Director-General

Selecting the next WTO Director-General — process for phase three and selection of acting Director-General may be decided on July 31

On Tuesday, July 28, the WTO held an informal meeting of the Heads of Delegation. Reportedly, the meeting was spent discussing the process for the third phase of the selection process for a new Director-General for the WTO.

The current Director-General of the World Trade Organization is stepping down one year early on August 31st. The first phase of the selection process for a replacement ended on July 8 (nominations by Members of candidates). The second phase, which is to permit candidates to become known to Members ends on September 7 and has already had each of the eight candidates meet with the Members in a General Council meeting (July 15-17). The third phase involves the Chair of the General Council supported by the Chairs of the Dispute Settlement Body and the Trade Policy Review Body consulting with Members, typically in a process referred to as “confessionals” in which each Member is asked to identify either the candidates the Member believes is most likely to achieve consensus or the candidates least likely to achieve consensus. Those candidates who are not viewed as being in the top number of candidates likely to receive consensus (or most likely not to achieve consensus if questions are styled that way) are expected to withdraw.

In 2013, there were three rounds of consultations to go from nine candidates to five candidates to two candidates with one candidate then put forward by the Chair of the General Council to the membership for a consensus decision. By procedures adopted at the end of 2002, this third phase is intended to be completed in two months, with provisions for possible voting if a consensus is not possible.

On the WTO webpage this morning, an additional informal meeting of the Heads of Delegation has been added and is scheduled for this Friday at 10 a.m. July 31st is the last day before the WTO’s August recess. A press article yesterday indicated that the informal meeting on Friday would take back up the issue of process for the third phase of the selection process, that discussions had been about having three rounds of consultations to take the candidates from eight to five to two to one. It was also reported that the informal meeting of Heads of Delegation on Friday would take up the question of who would serve as the acting Director-General between September 1 and whenever the selection process for a new Director-General concludes (likely around November 7). See Inside U.S. Trade’s World Trade Online, WTO members to meet again this week on selection process, acting DG, July 28, 2020, https://insidetrade.com/trade/wto-members-meet-again-week-selection-process-acting-dg.

Should the informal meeting of Heads of Delegation reach agreement on an acting Director-General, a special General Council meeting would be called so the decision could formally be taken by consensus. By procedures adopted at the end of 2002, the acting Director-General is to be selected from the four Deputy Directors-General. All four of the Deputy Directors-General (DDGs) have indicated their willingness to serve as acting DG if selected. Yonov Frederick Agah (Nigeria), Karl Brauner (Germany), Alan Wm. Wolff (United States) and Yi Xiazhum (China) are the four DDGs.

Possible scenario for the phase 3 selection process

In a prior post, I provided a summary of statements made by each candidate to the General Council and a summary of press conference questions and answers. See July 19, 2020, The eight candidates for WTO Director-General meet the General Council – recap of prepared statements and press conferences, https://currentthoughtsontrade.com/2020/07/19/the-eight-candidates-for-wto-director-general-meet-the-general-council-recap-of-prepared-statements-and-press-conferences/. As reviewed therein each candidate has his or her own story for why he/she would be the right person to become the next Director-General. There are also issues of whether the candidate (1) is from a geographical area not previously having a Director-General of the WTO, (2) has WTO/Geneva experience, (3) has served as a Trade Minister, (4) has served in other high-level government positions, (5) has been an official of a multilateral organization, (6) is from a developed or developing country. There are also potential political issues reflecting any ongoing conflicts the candidate’s country has with other WTO Members. Depending on how WTO Members actually weigh the candidates’ credentials and the other issues will resolve which candidates are viewed as most likely or least likely to receive consensus from the WTO membership.

WTO Members obviously have much greater information on each candidate and will have the opportunity to talk privately with each candidate if so inclined. What follows is simply an outside observer’s thoughts on how the consultations could proceed. I provide my assumptions as I proceed. As any of the eight could be the candidate selected as the next Director-General, my views on who may drop out in each of the rounds should not be taken as any comment on the capabilities of the individual candidates but simply an assessment from the private sector of how factors could combine to narrow the field.

Round 1 of consultations, going from eight to five candidates

While some former U.S. Trade Representatives have stated that technical expertise is not needed to be an effective Director-General (and indeed there have been both WTO Directors-General and USTRs who came to the position without extensive trade backgrounds), considering the challenges facing the WTO at the present time, I believe many Members will view having a trade background and a good familiarity with current WTO issues as a plus for any candidate.

As Director-General Azevedo demonstrated, a candidate doesn’t need to have a prior high political office (e.g., Minister of Trade or head of other ministry) to be able to effectively work with and communicate with senior government officials of Members in capitals. That view is supported by comments by former U.S. Trade Representatives as well. See WITA’s July 16, 2020 webinar, Three former USTRs on the WTO in a time of change, https://www.wita.org/event-videos/wita-webinar-three-former-ustrs-on-the-wto-in-a-time-of-change/ (former USTRs Froman, Schwab, and Hills). Even though that is true, I believe many Members will view prior senior government experience as important in any candidate.

While serving in other multilateral organizations will likely be viewed as a plus for any candidate, it is not likely in my view by itself to override the other elements.

Geographical diversity will be a plus for the three African candidates. Depending on whether Mexico is viewed as North American or Latin, Dr. Seade may be helped (if viewed as North American) or hurt (if viewed as Latin since the current DG is from Brazil). The Saudi Arabian candidate similarly would be helped if viewed as a Middle East candidate or possibly hurt if viewed as an Asian candidate (since Thailand’s candidate in the past was selected as Director-General). The other three candidates come from regions that have had prior DGs. While all candidates have stated that the best candidate should be selected and not be a candidate from a particular geographical area, the factor of geographical diversity will likely be significant in weeding out at least some of the candidates.

If being from a developed country is helpful (since the current DG is from a developing country), then the Moldovan and UK candidates would be viewed as helped as they are the only developed country candidates. While the EC Trade Commissioner had early on indicated he thought the next DG should be from a developed country, the U.S. did not support that position. I assume it will not be a relevant factor for most Members.

The WTO, and the GATT before it, have never had a female Director-General. Considering UN Sustainable Development Goals, for many Members whether the candidate is female may be an important factor.

While the selection process in phase three is set up to try to prevent Members from preventing a consensus from forming, it is unclear how the process will work if one or more major players will not accept a candidate for political or other reasons. During the press conferences, questions were raised about (1) ongoing political tensions between Korea and Japan and between Saudi Arabia and Qatar, (2) tensions between the United Kingdom and the European Union from Brexit, and (3) concerns China might have if an Asian candidate were selected in terms of its ability to maintain a Deputy Director-General position. It would seem likely that if the EU chose to defeat the U.K. candidate, between their member states and friends in the WTO, they would be able to block Dr. Fox. It is unclear if the same is true for the Korean candidate should Japan alone oppose, but it is more likely that the Korean candidate would be blocked if China also worked to defeat the candidate. I don’t believe that sufficient Members would oppose Saudi Arabia’s candidate on the basis of Saudi Arabia’s conflict with Qatar.

Based on the above assumptions, I believe that the first round of consultations will likely result in the following three candidates being viewed as least likely to obtain a consensus and hence withdrawing:

Tudor Ulianovschi (Moldova) – I believe many Members will view other candidates as having similar or greater strengths; he is from Europe which has dominated past DG selections.

H.E. Mohammad MazaidAl-Tuwaijiri (Saudi Arabia) – I believe his message of bringing strong business management skills to the job will not attract a large part of the WTO Members.

Dr. Liam Fox (United Kingdom) — while having strong free trade credentials, he has limited WTO experience; being from Europe will be a negative if Members get past credentials.

Round 2 of consultations, going from five candidates to two candidates

It is not surprising that even in the first round, it is possible that other candidates could be the ones who withdraw versus the three listed. That caveat is even stronger in round two. That said, here are two of the three whom I believe will drop out after Round 2:

Abdel-Hamid Mamdouh (Egypt) — while Mr. Mamdouh has a wealth of WTO experience and is well known to many if not all of the WTO Members, I believe he will not make it to the final round based on what many Members may view as lack of political experience not having served as a Minister or other high level government position.

H.E. Yoo Myung-hee (Korea) — Minister Yoo has an impressive resume and her arguments for why she would be a good Director-General resonated with me. Because other candidates have similar or more extensive backgrounds in trade, I believe Minister Yoo will drop out after the second round.

I consider the other three candidates to be the most likely to achieve consensus. Which of the three drops out after Round 2 will, in my view, depend on the weight members give to Dr. Seade being from a Latin American Member vs. the weight given to a strong reputation for reform and political capabilities vs. trade background and track record of accomplishments within the WTO.

If the Latin American label (versus Mexico being part of North America which has never had a Director-General) generates significant negatives, then I believe Dr. Jesus Seade (Mexico) will drop out at the end of round two. This would be unfortunate in my view because his understanding of pending challenges at the WTO and suggested approaches to addressing them sounded the most developed and most likely to achieve results of any of the candidates.

If Dr. Seade is not eliminated at the end of the second round of consultations, the choice for the third candidate eliminated comes down to H.E. Amina C. Mohamed (Kenya) or Dr. Ngozi Okonjo-Iweala (Nigeria). Minister Mohamed has a strong record of accomplishments at the WTO including at the 2015 WTO Ministerial Conference in Nairobi. She checks all of the boxes of factors listed and hence is likely to be one of the last candidates standing. Dr. Ngozi Okonjo-Iweala has a large reform reputation with a strong record at both the World Bank and as Finance Minister in Nigeria but has no WTO experience, and the trade experience that flows from her finance role or her role as a development economist.

Round 3 of consultations, from two candidates to the one candidate viewed as most likely to achieve consensus from the WTO Members

While any of the three reviewed above could be the one standing at the end of the process and all are obviously qualified to lead, I believe that Minister Mohamed of Kenya will be selected as the next Director-General.

Dr. Ngozi Okonjo-Iweala would be my guess at who emerges as DG if Members don’t select Minister Mohamed.

While I believe that Dr. Jesus Seade may be the best candidate in fact, the current Director-General being from Brazil will likely move enough Members to vote for one of the two women candidates from African countries so that Dr. Seade will not make the final cut (if he gets to round 3).

Conclusion

With the hour glass running, the eight candidates for the WTO Director-General post are fully engaged in reaching out to WTO Members to get themselves known. From social media to webinars to press interviews to virtual and actual meetings with individual Members and groups of Members, each candidate and his/her host government are pulling out all the stops to help Members understand why the particular candidate is the right person to lead the WTO at the end of 2020.

Who Members decide is the best person to achieve consensus and become the next Director-General will unfold over the period September 8-November 7. The WTO is fortunate to have so many candidates come forward. There are lots of factors that can be considered by Members. Time will tell who emerges.

World Trade Organization — Search for a new Director-General

On May 14, 2020, the WTO’s Director-General Roberto Azevedo announced during a virtual meeting of all WTO Members that he would be stepping down from his position on August 31st, one year ahead of the end of his second four year term which ends August 31, 2021. His message to the membership was that the decision was personal and was intended to permit the WTO to choose a new Director-General hopefully before his departure and to avoid a dilution of effort needed for the next Ministerial Conference which has been postponed from June 2020 to either summer or winter of 2021. The current Chair of the WTO General Council, Ambassador David Walker of New Zealand, indicated that he would be notifying Members shortly of the start of the selection process and would be consulting to see if the process could be expedited in light of DG Azevedo’s departure in three and a half months. Both statements are linked here and reproduced below. https://www.wto.org/english/news_e/news20_e/dgra_14may20_e.htm.

WTO-_-2020-News-items-DG-Azevêdo-announces-he-will-step-down-on-31-August

Procedures for the Appointment of Directors-General

Since 2003, there have been procedures for the appointment of directors-general adopted by the General Council of the WTO (10 December 2002), The procedures are included in WT/L/509.

The timeline laid out in the procedures calls for the process to start nine months prior to the “expiry of the term of an incumbent Director-General.” WT/L/509, para. 7. So the current situation will either run over beyond DG Azevedo’s departure (indeed potentially to as late as sometime in February 2021) or will have to be seriously expedited (as potentially permitted under para. 23).

While expediting the process is possible, the various steps required by the process suggest that it is highly unlikely a new WTO Director-General will have been agreed to by the time DG Azevedo steps down. Thus, the WTO will likely face a vacancy for some period of time. Para. 23 of the procedures agreed to would then require the General Council to designate one of the four Deputy Directors-General to serve as Acting Director-General until the selection process for a new Director-General is completed. Thus, if there is a vacancy beginning September 1st, the General Council will be selecting an Acting Director-General from among these individuals — Yonov Frederick Agah (Nigeria), Karl Brauner (Germany), Alan Wolff (US) and Yi Xiaozhun (China).

Timing of Steps Absent Expedition

The procedures (WT/L/509) provide for the following timeline if a selection process occurs within the nine months outlined:

  1. “Members shall have one month after the start of the appointment process to nominate candidates. Nominations shall be submitted by Members only, and in respect of their own nationals.” Para. 8.
  2. Chair of the General Council has materials distributed to members as received and sends a consolidated list of candidates after the close of the one month period. Para. 10.
  3. “The candidates nominated shall then have three months to make themselves known to Members and to engage in discussions on the pertinent issues facing the Organization.” Para. 8.
  4. “As early as possible after the close of the one-month nomination period, candidates shall be invited to meet with Members at a formal General Council meeting. Candidates will be invited to make a brief presentation, including their vision for the WTO, to be followed by a question- and-answer period.” Para. 14.
  5. Months 5 and 6 after initiation, “the General Council shall proceed, through a process of consultations, to narrow the field of candidates and ultimately to arrive at its choice for appointment.” Para. 15.
  6. The process which is led by the Chair of the General Council and several facilitators, looks to find the candidate “around whom consensus can be built.” Para. 17. Depending on the number of candidates, there can be successive rounds to find candidates least likely to attract consensus who are then expected to withdraw. Para. 18.
  7. If successful, the Chair of the General Council with the support of the facilitators will “submit the name of the candidate most likely to attract consensus and recommend his or her appointment by the General Council.” Para. 19.
  8. “The process shall conclude with a meeting of the General Council convened not later than three months prior to the expiry of an incumbent’s term, at which a decision to appoint a new Director-General shall be taken.” Para. 7
  9. If General Council can’t take a decision by consensus, Members can “consider the possibility of recourse to a vote as a last resort.” Para. 20.

The full list of procedures is embedded below (WT/L/509).

WTL509

Assuming Amb. Walker sends out a notification in the next day or so, a normal process would result in a General Council decision in the second half of November. If there is a vacancy, the new Director-General should be able to assume responsibilities as soon thereafter as his/her schedule permits, even if not three months after the decision.

Process in 2012-2013

The selection process in 2012 started in December with nine applications received by December 31. The WTO press release showing the candidates and linking to their statements, CVs and other materials is linked here. https://www.wto.org/english/news_e/news13_e/dgsel_03jan13_e.htm. There was interest by many developing countries in seeing that the selection process kept in mind paragraph 13 of the procedures dealing with representativeness of candidates which states,

“13. In order to ensure that the best possible candidate is selected to head the WTO at any given time, candidatures representing the diversity of Members across all regions shall be invited in the nominations process. Where Members are faced in the final selection with equally meritorious candidates, they shall take into consideration as one of the factors the desirability of reflecting the diversity of the WTO’s membership in successive appointments to the post of Director-General.”

Because the DG slot at the WTO had been filled by three Europeans, one New Zealander and one from Thailand (with Pascal Lamy of France the last DG), many developing countries sought a developing country candidate assuming there were well qualified candidates from many countries. See WT/GC/M/139 at 13-15 (paras. 50 – 60).

Of the nine candidates, eight were from countries that classify themselves as developing countries within the WTO (Ghana, Costa Rica, Indonesia, Kenya, Jordan, Mexico, the Republic of Korea and Brazil). The sole developed country candidate was from New Zealand. All candidates had solid credentials.

Meetings with the candidates by the General Council occurred in late January (29-31) where each candidate was given 15 minutes for an opening statement and then participated in a question and answer session of an hour and fifteen minutes. See, e.g., WT/GC/M/142 (minutes of meeting held on Jan. 29-31) posted 16 May 2013.

Three rounds of consultations were held beginning in early April, with the result that at a General Council meeting on May 14, the Chair of the General Council put forward Roberto Azevedo from Brazil as the candidate most likely to achieve consensus and the General Council agreed. WT/GC/M/144 (minutes of meeting held on May 14) posted 4 July 2013.

Mr. Azevedo then assumed the role of Director-General as of September 1, 2013 and was reappointed for a second four years in 2017.

Prognosis for 2020

One would expect that there will be a number of developed country Members who put forward candidates in the next thirty days on the assumption that the pattern will be developed, developing, developed, developing and Brazil has just completed seven years with their candidate as DG.

Canada, Australia, New Zealand, Japan, Switzerland, Norway, the United Kingdom and one or more member countries from the EU would seem to be possibilities. The U.S. is not included in the list simply because of its prior lack of putting forward candidates and current Administration and Congressional concerns with the WTO, although the U.S. concern with the need for reforms could result in a surprise. The Republic of Korea is not included as it has considered itself a developing country, though it may still put forward a candidate and note that it is not seeking special and differential treatment on current or future negotiations in light of its development. I would be surprised if the United Kingdom puts forward a candidate just based on the serious trade negotiations that the U.K. is engaged in with the EU and the United States and their recent resumption of trade policy responsibilities following Brexit.

Developing countries are not prevented from putting forward candidates, and I assume that there will be some candidates put forward. Singapore would fit a profile similar to Korea in that it has indicated it will not seek special and differential treatment on current or future negotiations. Africa has not had a Director-General selected from among its candidates, and there has been only one Asian candidate selected previously.

What isn’t known is the willingness of the Members to streamline the nomination and selection process to permit a resolution while DG Azevedo is still active. If there are very few candidates, it may be easier for Members to agree to expedited procedures.

With the serious issues facing the world economy and the global trading system, maximum cooperation in selecting a new Director-General would be very important to helping focus a global response and updating of the WTO. Let’s hope that this is an issue on which the membership can agree to act quickly.