Opinion

Opinion: WTO Leadership Tussle: The Rules versus the Deals

By Ihesiulo Grace 10 November 2020 5 No comment

The American obstacle to the emergence of Nigeria and Africa’s candidate, (WTO) Okonjo-Iweala is a reflection of what has come to be the stumbling block of growth in global trade and its inevitable negative impact on the welfare of nations as predicated on the gains from subdued high tariff regimes.

The World Trade Organisation has been struggling to hit the ground running since it was founded in 1995.

This has been occasioned mainly by the unfinished deals of General Agreement on Tariff and Trade (GATT) that it replaced, lack of clarity on the wave and extent of penetration of the ‘Globalisation’ waves across the world.

Scepticism about balanced flow of trade benefits between big and small countries, rich and poor nations as well as developed and developing nations cannot also be discountenanced when the ‘troubles’ of WTO is being discussed.

As it were, ‘’the World Trade Organisation is the only international organisation dealing with the global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible’’.

These lofty goals of the body rely largely on negotiations that give rise to new and lower tariff regimes, agreements that are ratified by parliaments of member countries and their willingness to adhere to the rules of the game.

The expectation is growth in world trade and expansion in the product mix of merchandise and invisible transactions, including intellectual property rights, banking, insurance, financial information and telecommunications services.

No doubt, the global trade has grown by approximately 420 per cent between 1948 (when GATT was founded) and 2018 (when WTO held sway) or an average of 6 per cent per annum.

Trade among WTO member countries account for about 98 per cent of global trade but more could be achieved if the major trade blocs are less suspicious of one another while treating the countries of the less developed world as equal partners in interpreting the rules and sealing the deals.

The concern of the developing countries, as rightly noted by the WTO bother mainly on, ‘’negotiations and other work on non-agricultural tariffs, trade and the environment, WTO rules on anti-dumping and subsidies, trade facilitation, transparency in government procurement, intellectual property and a range of issues…as difficulties they face in implementing WTO agreements’’.

Unfortunately, the WTO has become the arena where the muscles of nations in international economic relations are being flexed. Consequently, breakdown in trade dispute resolution, protectionism, retaliations and bilateral agreements have had immeasurable impact on global flow of goods and services.

Indeed, multilateralism seems to have been substituted with bilateralism as the latter has become the preferred route among the members that ‘committed’ themselves to a new trade philosophy after the inconclusive Uruguay round.

The crisis of GATT and Uruguay round negotiations have metamorphosed into a hydra headed monster that has made the WTO a lame duck since its establishment. The epicentre of the crisis is leadership tussles originating mainly from the perception of the US and some other countries on what the ‘exact’ mandate of the World Trade Organisaton is, especially on dispute settlement.

The Americans, in the past couple of years have been blocking appointment of members into the Appellate Body (AB) as the terms of the sitting members expire.

In fact, at a time in 2019, the AB had just a sitting member whereas a minimum of 3 active members are needed to consider an appeal.

This situation doesn’t seem to bother the United States as it arrogantly pushes its case even if it undermines the very essence of formation of the global trade watchdog.

As one writer succinctly put it, ‘’the US is alone in its apparent willingness to burn the village to save it’’. Such actions have eroded the functionality of dispute settlement system of the WTO.

The Americans have been complaining bitterly about trade dispute rulings and policies which they believe tilts in favour of China and President Trump have also developed a propensity of throwing some jabs against his perception of ill-treatment of American companies.

It has to be pointed out that China has also been displaying its own power at the WTO stage. It vetoed the appointment of American Alan Wolff, one of the Deputy Directors-General as the Acting Director General after the resignation of Roberto Azevedo some few months ago, a move that angered the US.

These are the kind of games that went on during the GATT-WTO transition period of 1993-1995 with Peter Sutherland of Ireland as the Executive Secretary.

Renato Ruggiero of Italy who emerged the first Director General of the body was in office between 1995 and 1999.

He had to contend with different doses of crisis emanating from the inconclusive Uruguay round in the midst of unclear paths of globalisation waves.

Mike Moor of New Zealand presided over WTO affairs as its second Director-General for the three year, 1999 and 2002.

He struggled to get ratification of agreements by parliaments that were yet to understand the workings of the fledgling trade body.

Supachai Panitichakdi of Thailand became the Director-General in 2002 and resigned his position even when he had a full year to remain at the helm of affairs.

He preferred to move to United Conference on Trade and Development (UNCTAD) as its Director General with several disputes unresolved.

The French man, Pascal Lamy remains the only Director-General of WTO to serve two full terms in office. He was in office during 2005-2009 and 2009-2013.

His major headaches revolved around improvement of rules for level-playing ground, rigidity of the EU and the US on agriculture negotiations, transformational trade and increased regulation.

Roberto Azevedo who succeeded Lamy completed his first tenure, 2013-2017 and resigned in the third year of his second term in 2020 amidst escalation in trade disputes and politicisation of negotiations.

The mess in dispute resolution and breakdown in control mechanism have made the organisation to be seen as ‘broken’ and ‘dysfunctional’.

This is the World Trade Organisation that beckons for a ‘magic’ in a new Director General. Africa and North America are the two continents that have never headed the WTO.

The former appears set to occupy that position through Nigeria’s OkonjoIweala while the latter, by the US might is gunning for the same by proxy through Korea’s Yoo Myung-hee.

Expectations of magical performance to resuscitate WTO should derive from experiences that reflect capacity to reform and reengineer the organisation that has been characterised by the tendency of the US pitching itself against the rest of the world.

That candidate should be able to douse the tension between the member countries. The person should be bold and ready to confront the powers that be and bring them to the table.

The candidate for that job is expected to be a true global player who understands the dynamics of the game in global multilateral organisations.

Having ‘’a hands-onexperience in the field’’ or being ‘’a bona fide trade expert’’ may not be enough to ‘’hit the ground running’’ in such a tension-soaked organisation.

This is where the endorsement of Nigeria’s Okonjo-Iweala for that top job by a near-consensus of member countries becomes crucial.

She has the capacity to navigate the trajectory of diplomatic and administrative bottlenecks with a class of global operator that she is.

Her credentials as former Managing Director of the World Bank, former Minister of Finance, Foreign Affairs Minister and the Coordinating minister of Nigeria’s economy are there to speak for her and am sure these have informed the decision of nations to rally around her for the emergency rescue mission that the WTO needs at the moment.

Unfortunately, the United States thinks differently and has thus scuttled the consensus, (with all the 164 member countries having to approve a candidate) which by tradition governs the appointment of WTO Chiefs.

By this singular action, the US has simply moved the escalated bilateral trade war between her and China to the WTO stage as it might be difficult to genuinely explain her support for Korean Yoo except for the fact that China has already pledged her support for Okonjo-Iweala.

An American desire to have a puppet in control of the world trade body may as well be another reason for their decision. That is not what the world needs now.

The gains of the last 72 years of negotiations and agreements must not be sacrificed on the altar of deals that diminish the rules.