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World Trade Organization leadership battle - in shadow of Covid-19 and crisis over future

Roberto Azevêdo (left) meets with the United States President, Donald Trump, at the World Economic Forum Annual Meeting in Davos, Switzerland.

The early resignation of Roberto Azevedo from the post of Director-General (DG) of the World Trade Organization (WTO), sets the stage for a highly politicized competition over his successor – who will face a major challenge in demands to reshape WTO in the wake of repeated US complaints about its trade dispute rulings and policies with an alleged pro-China tilt.

Why is this important?

Azevedo, who is resigning 31 August 2020, a year before his term formally ends is a seasoned Brazilian diplomat, who has nonetheless presided over a period when the WTO’s effectiveness as a negotiating forum was eroded. Political conflict between economically powerful members, most recently the United States, brought WTO’s highly regarded trade dispute settlement system to a standstill. Now, as the COVID-19 crisis has sent global trade into a tailspin, the question is who - if anyone – can revitalize the Organization and reassert its preeminence in trade governance.

The new Director General will face a range of sharp debates around trade issues critical to health – including the need to ensure wide global access to new COVID-19 medicines and vaccines. But beyond the current pandemic, the WTO may also play a lead role on other critical policies affecting health and well-being more broadly, including: import and export barriers affecting fragile economies; policies around trade in agriculture and food products; and evermore urgent questions surrounding trade, climate and sustainability.

The Candidates

So far, three candidates have been formally nominated: Jesús Seade Kuri, Mexico’s chief negotiator for the ‘New NAFTA’; Abdel-Hamid Mamdouh, former director of the Trade in Services Division of the WTO; and Ngozi Okonjo-Iweala, board chair of Gavi, the Vaccine Alliance and former Nigerian Finance Minister, who also spent 25 years in Washington DC with the World Bank.

On Tuesday, June 9, European Trade Commissioner Phil Hogan told reporters that he was also considering a bid. At a meeting with European Union trade ministers he identified trade and health issues, and the urgency of addressing the COVID-19 crisis, as priorities. Hogan also suggested that the European Union should put forward a single candidate, saying: “The EU has very strong multilateral credentials and is recognized as a force that could shore up the WTO and protect the multilateral trading system. This puts the EU in a legitimate position to offer a Director General to the WTO.”

The fact that Hogan has put his name forward does not, however, assure his position as the EU nominee. Other qualified contenders are also testing the waters. Croatian Foreign Minister has confirmed that EU members would discuss whether to unify around a single EU candidate during the next month.

Jockeying between the power blocs

Appointments to leadership posts at multilateral organizations take account of the merits of the candidates, but realistically they must be viewed through the lens of political gaming and the exercise of power. Neither China nor the United States have as yet nominated a candidate, and perhaps neither country will because of the almost-certain divisiveness this would evoke. But it would be a mistake to think that either Beijing or Washington view this appointment as one of identifying the smartest trade expert in the room. The recent battle over the appointment of a Director General for the World Intellectual Property Organization (WIPO) was hard-fought between US and China-sponsored candidates. With the US having prevailed, China will be looking again to assert its growing power. And, we have not yet heard from India.

Regional balance among Geneva and global UN Agency heads

Also, tradition holds that the leading positions in the United Nations and other multilateral organizations are divided up between regions – and that balance will play a role in the debate over whether a candidate from Asia, Africa, Europe or the Americas will succeed.

A candidate from Africa, such as Ngozi Okonjo-Iweala, might seem a “neutral” prospect as compared to candidates from one of the major trading powers. Okonjo-Iweala, who studied at Harvard and earned a PhD from MIT, might also be someone who the Americans would support.

However, Dr. Tedros Adhanom Ghebreyesus of Ethiopia is currently leading the WHO and Mukhis Kituyi of Kenya is leading the UN Conference on Trade and Development (UNCTAD). So this might pose an obstacle to the appointment of another Geneva DG from Africa. Asia is meanwhile poised at the top of WIPO, with Daren Tang of Singapore elected to succeed Francis Gurry. Through a wider UN and global lens, however, the UN (António Guterres) and the International Monetary Fund (Kristalina Georgieva) Secretariats are headed by Europeans, and an American (David Malpass) is leading the World Bank. Seen from that perspective, the prospects for a third African Geneva leader may be brighter.

Frayed European- United States alliance

In years past, despite their differences, the United States and European Union were allies with shared trading system interests that would ultimately cooperate over the selection of a WTO Director General, even if each had a candidate in the running. However, the Trump Administration has done everything it can to blow up the US relationship with the EU, so a prospective alliance over the choice of a candidate for WTO right now is in doubt.

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