- Current political and economic issues succinctly explained.
The World Trade Organization (WTO) was left leaderless on Monday when Director General Roberto Azevedo stepped down with a year left in his term. His departure comes at a pivotal moment for the governing body of international trade, which was in trouble even before the coronavirus pandemic upended the global economy.
Eight candidates are in the running to replace Azevedo. Meanwhile, WTO members were too divided to even agree on an interim director, in part due to the United States’ insistence that they be an American.
The succession process is designed to reach a consensus on a new director general by November 7. However, some slippage in the date, particularly given the U.S. election on November 3, is likely. The process involves a winnowing down of the candidates in successive rounds beginning on Labor Day, known as “confessionals,” in which the selection committee will hear the preferences of all 164 WTO members. Developed in 2002, the process has worked so far to reach a consensus, but now, gridlock among the biggest economies increasingly hampers the WTO’s operations.
What does the director general do and why is the role important?
The director general is the formal administrative head of the WTO and is responsible for supervising the WTO secretariat of about seven hundred staff. The director general sets the overall tone and, to some degree, direction for the organization, and represents the WTO to the outside world and at gatherings of world leaders. But because WTO decisions are made by a consensus of the 164 WTO member countries, the director general traditionally has wielded little power over matters of policy.
This year may be different, however. In light of the deep troubles at the WTO and the need for a well-functioning trading system amid the economic shocks caused by the coronavirus pandemic, a stronger leader may be in order.
Azevedo was well-regarded. During his seven-year tenure at the helm of the WTO, he oversaw the completion of the 2013 Trade Facilitation Agreement, commitments by developed countries to end export subsidies for agriculture products, and the expansion of tariff-free trade in information technology products. But he was unable to revitalize the WTO’s three primary functions—negotiating, monitoring, and settling disputes—or to address the widening rift between the WTO’s two largest economies—the United States and China.
What will be the most pressing issues facing the new director general?
They will inherit a WTO that has failed to reach any significant pacts (other than the Trade Facilitation Agreement) since its founding in 1995. Critical agreements are needed to curb fishery subsidies that are contributing to the depletion of the world’s supply of fish, and to write rules of the road for e-commerce and digital trade. These are “must-do” items, along with fixing the WTO’s dispute settlement system following a U.S. decision to destroy its Appellate Body, which could allow countries to avoid complying with decisions they do not like. The director general will also need to find ways to address growing concerns over China’s unfair trade practices.
What role has the WTO played in dealing with the pandemic, and what more could it do?
The WTO responded to the pandemic by working to enforce the Group of Twenty (G20) leaders’ pledge that any trade restrictions imposed on medical supplies are “targeted, proportionate, transparent, and temporary” by requiring notification and publication of all relevant measures. It has also provided a forum for considering potential collective responses to the pandemic and encouraged countries to lower tariffs and forego export bans on medical goods and supplies.
Going forward, the biggest contribution the WTO could make would be to work in conjunction with the World Health Organization, the Coalition for Epidemic Preparedness Innovations, and Gavi, the Vaccine Alliance to establish a trade and investment agreement that would ensure the fair and efficient distribution of any vaccines or drug treatments that might be developed for COVID-19, the disease caused by the new coronavirus.
The director general position has historically alternated between developed and developing countries, but there are calls to choose an African member or woman. To what extent should WTO members consider geographical and gender representation in their decision?
While the selection of a woman to lead the WTO would be a first and potentially an important signal that the WTO takes seriously the 2017 ministerial declaration calling for greater inclusion of women in trade, the most important consideration for WTO members is selecting a strong and effective leader, regardless of nationality or gender. The good news is that there are three highly qualified women among the eight candidates.
Given the malaise at the WTO due to the inability to reach new agreements, fix the Appellate Body, or help resolve the trade war between the United States and China, the organization is much in need of new leadership and new energy. A successful director general will be one who has the skill to bring people and countries together, a vision for the future role of the WTO, and the talent to communicate its successes—both past and present—while spelling out concrete solutions for its failures.
What will the results of the 2020 U.S. presidential election mean for the new director general?
Because the United States is such a large trading nation and the single biggest contributor to the WTO’s budget—contributions are based on each country’s share of global trade over the past five years—it is essential that the new director general find a way to work with the next U.S. president and his trade team. The Donald J. Trump administration has been somewhat hostile to the WTO: President Trump has threatened to withdraw the United States from the organization, criticized its failure to rein in China or modernize the global trade rulebook, and continued to block any appointments to its Appellate Body. Achieving a more cooperative relationship with a second Trump administration is a tall order and would require at a minimum the achievement of significant reforms to the WTO along the lines sought by the White House.
Should former Vice President Joe Biden* win, his administration would likely use the WTO as a forum for reasserting U.S. leadership in foreign policy and multilateral organizations and affirming its commitment to a rules-based trading system. A Biden administration would be expected to lead efforts to reform and revitalize the WTO but would likely want to work with allies on trade policy and use the WTO to collectively push back on China.
*Editor’s note: The author serves as an informal advisor to the Biden presidential campaign.