The head of the World Trade Organisation (WTO), Roberto Azevedo, will step down a year earlier than planned in August in a surprise move as the trade body struggles to contend with global tensions and coordinate responses to the COVID-19 pandemic. The 62-year-old Brazilian has been director-general since 2013 and is serving a second term that was due to conclude at the end of August 2021.
“As members start to shape the WTO’s agenda for the new post-COVID realities, they should do so with a new director-general,” he told a virtual meeting of national members. His departure comes at a testing period for the 25-year-old entity, which has seen its role in settling disputes undermined after its Appellate Body was paralysed in December by Washington’s decision to block the appointment of judges.
Asked about Azevedo’s departure, President Trump said he was “OK with it”, telling reporters that WTO was “horrible”. “We’ve been treated very badly,” he said. “They treat China as a developing nation. Therefore China gets a lot of the benefits that the U.S. doesn’t get.” Ever since the COVID-19 crisis hit the world, Azevedo has urged governments to refrain from imposing export restrictions on food and medical supplies.
The WTO club of 164 members, which is designed to set global trading rules, has not produced any major international accord since abandoning its “Doha Round” of negotiations in 2015. Its members are negotiating an agreement to cut subsidies for fishing to allow a revival of depleted fish stocks, while a smaller group is discussing a possible deal on e-commerce. However, key differences remain and these are far from the consensus required to agree on both deals.
Some members, notably the United States, Japan and the European Union, are pushing for more fundamental reforms. They say global trading rules need to reflect new realities ~ notably a far stronger China ~ and address problems such as state-led subsidies and forced technology transfers. Such issues would have been addressed at the WTO’s biennial meeting MC12 in Kazakhstan in June 2020 but it has now been pushed back to mid-2021 due to the pandemic. Azevedo has said his departure would allow a successor to be in place before then.
In his reckoning, WTO cannot stand still while the world around it changed, nor ignore the “new normal” that emerged from the Covid-19 pandemic. The US Trade Representative, Robert Lighthizer, said Azevedo would be difficult to replace and that Washington looked forward to participating in the process of selecting a successor. EU trade commissioner Phil Hogan said this was a good time to find a new chief but this needed to be done this year not next as the WTO was encountering major challenges and louder voices demanding reform.
The eight nominees to replace l Roberto Azevedo include more women and African candidates than in the past, but a drawn-out race is expected as the U.S. and China jockey for advantage in writing the rules of global trade. Ngozi Okonjo-Iweala, a former finance minister of Nigeria, was considered an early front-runner. She served in the World Bank for 25 years, reaching the No. 2 post. Okonjo-Iweala is well known internationally, with strong connections in many countries. But the late entry of another African woman, former Kenyan Foreign Minister Amina Mohamed, has rendered the race still more uncertain.
Mohamed has chaired top WTO decision-making bodies, including the General Council and the Dispute Settlement Body. She also has a reputation for building an effective consensus on trade issues ~ a vital skill in a group that forges decisions through unanimous agreement. With Egypt fielding a candidate as well, the continent, which accounts for 30 per cent of the WTO’s 164 member, is yet to unite behind a single nominee.
Observers speculate that China will throw its weight behind a candidate from a region where Beijing has invested heavily through its Belt and Road Initiative. China and African nations share an interest in devising favourable trade rules for traditional industries such as agriculture and fishing. Complicating matters are the trade tensions between Beijing and Washington, which has objected to the WTO’s classification of China as a developing economy eligible for special treatment. “I look forward to someone who understands the nature of the problem of free economies dealing with China,” US Trade Representative Robert Lighthizer told lawmakers when asked about the WTO leadership race.
Washington might back Jesus Seade, under secretary for North America in Mexico’s Ministry of Foreign Affairs and the country’s chief negotiator for the United States-Mexico-Canada Agreement on trade, the successor to NAFTA. Seade, who worked as associate vice president for global affairs at the Chinese University of Hong Kong, Shenzhen, told the US outlet Politico that he can offer a “bridge” linking WTO members.
The WTO has finalised the field of candidates, who include South Korean Trade Minister Yoo Myung-hee, trade negotiator Abdel-Hamid Mamdouh of Egypt, former Moldovan foreign minister Tudor Ulianovschi, former Saudi economy minister Mohammed Maziad Al-Tuwaijri and Liam Fox, a former UK international trade secretary. Candidates will give speeches and field questions at the three-day General Council meeting starting on July 15. The head of the council will work with members to narrow the field to one candidate.
The WTO, with its emphasis on building consensus, does not vote on issues unless necessary. But some observers do not expect the organisation to settle on one candidate by the time Azevedo steps down in late August. If this is the case, a deputy director-general will be chosen for the post on an acting basis until a decision can be made. The leadership race comes amid deep dysfunction at an organization meant to be the guardian of free trade. Ever since President Trump assumed office in 2017, he has blasted the WTO as “unfair” to Washington, particularly regarding American trade disputes with China.
The US has blocked appointments to the Appellate Body, the highest level of the WTO’s dispute settlement system, bringing its work to a halt for the first time since the group’s creation in 1995. The European Union and 16 WTO members including China but not the US or Japan agreed in January to establish a temporary appeals system.
(The writer is author of World Trade Organisation: Implications for Indian Economy (Pearson Education) and is retired senior professor of International Trade. He may be reached at vasu022@gmail.com)