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Views from the Center


The madness of the US NCAA basketball championship  is in full swing and getting lots of attention in Washinton, but a globally more significant competition is entering the final stages in Geneva. Just as 68 US college basketball teams were winnowed to a sweet sixteen, and soon to an elite eight, and so on, nine candidates for director-general (DG) of the World Trade Organization (WTO) will soon be trimmed to a fab five, then a dynamic duo, and, by May 31, a champion to lead the world trade system.

While the WTO director general competition attracts only an infinitesimal fraction of the attention lavished on the NCAA, the outcome of the former race will have vastly greater implications for people around the world. And the WTO process is not without a certain drama.

The WTO operates whenever possible on consensus, and leadership selection is no different. The process to replace current director-general Pascal Lamy will be similar to that used in the last leadership contest in 2005, except with nine candidates instead of four.

In brief, there will be three rounds of consultations where WTO member can express their preferences by dedicated email, fax or in private meetings with the chairs of the General Council and two other key WTO committees (positions currently held by WTO ambassadors from Pakistan, Canada, and Sweden). The first phase will begin April 2 and end April 9 and the four candidates with the least support will be asked to withdraw. The process will be repeated and three more will be expected to withdraw, leaving just two for the final round of member consultations. The whole process is explained in more detail here.

As I noted previously, the WTO process is far more open at the nominating stage than the process for international financial institutions.  Nonetheless, I do have a couple of concerns.

First, many poorer countries do not have permanent representatives in Geneva and will thus have less opportunity to participate and express their views, instead sending in their preferences by email or fax. Of course, even the delegations with resident representatives get only 10 minutes to express their preferences, so maybe the tight schedule and large number of candidates is a problem for everyone.

On the other hand, I am also concerned that the consensus-based process may result in selection of a DG who is good at not offending anyone, but is not necessarily the best person for the job. The candidate statements before the General Council in January were very broad and better at diagnosing the WTO ills than at suggesting remedies.

CGD has been pressing the candidates to be more forthcoming about their visions for the WTO in a series of Wonkcasts where Lawrence MacDonald has asked seven candidates who accepted our invitation why they want to be the new DG, what they would do about the comatose Doha Round, and how the WTO should address difficult new issues, like trade and climate change.

The candidates that I have had the pleasure of meeting personally are extremely knowledgeable and dynamic and their reticence in speaking frankly is understandable. But the WTO is facing serious challenges and it would be useful to know more about how they plan to address them. For instance, despite Lawrence’s efforts to draw the candidates out, no one he interviewed was willing to admit that the Doha Round is dead. All the candidates emphasized the importance of a positive outcome at the WTO ministerial this December, but there were no more than hints that some think the member states should grab what they can in Bali and move on.

Moving on would not mean abandoning everything on the existing agenda; in a paper that I’m writing now I argue that the WTO still needs to put further disciplines on agricultural subsidies. But starting fresh would allow the agenda to be updated and reshaped in ways that would better meet the needs of the 21st century.

Another key challenge facing the WTO can be illustrated with a simple question: should the Republic of Korea count as a developing country? Korea, which is among the nine countries that put forward a candidate to become director general, is a high-income country in the  World Bank’s classification and has been so since 2001. For WTO purposes, however, Korea still identifies itself as a developing country member. And developing country members get “special and differential treatment” in the WTO. Moreover, the only differentiation that is permitted among the large group of developing country members is between the UN-designated least-developed countries (LDCs), and all the rest.  (I don’t intend to pick on Korea, and it does not take advantage of all the flexibilities it is allowed, but it isn’t a developing country by any objective criteria.)

Some would say that the answer is to end special and differential treatment, but countries differ widely in their development needs and in their capacity to implement and enforce some rules, for example intellectual property protections. The core problem is that Brazil, China, and India are treated the same under WTO rules as Bolivia, Kenya, and Sri Lanka. In negotiations, with a few exceptions, developing countries other than LDCs are all expected to take on the same obligations.

Though few are willing to say it publicly, many of the smaller developing countries were leery of a Doha Round deal not because they were afraid of opening their markets to the United States or Europe, but because they feared the impact of opening up to China. The large emerging market economies are now members of the G20 and they are, rightly, demanding more of a say in running international institutions and managing the global economy. But more power also entails more responsibility and in the WTO context that should include accepting more differentiation among developing countries in some areas than is currently the norm. Might that be easier to accomplish with a DG from a developing country?

So where is consensus likely to take us in the WTO ‘tournament’? The consensus rule has its strengths and weaknesses—it often makes agreements more difficult to reach, but it also makes them more credible and sustainable. And the reality is that the consensus rule is not going away. But the WTO does need to find a DG who is willing to shake up the status quo and find more effective ways of managing the institution with its  large and diverse membership. In this situation, will the consensus rule produce a leader with the skills to accomplish that, or one that offends the fewest people?

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.