Battle to head WTO offerschance to defend global trading order

The FT, June 15, 2020

Candidates jostling to replace Roberto Azevêdo seek support of US, EU and China

The race to succeed the Brazilian Roberto Azevêdo as head of the World Trade Organization is turning into a battle between candidates who reflect political legitimacy as much as personal competence — the prize being the opportunity to defend a global trading order under severe pressure.

The WTO director-general has few direct powers, meaning their success depends on gaining members’ trust, particularly the big three — the US, China and the EU.

Nominees’ political abilities are particularly important at the moment because, having faced sharp US criticism, the organisation is struggling to stay relevant. The new head will have to find a way of addressing American complaints about the inability of the WTO rule book to constrain China’s state capitalism, and Washington’s criticisms of judicial over-reach by the organisation’s dispute settlement process, without alienating the rest of the membership.

China would almost certainly block a US appointment and vice versa, leaving leading nations and regional groupings searching for a compromise candidate who can command a consensus among the WTO’s 164 member nations. Formal voting is a last resort.

The deadline for nominations is July 8, and the candidate could be in place by the time Mr Azevêdo departs in September. Alternatively, the WTO could appoint an interim directorgeneral and the contest could extend beyond this autumn. World Trade Organization Battle to head WTO offerschance to defend global trading order Candidates jostling to replace Roberto Azevêdo seek support of US, EU and China “The key issue is which individual has the legitimacy to preserve the organisation’s vital functions,” said Uri Dadush, an expert on global economic governance and former senior World Bank official. “The implicit support of one or more of the big trade powers would probably be a necessary but not sufficient precondition for success.”

Unlike the contentious but long-established convention under which the EU appoints the head of the IMF and the US the president of the World Bank, there is no widely accepted custom about the nationality of the WTO head.

The organisation’s rules say merely that the selection should involve “reflecting the diversity of the WTO’s membership”. The sequence since the WTO was created in 1995 has been two Europeans, a New Zealander, a Thai, another European and then the Brazilian Mr Azevêdo. Some countries — particularly in Africa, which has never produced a director-general — say there is a case for regional rotation. Ebba Kalondo, spokesperson for the African Union of governments, said a unified African candidate “would be a game-changer for Africa in the world”.

But the AU’s attempts to select and unite behind an African nominee have already been clouded by intraregional rivalries and personal ambition.

Hamid Mamdouh, an Egyptian with long WTO experience but little political clout, was nominated as the AU selection earlier in the year along with similarly low-profile candidates from Benin and Nigeria. But after Mr Azevêdo’s unexpected decision to leave early, Nigeria withdrew its earlier nomination and proposed Ngozi Okonjo-Iweala, its widely-known former finance minister.

Ms Okonjo-Iweala’s candidacy may also deter a potential bid by Kenya’s Amina Mohamed. In an interview, Mr Mamdouh stressed his long personal experience of the WTO and the legitimacy of the AU selection protocol.

“It would be helpful to have a single candidate backed by the continent, but what Nigeria did was to disrupt the AU process,” he said, defending his decision to continue in the race. He would now be guided by continued discussions inside the AU, Mr Mamdouh said.

The European Commission initially tried to argue that it was the turn of a developed country — a position that EU trade commissioner Phil Hogan, who is contemplating a run, claimed had the support of Robert Lighthizer, the US trade representative. I don’t think there is any single developing bloc in the WTO or coherence among the developing countries Bipul Chatterjee, Consumer Unity and Trust Society Copyright The Financial Times Limited 2020. All rights reserved. But it rapidly became clear that Mr Hogan had overstated the US position.

Mr Lighthizer’s office last week said that “Ambassador Lighthizer does not support any candidate at this time, nor does he feel that a candidate must necessarily be from a developed country”. The EU’s own member states also said last week that the next head did not have to be a European.

Another declared candidate, the veteran Mexican trade and financial official Jesús Seade Kuri, faces the challenge of distancing himself from the US. Mr Seade successfully renegotiated the US-Mexico-Canada trade deal and has spoken of his ability to get on well with Mr Lighthizer. But that may tell against him among emerging markets suspicious of American influence.

In supporting his bid, the Mexican government emphasised its status as a successful open trading economy, rather than its geographical location. “More than thinking about regional blocs, what we’re thinking is to place a candidate who represents the importance of trade and the rules-based trading system,” said the Mexican economy minister Graciela Márquez Colín in an interview. Mexico also had a trade deal with the EU and dealt a lot with Asia, she added: “In terms of trade, Mexico is close to the US. But it’s also close to almost everywhere else.”

In any case, those involved in the system say, the idea of neatly delineated blocs of developed and developing countries in the WTO is inaccurate.

Bipul Chatterjee, executive director of the Consumer Unity and Trust Society, a research group based in Jaipur, India, said: “I don’t think there is any single developing bloc in the WTO or coherence among the developing countries.”

Brazil, for example, has accepted a key US demand and stopped defining itself as a developing country in the WTO and hence claiming exemptions from some trade rules, and as such is regarded with some suspicion by countries such as China and India. Mr Chatterjee said some developing countries viewed Mr Azevêdo himself as too close to the US, and said that insisting a candidate should specifically be from an emerging market was likely to be counter-productive.

“The WTO director-general probably needs to be someone from a middle-ranking power where both the individual and the country are trusted by the big powers,” Mr Chatterjee said. Additional reporting by David Pilling in London and Aime Williams in Washington.

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