DG selection by attrition or by back-room moves ?

by Chakravarthi Raghavan

Geneva, 19 June -- The World Trade Organization appears to be facing a choice between decision by attrition or a back-room manoeuvre by the majors to foist a candidate of their choice as the next Director-General, and perhaps a mixture of both.

Either way it will take the WTO back to the days of the old GATT and its methods of functioning -- and make it more difficult to gain public confidence about a rule-based system and one functioning in the interests of all.

This was the assessment of some long-time observers of the trading system as the General Council adjourned its meetings on Friday, still unable to fill up the post of a Director-General who, under the rules, in reality has no independent power or initiative beyond what the membership directs him to do.

At the end of a day-long meeting of the General Council on choosing a Director-General, the Chairman Amb. Ali Mchumo said Friday evening that there seemed to be no consensus around either candidate in the field - Mr. Mike Moore of New Zealand and Dr.Supachai Panitchpakdi of Thailand.

However, said Mchumo, there was a strong desire on all sides not to get into a new process to find a DG. At the same time people were not yet ready to decide on how to choose between the two candidates.

"It may a good thing that I am going to be away for ten days. It is more important for delegations to talk among themselves than through me," Mchumo told media at the end of the meeting.

The sharp comments and exchanges heard on 16 June, at the informal meeting of the Council, between protagonists of Moore and those of Supachai were largely absent, trade diplomats said. Absent too were voices from supporters of Moore, that the Chair persevere and continue his consultations to promote a consensus around his proposal of 30 April that Moore be chosen by consensus.

In opening the formal meeting, Mr. Mchumo expanded on the note he had circulated to delegations, and said he had convened the meeting with a view "to bringing the process to a conclusion" since many delegations had impressed on him the impasse confronting them for several weeks could not be allowed to persist indefinitely. The Council should hence address the impasse directly: either by reaching an agreement on the appointment of a new Director-General or recognizing that the process inaugurated in July last year had not produced any agreement and to consider what new steps should be taken.

Having discussed with delegations as to ways to break out of the impasse, it was clear to him that it would not be possible to reach agreement on any of them. This was because some delegations were unwilling to accept that any "circuit-breaker" must be within the parameters of the current selection process, while others were unwilling to accept any procedures which by going outside those parameters would in effect entail the beginning of a new process. Any time spent in trying to negotiate an agreement on any of these suggestions would simply be wasted.

Mchumo repeated his assessment of the situation set out in his note of 14 June (about some 80 members being in a position to support his proposal to elect Moore as Director-General), and explained how he had arrived at this figure - by adding to the original supporters of Moore, none of whom had indicated change in position, those who did not originally support Moore but had indicated either in the Council or in consultations with him, support to his proposal. But he had used the term "some 80" members (rather than a particular figure), since he did not think it was his task to reduce it to a simple matter of figures. Mchumo also defended his decision to cite figures in relation to the level of support, but since he had been advised that the formal objections to Mr. Moore would be maintained, he could not conclude there was a consensus in favour of his appointment.

He had also been informed in consultations that the objections to the Kenyan proposal stated in the Council would also be maintained. In that event no consensus could be achieved on that proposal either.

It was now for the Council to decide whether the situation was as he had outlined, and to decide what to do next.

The current process could be concluded either by agreement on a Director-General or by acceptance that the process had failed to produce an agreement. In the latter event, they would have to consult on how to proceed. It was for the Council to take decisions, and he could not and did not wish to impose any of them. The Council had to appoint the Director-General and had to accept its responsibilities.

But the discussions and interventions that followed would not appear to have broken any new ground.

Amb. Celso Amorim of Brazil (which supports the Supachai candidacy) at one stage in the discussions reportedly summed up the four choices:

* arrive at a consensus decision by attrition - that would take several months more;

* have recourse to vote, but which no one wants;

* make a Solomon's choice (of splitting the term between the two candidates): or

* end the current process and discuss a possible new process. Some trade observers said that ultimately, the key delegations would have to re-establish contacts with each other and talk among themselves, but given the hardening of positions and stands by delegations, it may take some time before there would be a move to find solutions.

As several trade diplomats and observers have noted, the atmosphere at the WTO was now such that there was very little of direct communications among those who hold different views.

At one stage, there were delegations who had been talking in the corridors that the US, as the host country for the next ministerial (in Seattle beginning end November) had a stake in having a Director-General in place, and other delegations too.

But more recently, US officials have been suggesting that they could go to Seattle with a WTO secretariat headed by a Director- in-Charge.

And in the US calculation, as that of several other key diplomats, the future negotiations on the agriculture reform program or the next round of Services negotiations (two areas of specific US interest), are both negotiations mandated to begin in 2000. And other issues of interest to the US such as Information Technology and Electronic Commerce are also on-going exercises. Thus, the US agenda does not depend on Ministers taking or not taking any decision at Seattle.

When the GATT Contracting Parties were "persuaded" in 1986 to take a decision on a more transparent way of selecting a Director-General (before agreeing to confirm another term for Mr. Arthur Dunkel, as decided by the US and EC), it was part of the drive of key developing countries to "democratise" the trading system.

And when, with all its deficiencies, the major developing countries, agreed on the Marrakesh Agreement for a WTO, as a definitive treaty (as opposed to the provisional executive agreement of GATT 1947) and establish a rule-based system, it was to enable the trading nations to have a better and more democratic voice.

Before the agreement was concluded in General in December 1993, the various ideas and alternatives for decision-making had been considered and rejected.

The US had wanted from the outset a "steering committee" of majors to run the system, but found itself opposed by the developing countries. There was talk of "trade-weighted" voting, but the US calculations showed that it would in fact have less weight than Japan and the EU, economies with greater international trade. While the Bretton Woods system was fashioned on a one-dollar-one- vote principle, with the US as the single largest shareholder being provided a blocking vote on some important questions, there was no easy way of translating these into the trading system.

The US at that time calculated that the EU, with its web of special trading arrangements and relationships, could easily command special majorities, and some of the provisions in Art IX (on WTO decision-making, including consensus, but failing that recourse to voting) and in Art X (about amendments) and special majorities were based on these calculations.

Negotiators from other trading nations, with some reluctance, agreed in December 1993 to this scheme - for to them it was a price worth paying for a "rule-based system" and one that would eschew any unilateral trade threats and sanctions.

This stick is still being wielded by the United States.

And the rule-based system is now being sought to be abused in decision-making.

The US is now effectively trying to set at nought the "rule" in Art.IX of the WTO agreement (for recourse to voting if consensus is not possible) to ensure that it prevails over any one else or all combined.

Thanks to some deft manoeuvring (through the secretariat and the chairpersons of some Council bodies), till this issue of a D.G. election, it had been able to ensure that only decisions acceptable to it would be brought before the Council for formal consensus adoption - in effect daring others opposed to stand up and say no.

In the DG process too it almost succeeded (and may still through attrition and several months), but several of the other key trading nations, including Japan, felt they have had enough and decided to take a stand.

It is possible, one trade diplomat said, that at some point the US and Japan might decide to strike a deal, and come up with a choice and try to push it through.

But however relieved trade ministries and diplomats might be that a solution had been reached, it would strengthen the public views of the WTO as a system and organization with a "large democratic deficit". (SUNS4460)

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

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