty and enabled China to become a big economic player globally at the expense of U.S. jobs and manufacturing. Adding to the unpredictability factor, Trump -- who has called the WTO the worst trade deal the U.S. has ever signed -- is up for re-election in November, so America's tolerance for a candidate who looks too favorably on China might be tested. Meanwhile, China has engaged in a multi-year campaign to expand its diplomatic influence by installing key personnel at the top levels of international decision-making bodies.

8. What happens if no candidate is selected?

The WTO will remain leaderless until members select a permanent director-general. That's because governments failed to choose an interim caretaker prior to Azevedo's departure on Sept. 1 and the WTO's four deputy directors-general are jointly overseeing the organization's housekeeping matters. If WTO members are unable to select a leader by consensus, a vote requiring a qualified majority could be held as a last resort -- an unprecedented step in the organization's history.