No sooner had the words left WTO Director General Roberto Azevedo’s mouth on his unanticipated early resignation than speculation on successors began. Some are experienced and well-known including former Kenyan trade minister Amina Mohamed, former EU trade commissioner Peter Mandelson, and the former head of the International Trade Centre Arancha González. More are sure to come.
As usual, there is also talk of which country or region is due its “turn” at the leadership post, but it would be counter-productive to prioritise national or regional identities over the demands of this extraordinary task.
The predominant logic in choosing previous WTO leaders has been around achieving another trade liberalising deal. Indeed, knowledge of global trade dynamics will be an important pre-requisite for the job, but the negotiations to rebuild the relevance of the multilateral trade system through the WTO are different.
The job requires a leader with a reputation for neutrality and bridge-building, who can provide clear, strategic choices, and who possesses the skills to persuade WTO members to act, even if it means a significant departure from previous models.
Walking into office, the next Director General (DG) will confront structural, procedural, and political challenges that threaten the relevance of the WTO, and thus the survival of the multilateral trade system as we know it.
By far the greatest threat to the institution is the divisive politics playing out between members. Public attention is most intensely focused on the United States and China. Their disagreements-and non-MFN deals -have driven a hole through the integrity of the WTO.
Waiting closely in the wings are enduring challenges across the membership that have been evident for years in which countries have blocked actions-and sometimes even dialogue-on issues. These have affected existing trade relationships and talks in areas from services to agriculture, to effective development measures and exceptions, to transparency and notifications. These practices are widespread and have baked bad behaviour into the system causing members to shift their energies elsewhere.
While the WTO was successfully reforming global rules in its early days, perhaps such tactics had a logic, but today they simply serve to smother its relevance. In the absence of real strategy over decades, these tactics have utterly failed to achieve anything positive. Those most actively pursuing such strategies may soon have to decide if continuing to do so is worth the price of the system. Countries that are not well integrated into regional agreements or benefitting from bilateral agreements with their largest trading partners, will find a less relevant WTO to be a significant brake on future development.
The rules of the WTO, from its dispute settlement system to the procedures of its committees, need repair. The changing nature of trade-more digital, more services, less tangible goods trade-means that WTO rules and commitments are lagging those developed in other fora. Other issues, such as climate change and its impacts, will obligate members sooner, rather than later, to confront the reality of climate-related measures and the value of concepts such as “like products.”
Some of the most productive work that can be continued under the WTO includes strengthening and developing new trade-supportive frameworks, such as the Trade Facilitation Agreement, that deepen the capacity to trade and cultivate trusted trade relationships.
The global pandemic is also hastening some of the worst instincts of protectionism and pushing the WTO into peril even faster. An adept DG will take the opportunity of the crisis to demonstrate the continued importance of trade and bend WTO processes towards needed adaptation or even replacement. Among the topics ripe for this shift is that of subsidies, in which the pandemic provides a concrete opening of common concern to all WTO members. It is an opportunity to shift from a narrow focus on trade distortion to the legitimate objectives of economic security and societal wellbeing.
It is time for WTO members to salvage the system they have and begin its repair rather than choosing a new wallpaper. This is a tall order for the next Director General.
The next DG must have an intimate understanding of emerging trade and economic issues, particularly those that will define competitiveness and sustainability in the future in areas such as digital, services, and intellectual property, which account for a growing proportion of value-added. Issues related to climate change-from carbon reduction solutions to climate friendly products and processes-will play a growing role in national actions and thus in trade policy. Part of the DG’s role will be to demonstrate to members that these are no longer Northern agenda items, but global ones, and that multilateral engagement on these issues is essential to deliver prosperity for all.
High on the list of selection criteria should be managerial skills, which have been given lower priority in previous processes. Such skills include the capacity to envision, to bring out-of-the-box thinking to bear, and to guide change processes with members; to synthesise and communicate a shared vision of an updated WTO; and the ability to energise members and the WTO staff in the Secretariat toward a mission of reform. She or he will need the interpersonal skills to bridge differences and build trust, and the strategic and tactical skills to organise for action. The WTO possesses a devoted and high-calibre Secretariat with whom the DG should promote shared objectives and leadership in generating the innovation that will be needed for effective change.
The next DG does not need to be a headline dealmaker but must nonetheless be capable of managing power dynamics and complex negotiations. With the leadership qualities that enable him or her rebuild trust and dialogue, the next DG will also need daring and humility in equal measures.
Hew too close to the status quo and members will continue to abandon principles and commitments and veer to other agreements; push too hard and talks will unravel, and members may desert the ship. It is a truly daunting role in a high-stakes challenge.
Where and how should countries find a trusted leader with the right political, strategic, and managerial skills? They may be stepping up on their own, but they may equally be out of sight. They may be serving their governments today as delegates at the WTO; serving in the WTO Secretariat today or in the past; they may have deep diplomatic experience, but be hidden below ministerial level in national government roles; they may be in other international organisations, think tanks or academia.
***This Talking Trade was written by Andrew Crosby, Senior Fellow, Asian Trade Centre. If you are a government official interested in joining our next Talking Trade webinar to discuss WTO prospects and other trade-related issues that matter to you, contact us now at firstname.lastname@example.org. Our next session will be held on June 2, with three more before mid-June. To see our first session of the Government Edition of Talking Trade online that sets out some additional issues for discussion, click here.***
Originally published at http://asiantradecentre.org on May 27, 2020.