The selection of Roberto Azevedo, Brazil’s Ambassador to the WTO and chief negotiator in the Doha Round, as the new WTO director-general is being hailed as recognition of the importance of the emerging economies in the world economy. Azevedo is viewed a champion of the global south. But will he be able to forge consensus among the multitude of different interests in the developing world and bridge the wide gap between the developed and developing countries in the WTO?
The WTO is at a crossroads. It was born less than 20 years ago, yet it has a pedigree going back to the end of the Second World War. For a new organization, it has already had its very brief “heyday” in the first few years of its existence. It is currently fraught with the institutional frictions and challenges typical of much older organizations, such as the United Nations. And, this is true despite the fact that the WTO is more egalitarian, consensus-based and member-driven than other international organizations.
The sole mission of the WTO revolves around making, administering and enforcing international rules relating to trade. However, its negotiating machinery has broken down, making the WTO dysfunctional. Many have emphasized that the WTO’s dispute settlement system is working very well. However, a judicial system cannot operate for long without a functioning legislature. One of the reasons for the collapse of the Doha Round is that there is a deep divide between the developed and developing countries in the WTO on a fundamental issue: its mandate. For the developed countries, it is simple: the purpose of the WTO is to liberalize trade, pure and simple; negotiations are aimed at improving market access, reciprocity, and reducing trade barriers. For developing countries, which represent the overwhelming majority of WTO members, it is different. They do not all believe in comparative advantage, or indeed, in economic growth for growth’s sake. Their goal is development, and economists do not agree on what policies are best for development. Many of them are pupils of Dany Rodrik and Ha Joon Chang. For them, the major goal of the WTO is development – including through the use of government policies that may seem to the developed countries to be “protectionist.” For example, India on behalf of the G-33 has proposed that subsidies for food security should be deemed not to be trade-distorting in a proposal that will be presented at the Bali Ministerial in December this year. The US has rejected the G-33 proposal.
Unable to reach agreement in the WTO, the developed countries have shifted the focus of their trade liberalizing and non-tariff barrier reducing efforts to bilateral and plurilateral trade agreement negotiations. Whereas the previous trend was for the US and the EU to negotiate bilateral free trade agreements (FTAs) with developing countries to gain or secure market access, the new emphasis is on negotiations between major players, such as the US and the EU, the EU and Korea, the EU and India, and Canada and the EU. The Trans-Pacific Partnership (TPP), involving 12 parties including the US, Canada, Australia, Japan, New Zealand, Mexico, Chile, Singapore, Malaysia, Vietnam, Peru and Brunei, is the major trade priority of the US government at the present time and a complicated, plurilateral undertaking. If successful, these new, bilateral economic and trade agreements between major players and key plurilateral agreements, such as the TPP, may threaten to undermine the centrality of the WTO as the central pillar of the multilateral trading system. The unravelling has already begun.
WTO members chose Azevedo because he is an “insider,” one of them, someone they know. He appears to be well-liked and respected by colleagues from all delegations in Geneva, including those who did not support him directly, which is important because trust among delegations is seriously lacking in Geneva.
The WTO is a difficult organization to “lead” because the members run it and there is no executive or management body. Ultimately, a director-general has to be able to listen, propose, prod, and persuade. The ultimate test will be whether Azevedo will use his goodwill with BRICS to encourage them to make the tough decisions (and, yes, concessions) necessary to achieve consensus and conclude negotiations on important issues. If he is not willing and able to put pressure on all sides equally to come to deals, then the WTO will continue to stagnate and will become increasingly irrelevant in the world economy. Let’s hope that Azevedo and WTO members will work together to cure the sick patient.
Debra Steger is Professor of Law at the University of Ottawa and Senior Fellow with The Centre for International Governance Innovation. She was the first Director of the WTO Appellate Body Secretariat and a Senior Negotiator for Canada in the Uruguay Round.