As Brazil’s Roberto Azevedo takes office as the next director-general of the World Trade Organization, it might be useful to reflect on what awaits him. Unlike his counterparts at the International Monetary Fund and the World Bank, Mr. Azevedo was selected through a process in which nationality was not a primordial criterion for getting the job.
The WTO’s dispute settlement mechanism is a success. The number of cases brought to it and the range of countries using it speaks to this. 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.
Mr. Azevedo has to lever these factors to tackle some important challenges that the WTO-centered multilateral trade system faces.
The global economic crisis is not over; indeed it is becoming entrenched in the economic and political fabric of many countries. If the quantitative easing programs in the United States, Europe and Japan result in a currency war, then the WTO will have to insert itself into the macroeconomics and global finance domain, an area in which it has historically been absent. Although the WTO cannot influence how these programs play out, it has to be ready to respond to currency-based trade conflicts should they occur.
At the risk of mixing Monty Python metaphors, the Doha Round of trade talks is like the plucky sap that keeps coming on despite having successive limbs chopped off. Rather than acquiesce to such gore, the incoming head of the WTO should use whatever honeymoon period he is afforded by the member states to do the best impersonation he can of John Cleese in the Dead Parrot sketch and declare the Round deceased.
This done, a cold hard look at the “single undertaking” approach that has characterized multilateral trade negotiations since the start of the Uruguay Round in 1986 is in order. The current list of issues that might be tackled via the trade regime route is an impressive and daunting one. It includes intellectual property, investment, climate change and technology transfer. Each deserves to be treated on its own merit rather than being part of a grander, fruitless bargain of the sort that got us into the Doha mess in the first place.
At the start of 2013, some 546 notifications of regional trade agreements had been received by the WTO, of which 354 were in force. The challenge posed by countries voting with their feet and fleeing the multilateral arena for regional (including bilateral) ones cannot be met by clinging to Doha. It would be best to disassemble the Doha agenda, and demonstrate the usefulness of the WTO as a negotiating forum by showing progress on a specific issue.
More broadly, the WTO has to take the lead in re-building the constituency for multilateralism in trade. Here the WTO might draw lessons from the IMF and World Bank, each of which have impressive training, research and outreach arms. Through these avenues, a global constituency for these institutions and the issues they work for has been built in ways that has not been the case for the WTO. The most compelling research showing the ill effects in developing countries of protectionism in agriculture in developed countries has come from Oxfam and the World Bank – not the WTO.
Perhaps even Mr. Azevedo, a leader with vision and management skills selected through a passably credible process, is not capable of changing what appears to be an inexorable drift away from the WTO-centered global trade regime. But not even trying will guarantee irrelevance, to the detriment of all countries, rich and poor alike.
Rohinton Medhora is President of The Centre for International Governance Innovation, a think tank based in Waterloo, Ontario.