As the next Director General of the World Trade Organization takes office, it might be useful to reflect on what awaits him or her. First, the good news. Despite the quite justified comments about the multitude of bilateral and regional trade deals that are overtaking the multilateral trade system centered around the WTO, global trade itself is not in crisis. A remarkable dog-that-didn’t-bark aspect of the current economic crisis is the resilience of trade flows and lack of any major trade disruptions in the past five years. For a group still looking for a landmark success, the G20 should be given some credit for having averted outright trade wars through the statements and actions of its leaders.
This might still change, if the three quantitative easing programs (in the US, Europe and now Japan) result in a currency war. Much depends on whether the programs work through the expenditure/investment channel rather than the exchange rate channel. If the latter, it is hard to imagine what the WTO might do to manage the consequences.
Another bright spot is the dispute resolution mechanism, a success in the sense that the number of cases brought to this process and the number of countries using it is rising. There is very little the head of the WTO can do to change matters in either direction, so best to garner the plaudits.
The albatross around the WTO’s neck that is the Doha Round must be shed. Rather than proclaim smaller and smaller visions of it still alive, the next head of the WTO is best placed to use whatever honeymoon period he or she is afforded by the member states to proclaim, doing the best impersonation he or she can muster of John Cleese in the Dead Parrot sketch, the Round over and to move on. To what? There is room for discussion here, but it is not clear if the single undertaking approach holds much promise going ahead. If even some of the current issues are to be tackled – intellectual property, investment, climate change, technology transfer – then they deserve to be treated on their own merit, and not part of a grander, fruitless bargain of the sort that got us into the Doha mess in the first place. At any rate, the challenge posed by countries voting with their feet and fleeing the multilateral arena for bilateral and regional ones cannot be met by clinging on to Doha. Best to disassemble it, add and subtract topics, and demonstrate the usefulness of the WTO as a negotiating forum by showing progress on a specific issue.
Unlike the International Monetary Fund and the World Bank, the WTO’s research, training and outreach arms are modest in their size and reach. This is one legacy left over from the GATT days which should be overcome, with the DG insisting to do so not just for the good of the organization, but to strengthen the global constituency for multilateral free trade. For starters, the WTO Chairs program could be expanded and deepened, and the WTO’s sporadic and frankly ineffective “training” courses could be systematized into an Institute along the lines of what the IMF and World Bank run.
Does it matter whether or not the head of the WTO hails from the developing or developed world? The IMF and World Bank are so sullied by their headship selection processes that there is an easy win for the WTO here. An open, competitive and transparent selection process is more important than the nationality of the person it yields. Perhaps a leader with vision and management skills selected through a credible process is not enough to change what appears to be an inexorable drift away from the WTO-centered global trade regime. But not even trying will guarantee irrelevance.
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