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TWN
Info Service on WTO and Trade Issues (May20/19) Geneva, 15 May (D. Ravi Kanth) – The World Trade Organization is expected to witness a fierce selection process for choosing a new director-general to replace current DG, Roberto Azevedo, who is demitting office on 31 August 2020. This comes amid an escalating war of words between the United States and China. On 14 May, the US President Donald Trump threatened to cut off completely economic relations with China, repeating his accusations that Beijing had concealed information on COVID-19, allowing it to become a global pandemic. “There are many things we could do. We could do things. We could cut off the whole relationship,” President Trump told the Fox Business channel. Cutting off all trade with China would save the United States $500 billion, the President asserted. US relations with China have soured since the two countries signed off on a “phase one” trade agreement at the end of last year. In a sharp response, China’s Global Times described Trump’s remarks as “lunacy” and a “clear by-product, first and foremost, of the proverbial anxiety that the US has suffered from since China began its global ascension.” The Chinese daily said on 15 May that “it is also a combination of envy and panic on behalf of Washington elites who recognize the substantial gap between the US and China in how both countries responded to the pandemic.” The US Trade Representative (USTR) Ambassador Robert Lighthizer said on 14 May that the US will focus on the selection process for choosing the new DG to the WTO. “In the coming months, the United States looks forward to participating in the process of selecting a new Director-General,” Ambassador Lighthizer said in a statement issued on 14 May. Against this backdrop, the WTO DG’s short announcement about his stepping down at the end of August – a year before his second term was due to expire – has come as a bombshell at this critical juncture for the global trade body, said trade envoys, who asked not to be quoted. Azevedo’s decision means that WTO members will be thrown into an election process for a replacement at a time when the organization is struggling to stay relevant and help keep trade flowing in the midst of the global COVID-19 pandemic. The WTO has also come under pressure – particularly from the United States – to undertake major reforms, including to its dispute settlement process. The WTO’s Appellate Body (AB) has been out of service since last December because Washington continues to block the appointment of any new members to the AB. At an urgently convened Heads of Delegation (HoD) meeting on 14 May, Azevedo said that the decision to step down a year early was taken after consulting his family members. He told members that he underwent knee surgery recently, but denied any health issues or a desire to enter politics had played into his decision. “I hope the future holds new challenges in store, but as of right now, I do not know what they will be,” he said. “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 members. He emphasized the need for meaningful reform, suggesting that “we (members) know that the WTO cannot stand frozen while the world around it changes profoundly.” He called for WTO to keep pace with evolving realities by responding to members’ needs, and that “priorities is an imperative, not an option.” “The “new normal” that emerges from the COVID-19 pandemic will have to be reflected in our work here,” he said. But Azevedo did not suggest what the “new normal” is going to be after the COVID-19. “While I am convinced we have set out in the right direction, the road ahead will entail consequential choices and deep reflection,” he argued. “MC12 (WTO’s 12th ministerial conference in June next year) will be a critical landmark for this exercise,” he emphasized. According to Azevedo, “MC12 should be a stepping-stone to the future of the WTO. It should tie together our various ongoing efforts in a coherent approach, and lay the foundations for subsequent reform. This means that MC12 will require careful preparation and execution from you, the members.” Explaining why he chose to leave now, he said that “for a mid-year ministerial, the selection process would overlap with the most intensive phase of pre-ministerial preparations, making it highly prone to compromise the planning and execution of MC12.” “Even if MC12 is held at the end of 2021, staying on through the end of my term would leave my successor mere weeks to prepare. I faced this situation when I first took office and I can tell you, first hand, that this is far from ideal,” he argued. “But given the far-reaching implications of the choices you will make at MC12, and the wide range of issues likely to be before you there, I believe you and your stakeholders deserve more ambition,” he said. Members “must decouple these two processes: the DG succession process and the preparation of MC12. Doing both would inevitably compromise MC12 and the reform impetus. I care too much for this Organization to allow this to happen.” The DG, who was a former trade envoy from Brazil, emphasized that he has been working for the system since 1997, first as a counselor in the Brazilian mission to Geneva. Azevedo called the DG’s job “most demanding,” saying that he learned a great deal during the past seven years. Azevedo repeatedly defended the WTO and his tenure as DG. The WTO is a key pillar of global governance, he said, underscoring the need to remain creative and pragmatic to address the new challenges in the 21st century. During his tenure, said Azevedo, major agreements such as the Trade Facilitation Agreement, the perpetual peace clause for food security purposes in developing countries, the Nairobi Agreement to end export subsidies and an agreement on effective implementation of tariff rate quotas were concluded. “We have achieved a great deal,” the DG said, adding that much more needs to be accomplished in the post- Covid-19 trade framework. Trade contributes to global growth, more so after the Covid-19 is brought under control, Azevedo suggested. But he did not mention that, on his watch, the two-tier dispute settlement system was dealt a body blow with the near demise of the Appellate Body. “This one issue will be recorded when the history of his tenure is written,” said a trade envoy, saying it has caused irreparable damage to the system. On WTO reform, Azevedo said “I will not be the leader” to carry out that work, but the organization cannot be allowed to remain frozen. The 12th ministerial conference will be a critical event because it will show whether members can emerge successful by launching the process for meaningful reforms of the WTO. Azevedo said that it would be better for him to leave now so that the new DG will be able to navigate the processes of preparing for the next ministerial without any delay. He said he took the decision to leave now, as it would not augur well to leave the organization in June 2021 when a new DG would have been selected. Also, if the selection process is delayed until next year, it could impair regular work, as the election process will be a distraction. So, in next three months, the selection process ought to be completed while simultaneously carrying out work on regular agenda of issues, Azevedo suggested. The General Council chair, Ambassador David Walker of New Zealand, will oversee the selection process for the next DG. Azevedo urged members not to treat the selection process as business as usual, saying that the multilateral trading system is facing new realities. At the HoD meeting, trade envoys from New Zealand, the European Union, Brazil, India, Australia, and several other countries said they are saddened by the DG’s decision to step down at this juncture, praising him profusely for his yeoman services and extraordinary contribution to the WTO during the past seven years. In a statement, USTR Robert Lighthizer also praised Azevedo, saying that “despite the many shortcomings of the WTO, Roberto has led the institution with grace and a steady hand. He will be difficult to replace.” Even President Trump waded into the selection process, saying that he is “okay” with Azevedo’s decision to step down early. “The World Trade Organization is horrible,” the President said. “We’ve been treated very badly. I’ve been saying it for a long time.” In conclusion, the war of nerves between the US and China following the COVID-19 pandemic will now come into play in the selection of the new DG to the WTO. More so, after the recent victory in which the US claimed success in the selection of the director-general of the World Intellectual Property Organization (WIPO) where it’s candidate from Singapore managed to defeat the Chinese nominee, the race for the next WTO DG will indicate how Washington will play its cards. The new director-general of WIPO, Daren Tang from Singapore, will take over office on 1 October.
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