DG compromise package adopted at WTO

by Chakravarthi Raghavan

Geneva, 22 July -- The General Council of the World Trade Organization formally adopted Thursday the compromise package proposal to name Mr. Mike Moore of New Zealand and Dr. Supachai Panitchpakdi of Thailand as Director-General for successive 3-year non-extendible terms, for a 'geographical balance' in appointing Deputy Directors-General and limiting ability of a DG to reward supporters by appointments to DDG posts.

The compromise package was substantially the same as was presented by Australia and Bangladesh to an informal meeting on Tuesday, but incorporated some changes that were accepted -- making clear that the D.G. to take office on 1 September 2005, will have a 4-year term, and that before end September 2000, the General Council will draw up and adopt a comprehensive set of rules and procedures for such appointments.

The pre-ambular para in the draft before the informal on Tuesday, to suggest that the decision and the process was one "in conformity with the principles of transparency, fairness and equity", was eliminated - as had been demanded by Brazil and Pakistan.

The package decision was also made subject to the "understanding", stipulated by Pakistan and others at the informal, namely, that if for any reason, Supachai is unavailable to take the job on 1 September 2002, the post will go to a candidate from a developing country.

The General Council chair, Amb. Ali Mchumo of Tanzania, said in regard to the decision on the DDG, he will hold consultations in September on some of the issues raised about DDGs (including the number and other issues raised by delegations).

And while Hong Kong and Colombia raised some concerns about the decision on DDGs, Pakistan, Brazil, Morocco and India among others made clear that the compromise was a package and had to be taken as a whole.

Thus, the principle of geographical balance in appointing DDGs, Moore having to consult members and Supachai, and being bound by Council decisions on ensuring continuity at senior management levels remain.

The decision, which by the very nature of the fight for the job and the compromises that had to be made to get a consensus, has made the two successive occupants of the post, in the words of Brazil's Amb. Celso Amorim, 'capitis diminutio' (a Latin expression meaning diminished capacity), and underscored the emerging dynamics of decision-making at the WTO that reduces the exercise of power by the United States.

The compromise, several of the envoys of the developing world hoped, will have an impact on the processes leading to Seattle (Ministerial Conference) and Seattle itself.

As Pakistan's Amb. Munir Akram put it, in responding to questions from the media, "We have moved the organization from the GATT- mode where the major countries alone counted and decided things into a mode a little bit closer to that in other international organizations where the views of the majority did count. We have reached a half-way house, where we have not been able to name a developing country to the post, but ensured that the successor to Moore after 3 years would be from a developing country."

Other envoys of the developing world, speaking on background, stressed the entire process and outcome showed that developing countries did count and could influence things, if they act together and are not ashamed, as some developing countries seemed to be at the WTO, of presenting views in a 'North-South' context.

Mexico's Alejandro de la Pena said if there was one lesson to be drawn it was that the WTO needed better rules for decisions in order to avoid the situation they found themselves in. "We, at the WTO, make rules for international trade, but don't have any rules for our systemic issues. We have now decided to do this by September 2000 and we all have to work at it."

The United States for the first time in the trading system found itself check-mated and could not get its way. Nevertheless, US ambassador Rita Hayes, in a statement, adroitly embraced the compromise and announced the decision as "a very satisfactory resolution" which gave the members "the opportunity to take advantage of the leadership and professional skills of two excellent candidates as a crucial time in the history of the institution."

Several developing country diplomats said on background that the US was planning to use Moore to 'load' the agenda towards Seattle and beyond, by using the old provisional GATT precedent of a "Trade Negotiations Committee" to be chaired by the Director- General, and to bring the social clause and workers rights into the WTO - through a working party or study group for "globalisation" and its downside.

There have been reports among trade diplomats that the US, France and a few others have been holding consultations to take advantage of the calls for "global coherence" from a range of organisations and groups, and under that guise bring in not only consultations between the WTO DG and the IMF and World Bank heads (as now), but the ILO, WHO etc.

However, the old provisional GATT could not launch negotiations, and this was always done through a meeting of GATT ministers, who set up a framework for negotiations, including a TNC. The WTO is a definitive treaty, and put an end to it, by providing for further negotiations and with the General Council overall in charge. Several developing countries say that the US move for a TNC is probably aimed at exercising power through the DG, but this is likely to be resisted. Nor would it be easy to get a steering committee for the WTO, though it was inevitable that with such a large membership, informal smaller groups have to negotiate, and could do so provided all groups and interests are represented.

In opening the meeting Thursday, in his introductory statement, Mchumo said the draft before the Council was one based on that prepared by Bangladesh and Australia after extensive informal consultations, and which had been examined in further detail on 20 July at the informal meeting, where Members had shown considerable flexibility to arrive at the compromise.

Though not fully satisfactory to all, said Mchumo, there was a strong convergence of views that this would be the only basis for resolving the question, and repeated his views at the informal that any efforts to introduce substantial changes to the Bangladesh-Australia proposal would "alter the delicate balance achieved and seriously jeopardise any possibility of reaching a conclusion within the immediate future." Mchumo said he proposed to bring formally on record the statements made by delegations at the Tuesday informal (so that they need not be repeated at the formal meeting).

Stressing "certain important aspects" of the text, Mchumo noted that as clearly set out in the final para, the decision is not to constitute a precedent for future appointments of DGs, whose term would be four years. Also, a comprehensive set of rules and procedures for future appointments would be elaborated and adopted no later than end September 2000 and which would improve and strengthen current rules and procedures.

"It was also suggested," Mchumo said, "that should Dr.Supachai be not available for the second term a Director-General from a developing country should be appointed in his place."

However, later Pakistan and a few others intervened and said this was not a mere suggestion, but it should be an "understanding" of the Council in adopting the decision. This was accepted.

Mchumo also referred to the para about DDGs, and said a number of divergent views have been expressed and these would now be put on record. He had taken note in particular of the strong concerns expressed by some delegations about the implications of the reference to "geographical balance". It was however Mchumo's understanding that this no way implied that the number of DDG posts should be increased. But the decision made clear that the DG would appoint his deputies in consultations with Members. Mchumo would resume, immediately after the summer break, consultations suspended nearly a year ago on the number of DDG posts, and these consultations would provide an opportunity for members to elaborate their views on other aspects of the matter.

"It should therefore be clearly understood that the elements included in the penultimate paragraph of this decision must be read in the light of the consultations we shall hold in September."

Third World envoys said that the current decision was for DDGs to be named for a renewable 3-year term. And the consultation would have to take account of the need for one of the DDGs to take over on 1 Sep 2002, if Supachai was not available and someone had to be named in his place, and a decision could not be reached by the time Moore's term ends.

Also, both Mexico and Pakistan, made clear in the General Council that as of now the WTO decision provided for four DDGs, and if there were four, geographical balance required one DDG each to be drawn from Asia, Africa and Latin America.

Initially, Hong Kong and Colombia are reported to have formally registered their objections to the para about the DDGs, but withdrew it after several members said the "package" negotiated, including the one about DDGs, had to be accepted as such, and could not be changed.

In a statement at the formal meeting, made available later to the media, Brazil's Amb. Celso Amorim said the General Council was about to close a chapter in the "short history" of the WTO, but "it is not a particularly edifying one and we hope lessons will be drawn from it."

As a fledgling institution, the WTO was still insecure as to how best to solve the kind of problems they had been grappling with during the last few months. "The WTO is no longer GATT, but it is not yet, in its practices and procedures at least, a fully matured Organization, as so many others. At best, the process we have been through will be remembered as a 'crisis of growth'."

On several occasions in the process, Brazil had expressed its high esteem for both candidates. Moore was now about to become the DG, and Supachai elevated to that position in three years time.

For that reason, and because of Brazil's reputation as consensus- builder rather than consensus-breaker, "we will not oppose the consensus which is emerging." But much as Brazil appreciated the high motivations and public spirit displayed by Bangladesh and Australia in putting forward the proposal, "we cannot fail to point out our discomfort with the essence of this compromise."

"We fear, in spite of any disclaimers, we may be creating today a dangerous precedent. It is the very nature of precedents that they do not come 'stamped' as precedents. In real life, precedents are essentially examples, good or bad, that tend to be resorted to whenever in future, for lack of imagination or weakness of will, people or states are unable to find appropriate responses to difficult situations. It is only then and not now, no matter how eloquently we deny it in the text, that we will know whether or not we have created a precedent."

Brazil, Amorim said, was concerned that "this new sort of consensus we are inventing, 'consensus by aggregation' may look to many in the outside world as an artificial fix that has all the appearances of putting the short-term interests of personalities above the long-term needs of the institution. In this case the result of this 'aggregation' may be lesser value than the sum of the parts, since both men, extraordinarily fit as they may be for the post - will from the very beginning suffer a certain 'capitis diminutio'. We only hope this will not impair or compromise their ability to perform the demanding tasks that await them."

As he had pointed out at the informal session, this may be the hour for pragmatism, "but pragmatism without principle may be the bearer of its own demise." It may appear excessively pessimistic, but hoped he was wrong and all the fears and apprehensions were unfounded.

In other comments outside the meeting, Pakistan's Amb. Munir Akram said that "this leadership issue here will influence what happens in the Seattle process, where there will be sharp division over the issues of the developing countries and the industrial world - between implementation versus new issues -- and we will be under tremendous pressure to accept the priorities and objectives of the big players. We have given an indication that we can respond when we act together." Akram said that while the DG issue had not been strictly on a developed and developing country basis, there was a clear developing country perception and view.

Another third world ambassador, who did not want to be identified, supported Akram's view, but said "the problem is some of us are ashamed of a North-South position." This episode showed that developing countries do matter and could influence things "if we act together... if we stand together we can negotiate together. We in the South should not be ashamed of acting together on a North-South basis."

A delegate from Asia said that if only in the process towards Seattle and beyond, developing countries, or at least the major key ones, stand together and show even fifty percent of the determination as in the DG selection, the WTO could still be an instrument to serve the people of the South. Otherwise, it would be a major instrument of the big players and their corporations, and would not endure for long.

Following is the text of the decision adopted by the Council on the appointment of the Director-General:

The General Council, Greatly appreciating the intensive consultations carried out by the Chairman of the General Council with regard to the appointment of the Director-General of the Organization,

Decides to appoint:

- the Right Honourable Mike Moore of New Zealand as Director- General for 3 years from 1 September 1999 to 31 August 2002

to be followed by

- H.E. Dr. Supachai Panitchpakdi of Thailand as Director-General for 3 years from 1 September 2002 to 31 August 2005;

Agrees that neither shall be eligible for reappointment as Director-General, nor shall his period of office be extended;

Further agrees that in March 2002 the General Council shall re-confirm the availability of Dr. Supachai for office and, if Dr. Supachai is not available, the process for the appointment of a new Director-General shall commence immediately, with one of the Deputy Directors-General to be appointed by the General Council as acting Director-General if the appointment process is not concluded by 1 September 2002;

Also agrees that if Mr. Moore vacates office prior to 31 August 2002, he shall be followed immediately by Dr. Supachai who shall serve for only three years;

Further agrees that the Director-General shall appoint Deputy Directors-General in consultation with Members, taking into account the views of the other designated Director-General, and the need to maintain equitable geographical balance and being bound by any decisions of the General Council with regard to ensuring continuity at the senior management level of the Organization; and

Affirms that this decision shall not constitute a precedent for future appointments of Directors-General, whose term shall be of four years, and resolves that, in order to improve and strengthen the current rules and procedures, a comprehensive set of rules and procedures for such appointments shall be elaborated and adopted by the end of September 2000. (SUNS4483)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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