H.E. Yoo Myung-hee

Third Round of Consultations in Selecting new WTO Director-General – eight days to go, political outreach continues at high level

The last WTO Director-General, Roberto Azevedo, departed at the end of August. The existing four Deputy Directors-General are overseeing WTO operations awaiting the outcome of the selection process for a new Director-General. While eight candidates were put forward by early July and had two months to “become known” to WTO Members, the process of winnowing down the candidates started in September and has gone through two rounds where the candidate pool went from eight to five to two. Which brings the WTO to the third and final round of consultations by the troika of Chairs of the General Council, Dispute Settlement Body and Trade Policy Review Body with the WTO Membership to find the one candidate with the broadest support both geographically but also by type of Member (developed, developing, least developed).

The third round started on October 19 and will continue through October 27. While the process is confidential, with each Member meeting individually with the troika and providing the Member’s preference, Members can, of course, release information on the candidate of their preference if they so choose.

The two candidates who remain in contention are Minister Yoo Myung-hee of the Republic of Korea and Dr. Ngozi Okonjo-Iweala of Nigeria. While all eight of the candidates who were put forward in June and July were well qualified, Minister Yoo and Dr. Okonjo-Iweala have received high marks from WTO Members from the very beginning. While Minister Yoo has the advantage in terms of trade background, Dr. Okonjo-Iweala has an impressive background as a former finance minister, 25 years at the World Bank and her current role as Chair of GAVI.

The procedures for selecting a new Director-General which were agreed to in late 2002 by the General Council put a primary focus on qualifications as one would assume. However, where there are equally well qualified candidates then geographical diversity is specifically identified as a a relevant criteria. There has never been a Director-General from Africa and there has only been one Director-General from Asia (although there was also a Director-General from the Pacific area outside of Asia). With the UN Sustainable Development Goals including one on gender equality (SDG #5), many Members have also been interesting in seeing a Director-General picked from the women candidates. Since both of the two remaining candidates are women, geographical diversity will likely have an outsized role in the third round .

Both remaining candidates are receiving strong support from their home governments in terms of outreach to foreign leaders seeking support for their candidate. The candidates, of course, are also extremely busy with ongoing outreach.

Thus, Minister Yoo traveled back to Europe last week and had a meeting with the EC Trade Commissioner Dombrovskis on October 13, among other meetings. See https://ec.europa.eu/commission/presscorner/detail/en/cldr_20_1935; Yonhap News Agency, Seoul’s top trade official to visit Europe to drum up support her WTO chief race, October 12, 2020, https://en.yna.co.kr/view/AEN20201012003300320?section=business/industry;

Similarly, the Korean President Moon Jae-in, Prime Minister Chung Sye-kyun and the ruling Democratic Party (DP) Chairman Lee Nak-yon are engaged in outreach for Minister Yoo’s candidacy. Korea JoongAng Daily, October 12, 2020, Moon, allies intensify campaign for Yoo Myung-hee to head WTO, https://koreajoongangdaily.joins.com/2020/10/12/national/politics/Yoo-Myunghee-WTO-Moon-Jaein/20201012172600409.html. Contacts have been made with heads of state or senior officials in Malaysia, Germany, Brazil, Colombia, Sri Lanka, Guatemala, Japan and the U.S. among others. See The Korea Times, October 20, 2020, Government goes all out for Yoo’s WTO election Government goes all out for Yoo’s WTO election, https://www.koreatimes.co.kr/www/nation/2020/10/120_297887.html. President Moon has also raised the issue of support with new ambassadors to Korea — including the German, Vietnamese, Austrian, Chilean, Pakistani and Omani ambassadors. Yonhap News Agency, October 16, 2020, Moon requests support for S. Korea’s WTO chief bid in meeting with foreign envoys, https://en.yna.co.kr/view/AEN20201016008600315.

Minister Yoo is reported to be having problems in solidifying support from some major Asian Members — including China and Japan — for reasons at least partially separate from her qualifications and is facing what appears to be block support by African WTO Members for Dr. Okonjo-Iweala. Thus, broad outreach in Asia, the Americas and in Europe will be important for Minister Yoo if she is to be the last candidate standing on October 28-29.

Dr. Okonjo-Iweala is similarly receiving strong support from her government where President Muhammadu Buhari indicated full support by the Nigerian government. See The Tide News Online, Ocotber 14, 2020, Buhari Backs Okonjo-Iweala For WTO Job, http://www.thetidenewsonline.com/2020/10/14/buhari-backs-okonjo-iweala-for-wto-job/. Press accounts report that Dr. Okonjo-Iweala has the full backing of the African Union as well as support in both the Americas and Asia. See RTL Today, October 19, 2020, ‘I feel the wind behind my back’: Nigerian WTO candidate, https://today.rtl.lu/news/business-and-tech/a/1596831.html. Many have felt that Dr. Okonjo-Iweala is the candidate to beat, and she is certainly helped by the support of the African Union WTO Members but will also need broad support in the other regions of the world to be the one remaining candidate.

With just eight days to go to the conclusion of the third round of consultations, the remaining two candidates and their governments are turning over every stone in their effort to generate the support needed to come out of the third round as the sole candidate left.

While the candidate announced on October 29 as the remaining candidate still has to be put forward to the General Council for consensus adoption as the new Director-General, it seems unlikely at the moment that either candidate, should she emerge as the preference of the WTO membership, would be blocked by a Member from becoming the next Director-General. While such blockage is always a possibility, the 2002 agreed procedures have prevented such blockage and hopefully will result in a clean conclusion this year as well.

It is certain to be an interesting end of October.

WTO remaining candidates for the Director-General position — Questions and Answers from the July 15 and 16 meetings with the General Council

The third round of consultations with WTO Members on which of the two remaining candidates is preferred and hence may be the most likely to obtain consensus to become the next Director-General gets started next Monday, October 19 and ends on October 27.

Both Minister Yoo of Korea and Dr. Okonjo-Iweala of Nigeria are in the process of seeking support from WTO Members and have the full support of their governments which are making calls and sending letters to government officials in many of the WTO Members.

Minister Yoo is back in Europe seeking support in this third round (she and Dr. Okonjo-Iweala both received preferences from the EU in the second round). Press reports indicate that China is believed to be supporting Dr. Okonjo-Iweala, and Japan is understood to have concerns with both candidates. Thus, Minister Yoo is working to bolster support in other regions of the world to supplement what is assumed to be only partial support within Asia.

Dr. Okonjo-Iweala has received the support from Kenya after Kenya’s candidate did not advance to the third round. It is not clear whether she will receive support from all African Members of the WTO, although Kenya’s action is obviously an imortant positive for her.

So the next eleven days will be an active time as each of the remaining candidates seeks support in the final round of consultations from Members in different geographical areas as well as in different categories (developed, developing and least developed countries).

One source of information about the candidates that hasn’t been available to the public but is now available is the questions and answers provided to the General Council meetings with each candidate on July 15 (Dr. Okonjo-Iweala) and July16 (Minister Yoo). While there were three days of meetings with the General Council to accommodate the eight candidates, the two remaining candidates appeared during the first two days. The Minutes of the Meeting of the General Council, 15-17 July 2020 are contained in WT/GC/M/185 (31 August 2020). The procedures for each candidate were reviewed by the General Council Chairman David Walker (New Zealand).

“Each candidate would be invited to make a brief presentation lasting no more than fifteen minutes. That would be followed by a question-and-answer period of no more than one hour and fifteen minutes. During the last five minutes of the question-and-answer period, each candidate would have the opportunity to make a concluding statement if she or he so wished.” (page 1, para. 1.5).

Dr. Ngozi Okonjo-Iweala’s statement, questions asked, answers given and closing statement are in Annex 2 on pages 16-26. Minister Yoo Myung-hee’s statement, questions asked, answers given and closing statement are in Annex 5 on pages 51-60. The statements have previously been reviewed in my posts and are available on the WTO webpage.

Questions are picked randomly from Members who indicated an interest in asking questions. Dr. Okonjo-Iweala received questions during the meeting from nineteen Members with another thirty-nine Members having submitted their names to ask questions of her. Minister Yoo received questions during her meeting from seventeen Members with another forty-four Members having submitted their names to ask questions of her.

Dr. Okonjo-Iweala’s questions came from Afghanistan, Ireland, Kazakhstan, Ukraine, Norway, New Zealand, South Africa, European Union, Paraguay, Estonia, Australia, Latvia, Guatemala, Japan, Mongolia, Brazil, and Malaysia. The questions dealt with a range of issues including the following sample:

  • The negative impact of the COVID-19 pandemic on developing countries, LDCs and small vulnerable economies (SVEs).
  • How to ensure the benefits of open trade are distributed equitably?
  • What steps will you undertake to ensure a multilateral outcome at the next Ministerial?
  • Role of the Director-General (DG) in addressing lack of trust among Members.
  • Role of the DG in facilitating economic recovery and resilience.
  • What is necessary to restore functioning of a binding, two-step dispute settlement system in the WTO?
  • Do transparency and notification obligations need to be strengthened?
  • Focus in the first 100 days.
  • Your initial approach to the reform of the WTO.
  • What kind of approach and efforts would you like to make to advance the subject of e-commerce?
  • Role of plurilaterals in the WTO.
  • How to deal with the different views on special and differential treatment?
  • What are your plans relating to empowering women in the future WTO agenda?

Minister Yoo’s questions came from Guatemala, Belgium, United States, India, Germany, El Salvador, Chinese Taipei, Sri Lanka, Spain, Qatar, Lithuania, Gabon, Botswana, China, Barbados, Malaysia, and Zimbabwe. The questions dealt with a range of issues including the following sample:

  • Do you have any proposal on how to overcome the current crisis?
  • How do you plan to include measures to respect sustainable trade in an agenda focused on free trade and trade liberalization?
  • In looking at interim arbitration agreement of EU and other countries, is it appropriate for WTO resources to be used for activities that go beyond what is contemplated by the DSU?
  • How to convince Members that the multilateral trading system is still best way forward over bilateral and plurilateral trading arrangements?
  • Is there a gap in the WTO rulebook with regard to level playing field issues such as subsidies, economic action by the State and competition?
  • Do you have a multilateral solution to issues like e-commerce which are being tackled in the Joint Statement Initiatives that would be of interest to a large number of Members?
  • WTO is lagging behind in pursuing the development dimension; what is the path forward?
  • Role of DG re fighting protectionism and unilateral measures.
  • How to strike a balance between public stockholding and food security and the avoidance of unnecessary trade restrictions?
  • What is your view on the Doha Development Agenda?
  • What role the WTO can play to help drive Africa’s integration agenda?
  • What is the most important issue to achieve results?

Both candidates gave extensive answers to the questions posed while avoiding staking out a position on any issue that is highly controversial within the WTO. The answers are worth reading in their entirety. As a result the minutes of the meeting are embedded below.

WTGCM185

Each candidate in their summing up at the end of her meeting with the General Council circled back to their prepared statement. Their short summing up statements are copied below.

Dr. Ngozi Okonjo-Iweala (page 26):

“The nature of the questions that I have heard and the nature of the discussions give me hope. Members are clearly interested in a WTO that works, in a WTO that is different from what we have now, in a WTO that shows a different face to the world. I can see it and I can feel it. And if ever I am selected as Director-General, that gives me hope that there is a foundation to work on. Before coming in here, I have spoken to several Members, but I did not really know that. From listening to all of you and fielding your questions, I now know that there is a basis to work on. And I want to thank you for it.

“And I really want to end where I began. Trade is very important for a prosperous and a recovered world in the 21st century. The WTO is at the centre of this. A renewed WTO is a mission that we must all undertake, and we need every Member, regardless of economic size, to participate in this. If we want the world to know who we are as the WTO, we have to commit. Having listened to you, I hear the commitment and I want to thank you sincerely for that.”

Minister Yoo Myung-hee (page 60):

“I spent the past few days meeting with Ambassadors and delegates in Geneva. When I listen to your views, together with the questions today, it seems that there are diverse views and priorities of Members – whether it concerns the negotiations, how to pursue development objectives and special and differential treatment, the plurilaterals or restoring the Appellate Body function. So, how can we, a dynamic group of 164 Members with different social and economic environments, come to an agreement? This brings me back to my original message. We need to rebuild trust in the WTO. How? Amid these divergent and different views of Members, I would share the commitment and hope to restoring and revitalizing the WTO.

“This pandemic has forced us to reflect upon what is needed from the multilateral trading system. Despite the current challenges, I have a firm belief in the multilateral trading system and what we can actually achieve in the future if we put our heads together and also our hearts into it. We are embarking on a new journey towards a new chapter for the WTO. Building on the past twenty-five years, when we embark on the new journey for the next twenty-five years, I am ready to provide a new leadership that will harness all the frustrations but most importantly all the hopes from Members to make the WTO more relevant, resilient and responsive for the next twenty-five years and beyond.”

Conclusion

The process that WTO Members agreed on in 2002 to promote a process for finding a candidate for a new Director-General is cumbersome, time consuming and burdensome for candidates brave enough to put their hat in the ring. To date, the 2002 process has resulted in Members agreeing by consensus on a new Director-General (2005 and 2013). The process in 2020 has worked remarkably smoothly as well despite the deep divisions in the membership and the multiple-pronged crisis facing the organization.

The two finalists bring different backgrounds and skill sets to be considered by Members. Each started strong in the General Council meetings in mid-July as can be seen from their answers to questions posed, and each has continued to impress many Members in the subsequent months. There are political considerations in the selection process of the Director-General (just as in any major leadership position of an international organization). Both candidates are getting active support of their home governments. Fortunately, the membership has two qualified and very interesting candidates to consider. Whoever emerges as the candidate most likely to achieve consensus among the Members will still face the hurdle of whether any Member (or group of Members) will block the consensus. While that seems unlikely at the present time, one never knows.

Whoever becomes the next Director-General will face the daunting challenges of an organization with all three major functions not operating as needed, deep divisions among major players and among major groups. The lack of forward movement and the lack of trust among Members will weigh heavily on the new Director-General with a narrow window before the next Ministerial Conference likely to take place next June. It is remarkable that talented individuals with long histories of accomplishments would be willing to take on the problems the WTO is weighed down with at the present time. Hopefully, the next Director-General will be known in the next three weeks.

October 8th Video discussion on WTO Director-General selection process following the announcement of two finalists

On October 8, the Washington International Trade Association (WITA) put together a short video discussion among Rufus Yerxa (current President of the National Foreign Trade Council, former Deputy Director-General of the WTO among other positions), Wendy Cutler (currently Vice President and Managing Director of the Washington, D.C. office of the Asia Society Policy Institute and former senior negotiator at the U.S. Trade Representative’s Office) and me, moderated by Ken Levinson (Executive Director of WITA). The discussion dealt with the ongoing WTO Director-General selection process, what the results of the second round of consultations with Members suggest is important for the WTO Members in the next Director-General. The You Tube link to the discussion is below.

Informal Heads of Delegation Meeting at WTO confirms Nigerian and Korean candidates advance to third (final) round of consultations in selection of next Director-General

This morning’s 11 a.m. informal heads of delegation meeting in Geneva saw Ambassadors David Walker (New Zealand), Dacio Castillo (Honduras) and Harald Aspelund (Iceland) communicate the results of the second round of consultations with WTO Members to the membership. Pursuant to the procedures adopted in 2002 for the selection of the Director-General, the Chair of the General Council together with the Chairs of the Dispute Settlement Body and Trade Policy Review Body (the “troika”) consult with each Member of the WTO to receive their preferences in successive rounds of consultations. In the second round, each Member was asked to provide two of five remaining candidates as the Member’s preferences.

As leaked yesterday, the two candidates who advance to the third round of consultations are Dr. Ngozi Okonjo-Iweala of Nigeria and Minister Yoo Myung-hee of the Republic of Korea. The selection of these two candidates was based “on the depth and breadth of preferences articulated” by Members to the troika. “The result creates an historic precedent for the WTO in that it assures that the 7th Director-General will become the first woman to lead the organization.”

The WTO press release from today (October 8) from which all quotes are taken, “WTO members narrow field of DG candidates,” can be found here, https://www.wto.org/english/news_e/news20_e/dgsel_08oct20_e.htm.

“During the DG selection processes of 2005 and 2013, breadth of support was defined as ‘the distribution of preferences across geographic regions and among the categories of members generally recognized in WTO provisions: that is (least developed countries), developing countries and developed countries.’ The Chair said he and his colleagues were guided by the practices established in these General Council proceedings and he further explained that the decisions made clear that ‘breadth of support means the larger membership’.”

The three candidates not advancing are Amb. Amina C. Mohamed of Kenya, Mr. Mohammed Moziad Al-Tuwaijri of Saudi Arabia and Dr. Liam Fox of the United Kingdom. Amb. Walker (Chair of the General Council) said “On behalf of the entire membership, I would like to express deep gratitude for their participation in this selection process. It was clear that members consider them individuals of outstanding qualifications. I am sure you will all agree with us that in participating in the selection process, the candidates have all made a significant contribution to the standing and image of the WTO.”

The third round of consultations will start October 19 and end on October 27. There will be another informal heads of delegation meeting so that Amb. Walker and his facilitators can present the results of the third round of consultations, probably on Thursday, October 29.

The Chair of the General Council will then call a General Council meeting before November 7 to present their recommendation of the candidate most likely to obtain consensus. If Members agree, that candidate becomes the next Director-General. If there is a lack of consensus, the 2002 procedures provide for the possibility of a vote.

As reviewed in my post yesterday, the two candidates who are advancing have significantly different backgrounds presenting Members with an interesting choice. See October 7, 2020, Nigerian and Korean candidates advance to final round of consultations to become next WTO Director-General, https://currentthoughtsontrade.com/2020/10/07/nigerian-and-korean-candidates-advance-to-final-round-of-consultations-to-become-next-wto-director-general/.

While politics obviously has a role in the selection process, both candidates bring high-level government experience and an ability to work with various levels of government officials from many countries. Minister Yoo touted the fact that Korea has gone through significant economic development during her lifetime and so she has seen the needs of her country at various stages of economic development which would help her understand the needs of all WTO Members. She has also engaged in negotiations with many of the major WTO Members, including the U.S. and China. Dr. Okonjo-Iweala is a development economist and has expressed an interest in various issues where working with other international organizations would be important to ensure participation by all WTO members in WTO issues (e.g., addressing the digital divide which prevents many developing and least developed countries from engaging on e-commerce; ensuring access by all Members to vaccines and therapeutics to address the COVID-19 pandemic).

While the process of selecting a new Director-General is cumbersome, it was developed after the challenges in 1999 when no consensus was reached on a single candidate to give a greater likelihood of Members reaching a consensus on candidates put forward. The procedures worked in 2005 and in 2013 and appear to be working this year.

Nigerian and Korean Candidates Advance to Final Round of Consultations to Become Next WTO Director-General

The informal Heads of Delegation meeting at which Amb. David Walker (new Zealand),who is the Chairman of the General Council and his facilitators (Chairs of the Dispute Settlement Body and of the Trade Policy Review Body), will announce to the WTO membership which two of the five remaining candidates have advanced to the final round of consultations in the search for a new Director-General is scheduled for 11 a.m. Thursday morning (October 8). However, just as after the first round of consultations, the results have been leaked to the press by one or more Members.

Based on news stories this afternoon, Dr. Ngozi Okonjo-Iweala of Nigeria and Minister Yoo Myung-hee of the Republic of Korea are the two candidates who will advance to the third and final round of consultations. Minister Amina C. Mohamed of Kenya, Minister Mohammad Moziad Al-Tuwaijri of Saudi Arabia and the Rt Hon Dr. Liam Fox MP of the United Kingdom will not advance and are expected to withdraw.

As reviewed in prior posts, Minister Yoo has had active support in her candidacy from the Korean administration and had achieved success in being one of two preferences put forward by a united European Union earlier this week. Minister Yoo’s career has been in trade throughout and she is the first woman Minister for Trade in Korea. Dr. Okonjo-Iweala has been finance minister of Nigeria twice, served 25 years at the World Bank rising to the number two position and has had an important position with GAVI in recent years.

There has been much discussion of whether this selection of a Director-General would result in a woman being selected — which appears to now be a certainty — and which would be a first for the WTO. Similarly, African Members have been arguing that the position should go to an African candidate since Africa has never had a Director-General from the continent. Asia has had one Director-General in the WTO previously, but never a Korean. Minister Yoo is the third Korean trade minister to run for the Director-General post in the WTO’s short history.

It is unclear if WTO Members from Africa put forward their preferences in a uniform manner to support both African candidates who were part of the round two consultations. Some press articles have suggested that other candidates received at least some support from individual African Members. It is known that Dr. Okonjo-Iweala and Minister Mohamed had support from different groups of African countries — ECOWAS and EAC respectively.

The third round of consultations will have WTO Members looking at very different candidates in terms of backgrounds and perceived strengths. Minister Yoo’s background is entirely in trade and she is from an important trading nation and has negotiating history with many of the major WTO Members. Dr. Okonjo-Iweala is highly regarded, has limited trade experience (as Minister of Finance she had responsibility for Nigeria’s customs service), has deep experience in development economics and with efforts to respond to the needs of developing and least developed countries in terms of access to medical goods, including vaccines and therapeutics. While Nigeria is a large country, it is a significantly smaller trading nation than Korea. Korea is the 7th largest exporter of goods in 2019 ($542 billion) and 9th largest importer while Nigeria was 48th largest exporter ($62 billion) and was not in the top 50 importers.

Both remaining candidates are very talented and would make an interesting choice for the next Director-General. Block voting by the EU certainly was a help to Minister Yoo in her quest to advance to the third round. It will be interesting to see if the EU, the African Members or other groups vote in blocks in the third round.

The three candidates who will not move to the third round were also all very talented individuals who would have brought different skills and perspectives to the job if they had ultimately been selected.

We will learn tomorrow the timing of the third round of consultations.

Selection of WTO Director-General — Second Round of Consultations Ends Today, October 6

October 6 marks the last day of the second round of consultations by the Chairman of the General Counsel and his facilitators (Chairs of the Dispute Settlement Body and Trade Policy Review Body) with the WTO Members. Each WTO Member has been providing the troika of Chairs with the names of two of the five remaining candidates that constitute the Member’s preference in the second round. While the date of the Heads of Delegation meeting has not yet been announced, it will likely be Thursday morning. At that time, the two candidates advancing to the final third round of consultations will be identified.

In a prior post, I had noted press articles that indicated EU members were looking to back the candidacies of the Nigerian and Korean candidates — Dr. Ngozi Okonjo-Iweala and Minister Yoo Myung-hee. An article from Bloomberg yesterday confirmed that at yesterday’s meeting in Brussels, EU countries had agreed to back the two candidates. See Blomberg, October 5, 2020, EU Throws Its Weight Behind Nigerian, Korean WTO-Head Contenders, https://eur04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2020-10-05%2Feu-throws-its-weight-behind-nigerian-korean-wto-head-contenders&data=02%7C01%7C%7Cc25bd1089e95463bd6e108d8699846db%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C637375450027528387&sdata=Lbn5YOaH6ZIm9m4b1ES91psH6rUAMz2PyfO7GomVre8%3D&reserved=0.

Hungary, which had earlier indicated it would back Minister Amina C. Mohamed of Kenya and Dr. Liam Fox of the United Kingdom, reportedly agreed to join with the other EU members. Thus, the EU is understood to have expressed preferences as a block for the Nigerian and Korean candidates.

While Africa has two candidates among the five in the second round, African nations are split on support. The six members of the East Africa Community support Kenya’s Minister Amina Mohamed while countries in west Africa (Economic Community of West African States (ECOWAS)) support Nigeria’s Dr. Ngozi Okonjo-Iweala.

It is unclear if African Members of the WTO will list their two preferences as Okonjo-Iweala and Mohamed or will split their preferences by including one of the three other candidates along with one of the African candidates. With the EU 27 supporting the Korean candidate, lack of solidarity in Africa for its two candidates would increase the challenges for Minister Mohamed to be one of the two finalists making the third round of consultations.

There are, of course, large numbers of WTO Mrmbers in the Americas and in Asia and the Pacific, and there are European countries besides the EU’s 27. It has been assumed that each of the five remaining candidates would garner some support in each of these other areas. Block voting can deny some candidates geographical coverage in some parts of the world which can be a factor the troika consider in reducing the field from five to two.

it is nail biting time for the candidates.

Press article indicates EU Members will likely support Nigeria’s Ngozi Okonjo-Iweala and Korea’s Yoo Myung-hee on Monday in second round of consultations [Updated 10-5]

The second round of consultations with WTO Members on winnowing down the list of candidates for the WTO Director-General position from five to two started on September 24 and ends on October 6. While Amb. David Walker of New Zealand, the Chair of the General Council, with his two facilitators, meet with each delegation to learn their two preferences for the second round of the five remaining candidates, there is no public information as to when WTO Members meet with Amb. Walker and the others during the second round.

In a prior post, I had flagged that Minister Yoo Myung-hee of the Republic of Korea was traveling to Europe to press her candidacy. See September 27, 2020,  Korean trade minister travels to Europe to push her WTO candidacy; Moldova candidate endorses Kenyan candidate, https://currentthoughtsontrade.com/2020/09/27/korean-trade-minister-travels-to-europe-to-push-her-wto-candidacy-moldovan-candidate-endorses-kenyan-candidate/.

Last week there were articles in the Korean press that President Moon Jae-in of Korea had contacted German Chancellor Angela Merkel seeking her support of Minister Yoo for the WTO Director-General position. See The Korea Times, October 1, 2020, Moon seeks Germany’s support for selection of WTO Chief, https://www.koreatimes.co.kr/www/nation/2020/10/120_296932.html.

On Friday, October 2, Bloomberg published an article (“EU Set to Push WTO Chief Bids of Nigerian, Korean Candidates”) that was republished by The National on October 4, entitled “EU to put forward bids of Nigerian and Korean candidates for WTO top job.” See, Bloomberg, October 2, 2020, EU Set to Push WTO-Chief Bids of Nigerian, Korean Candidates, https://www.bloomberg.com/news/articles/2020-10-02/eu-set-to-push-wto-chief-bids-of-nigerian-korean-candidates; The National, October 4, 2020, EU to put forward bids of Nigerian and Korean candidates for WTO top job, https://www.thenational.ae/business/eu-to-put-forward-bids-of-nigerian-and-korean-candidates-for-wto-top-job-1.1087741.

“European Union governments are nearing an agreement to
support the Nigerian and South Korean candidates to lead the
World Trade Organisation as the arbiter of international commerce
prepares to whittle down a list of contenders.

“EU member-country envoys plan on Monday to endorse Ngozi
Okonjo-Iweala, Nigeria’s former finance minister, and Yoo Myunghee,
South Korea’s trade chief, in their bids to become WTO
director-general, according to officials familiar with the matter.
They spoke on the condition of anonymity because the
deliberations are confidential.

“Of the 27 EU countries, only Hungary withheld support at a
Brussels meeting on Friday of national trade experts for a plan to
put Ms Okonjo-Iweala and Ms Yoo on the bloc’s new shortlist,
according to one official. That resistance may be overcome at
Monday’s higher-level gathering, the official said.”

Obviously if the news articles are correct, this is a major development helping Korea’s candidate Minister Yoo and will be a disappointment to Kenya’s candidate Minister Mohamed who had been on the EU list of four in the first round.

The development, if it happens, will also complicate Minister Mohamed’s efforts to get into the final round of two candidates. It is anticipated that African WTO Members will support one or both of the two African candidates remaining – Dr. Okonjo-Iweala and Minister Mohamed. If there is a split in solidatity for both candidates within the African Members, it could make the final two candidates Minister Yoo and Dr. Okonjo-Iweala instead of Minister Mohamed and Dr. Okonjo-Iweala.

As reviewed in a prior post, it is unlikely that either of the two male candidates, Minister Mohammad Moziad Al-Tuwaijri of Saudia Arabia or the Rt Hon Dr. Liam Fox of the United Kingdom, will make it into the final two. See September 24, 2020,  WTO Director-General selection – block voting likely to ensure next Director-General is a female, https://currentthoughtsontrade.com/2020/09/24/wto-director-general-selection-block-voting-likely-to-ensure-next-director-general-is-a-female/; September 25, 2020, Video discussion on WTO Director-General selection process, https://currentthoughtsontrade.com/2020/09/25/video-discussion-on-wto-director-general-selection-process/.

With the consultations ending on Tuesday, October 6, it is expected that there will be a heads of delegation meeting scheduled for October 8 with Chairman Walker and his facilitators reaching out to the five candidates with results on the 7th of October. After the first round, leaks occurred with the names of those not advancing hitting the press on the day before the heads of delegation meeting.

Stay tuned.

An environmental read on the five candidates for the WTO Director-General slot

A British-based press publication on climate change released a story today looking at the position on climate change of the five candidates being considered in the second round of consultations at the WTO to become the next WTO Director-General. The publication, Climate House News says this about themselves, “Climate Home News is an independent news site specialising in the international politics of the climate crisis. Our London-based editorial team coordinates deep reporting from around the world on the political, economic, social and natural impacts of climate change. Our coverage of UN climate talks is essential reading.”

Today’s article can be found here: Climate Home News, 29 September 2020, African green reformer tipped to win UN trade leadership race, https://www.climatechangenews.com/2020/09/29/african-green-reformer-tipped-win-un-trade-leadership-race/.

While crediting H.E. Yoo Myung-hee of the Republic of Korea and the Rt Hon Dr. Liam Fox MP of the United Kingdom for speaking out on the need for fisheries subsidies reform, the article singles out H.E. Amina C. Mohamed of Kenya and Dr. Ngozi Okonjo-Iweala of Nigeria as the two candidates who appear committed to raise the profile of climate change within the WTO if selected as the Director-General. The fifth candidate, H.E. Mohammad Moziad Al-Tuwaijri of Saudi Arabia, was noted as having made no statements on climate change.

“Both women used their written candidate statements to call for environmental reform of the WTO’s trade rules, while their three opponents from Korea, the UK and Saudi Arabia, have said little about climate change.”

“Mohamed, who has held cabinet roles including foreign affairs in the Kenyan government since 2013, said the economic recovery must ‘take account’ of issues like climate change. The WTO should be reformed to ‘support our shared environmental objectives’ and encourage diffusion of clean technologies, she said.”

“Okonjo-Iweala, former finance minister for Nigeria, said that ‘the WTO appears paralysed at a time when its rule book would greatly benefit from an update to 21st century issues such as ecommerce and the digital economy, the green and circular economies’. She said she wants to reach ‘optimal complementarity between trade and the environment’.”

The article spends a fair amount of space on carbon pricing as an important initiative and notes Minister Mohamed’s comments that “the WTO could replicate carbon pricing initiatives like the EU’s ‘on a grander scale.”

Whether increasing the role of the WTO in addressing climate change is an issue of concern to many WTO Members, it certainly is to some and should be to many. Because trade and the environment is not a prominent area of ongoing WTO negotiations (other than fisheries subsidies), it is not surprising that all of the candidates seeking the Director-General position have not spoken extensively on the issue. Thus, one cannot necessarily draw the conclusions that the article suggests about three of the candidates. Being a member-driven organization, a candidate to become the next Director-General can not be faulted for focusing on the issues of stated concern by Members. Under the current WTO structure, it is not clear what influence a Director-General can have on subjects that Members will focus on.

Nonetheless, ensuring sustainable development (including how trade can help achieve global needs to address climate change) is important to businesses, workers, consumers, NGOs, and the global population. It can and should be a factor that Members of the WTO consider in who gets selected as the next Director-General — i.e., commitment to sustainable development and passion for making trade a positive contributor to solving climate change. More importantly, it must be a factor that Members consider in deciding on areas of negotiation and reform of the WTO in the months ahead.

Korean Trade Minister Travels to Europe to push her WTO candidacy; Moldovan candidate endorses Kenyan candidate

In a prior post, I had reviewed that the EU had backed all three women candidates in the first round of consultations at the WTO on who should be the next Director-General — H.E. Yoo Myung-hee of Korea; H.E. Amina C. Mohamed of Kenya; Dr. Ngozi Okonjo-Iweala of Nigeria — but had not backed either of the two men who advanced. See September 24, 2020, WTO Director-General selection – block voting likely to ensure next Director-General is a female, https://currentthoughtsontrade.com/2020/09/24/wto-director-general-selection-block-voting-likely-to-ensure-next-director-general-is-a-female/. All three women moved onto the second round of consultations along with H.E. Mohammad Moziad Al-Tuwaijri of Saudi Arabia and The Rt Hon Dr. Liam Fox MP of the United Kingdom.

With the other two women candidates likely to secure most or all of the second round votes from African WTO Members, it is obviously important for Minister Yoo to continue to receive support from at least some portion of European Members as well as geographical support from Asia and the Pacific and the Americas. With Africa and the Middle East having their own candidates, it is presumably her hope to also secure some support from those areas as well. While it is understood that the EU presented their preferences in the first round of consultations on a consolidated basis, that may not be the case in the second round where at least one EU member (Hungary) has indicated they will vote independent of the EU preferences. Thus, it is not surprising that Minister Yoo and the Korean government are putting focus this week on European Members of the WTO and other missions in Geneva As reviewed in the Korea Times, “‘Minister Yoo is visiting Geneva and Sweden from Sept. 27 until Oct. 2 to seek support of WTO member states with regard to the election of the next WTO director-general,’ the ministry said in a statement, Sept. 25.” The Korea Times, September 27, 2020, Trade minister Yoo Myung-hee kicks off Europe campaign for WTO race, https://www.koreatimes.co.kr/www/nation/2020/09/113_296737.html.

The other piece of news reported today relevant to the WTO Director-General campaign is the endorsement of the Kenyan candidate, H.E. Amina C. Mohamed, by one of the three candidates who did not advance at the end of the first round of consultations, Moldova’s Amb. Tudor Ulianovschi. The Standard, September 27, 2020, Moldovan Candidate Tudor Ulianovschi endorses Amina Mohamed for top WTO job, https://www.standardmedia.co.ke/branding-voice/article/2001387896/tudor-ulianovschi-endorses-amina-mohamed-for-top-wto-job. “He announced on twitter, ‘For the final round of @wto DG selection, two candidates will compete against each other to the benefit of the multilateral trade system. I am pleased to support my friend @AMB_A_Mohammed for the role of DG @wto. We have a similar experience (Ambassador&Minister), diplomacy, and character.'”

The second round of consultations with WTO Members to decide which two of the remaining five candidates will advance to the third round of consultations started on September 24 and will end on October 6. All five candidates and their governments are engaged in shoring up support for their candidacy, with the identification of the two remaining candidates likely to be announced on October 7 or 8.

The third round of consultations, when the candidate viewed as most likely to achieve consensus among the WTO Members, will get started later in October with a hoped for selection of the next Director-General completed by November 7.. Should there be a lack of consensus for the candidate emerging from the third round of consultations, the procedures for selecting Directors-General agreed to at the end of 2002 permits resort to voting if consensus cannot be achieved.

Additional Materials on Three of the Remaining Five Candidates for WTO Director-General post

While WTO Members are engaged in the second round of consultations with the Chairman of the General Council and his facilitators on which two of the remaining five candidates receive each Member’s preference, the candidates continue to reach out to Members and make media contacts. The second round of consultations started on September 24 and will continue until October 6 with a Heads of Delegation meeting likely held one or two days later to announce the two finalists and the timing of the third round of consultations.

The links below are for selected articles or news clips for three of the five remaining candidate and include news interviews.

The Bloomberg piece for Dr. Okonjo-Iweala in not directly WTO related though the WTO Director-General selection process is mentioned. The interview is a joint discussion with Australia’s former Prime Minister Julia Gillard looking at the opportunities for women in leadership in times of crisis.

In Bloomberg’s interview of Minister Yoo, Minister Yoo goes through a number of challenges facing the WTO and answers questions on U.S.-China tensions and responds to a question on whether Japan will oppose her nomination.

Dr. Fox’s interview with the Global Trade Review addresses his interest in the Director-General position, responds to a question about whether his candidacy is serious and answers a question on the relevance of Brexit. His interview with CNBC Africa was wide ranging and he stressed the need for a recommitment by Members to a common enterprise, the need to get the dispute settlement system functioning again. Dr. Fox talked about the needs for Micro-, Small and Medium businesses for all Members, and reviewed the actions he would take to improve the focus on these commercial operators. He also talked about the need for verification of information notified by parties, citing subsidy notifications. He discussed the need to obtain greater liberalization in trade in services and spent some time on e-commerce/digital trade and reviewed how online trade can be helpful to better integrating women into trade. He also talked about the regional trade agreement among African countries and the use of plurilaterals where multilaterals are not presently doable.

Dr. Ngozi Okonjo-Iweala (Nigeria):

Bloomberg, Australia’s Gillard, Nigeria’s Okonjo-Iweala on Women in Leadership, https://www.bloomberg.com/news/videos/2020-09-24/gillard-okonjo-iweala-on-women-in-leadership-video.

H.E. Yoo Myung-hee (Republic of Korea):

Bloomberg, Korean Minister Vows to Revitalize WTO if Elected as Chief, https://www.bloomberg.com/news/videos/2020-09-25/korean-minister-vows-to-revitalize-wto-if-elected-as-chief-video.

The Rt Hon Dr. Liam Fox MP (United Kingdom):

Global Trade Review, September 24, Exclusive interview: Liam Fox talks WTO bid, calls his backing of Brexit a ‘red herring’, https://www.gtreview.com/news/global/exclusive-interview-liam-fox-talks-wto-bid-calls-his-backing-for-brexit-a-red-herring/.

CNBC Africa, September 25, 2020, UK’s Liam Fox Shares His Vision for Global Trade, https://www.cnbcafrica.com/videos/2020/09/25/in-conversation-with-liam-fox-on-his-vision-for-global-trade/.

WTO Director-General selection — block voting likely to ensure next Director-General is a female

As the World Trade Organization starts the second round of consultations with Members today to continue to winnow down the list of candidates to move forward to the third round in mid-October, the likelihood of block preferences by countries within the EU and from Africa would seem to guarantee that the two candidates remaining at the end of the second round of consultations are two of the three women candidates — Dr. Ngozi Okonjo-Iweala of Nigeria, H.E. Yoo Myung-hee of the Republic of Korea and H.E. Amina C. Mohamed of Kenya.

First, African Members of the WTO have been arguing since before the start of the selection process that it was time for a Director-General to be from Africa. With two of the five remaining candidates being from Africa, if African Members provide as their preferences the two remaining African candidates, those two candidate will have a large support base before one looks at the rest of the world. There are currently some 45 WTO Members from Africa. While it is always possible for Members from Africa to support only one of the two African candidates and to pick a second preference from outside of the continent, it is likely that most Members will provide both African candidates as preferences to improve the chances of an African candidate in fact being selected as the next Director-General.

Second, press articles in recent days have indicated that the 27 European Union countries had given their preferences for the same candidates in round one of the consultations and that had led to three of the four candidates they supported advancing — the three women candidates from Nigeria, Kenya and the Republic of Korea. They had not expressed preferences for either of the two male candidates who advanced, H.E. Mohammad Moziad Al-Tuwaijri of Saudi Arabia and the Rt Hon Dr. Liam Fox MP of the United Kingdom. While WTO Members are obviously not limited to prefer in later rounds individuals they expressed preferences for in earlier rounds, it is expected that the EU countries (with limited exceptions) will agree on two of the three women candidates for Round 2. This would be consistent with their apparent desire to see a candidate from a different geographical area than recent DGs and for a candiate who is female supporting gender equality objectives of the UN Sustainable Development Goals. There is one known likely exception to the EU expressing preferences as a block approach. Specifically, the press has indicated that Hungary intends to identify its preferences as H.E. Mohamed of Kenya and Dr. Fox of the United Kingdom.

It is expected that each of the women candidates will have reasonable support in other parts of the world as well. With Dr. Seade out of the running, the Americas has no geographic candidate and will certainly provide a fair portion of their preferences to one or two of the women candidates. Similarly, Asia and the Pacific will split preferences among the five remaining candidates ensuring some additional support for each of the women.

While H.E. Al-Tuwaijri and Dr. Fox will certainly receive support in round two of the consultations from a significant number of Members, if the EU and Africa vote largely in blocks, it is hard to imagine how either of them advances to the final round of consultations.

Depending on the block preference approach of Africa and the EU, the two candidates who advance will either be the two African candidates or one of the African candidates and the Korean trade minister.

My assumption is that the third round will be a face off between H.E. Mohamed and Dr. Okonjo-Iweala. We will know in early October.

WTO Director-General selection process — what do results from first round of consultations suggest are key criteria for WTO Members in next Director-General?

Last week, five of eight candidates advanced to the second round of consultations when the WTO’s Chairman of the General Council reviewed with the membership the results of the first round of consultations. The second round of consultations starts this week. WTO Members’ preferences in the second round will result in the field being reduced from five to two candidates before the third round selects the candidate viewed as most likely to achieve consensus among the WTO Members. The selection process should end by November 7, 2020

Can anything be gleaned from the results of the first round results?

  1. The three candidates who did not advance

The three candidates eliminated were Dr. Jesus Seade Kuri of Mexico, Mr. Abdel-Hamid Mamdouh of Egypt and Amb. Tudor Ulianovschi of Moldova.

Dr. Seade has had personal involvement with the GATT during the Uruguay Round and was not only Mexico’s Ambassador to the GATT but then a Deputy Director-General of the GATT at the end of the Uruguay Round and one of the original Deputy Directors-General when the WTO was set up in 1995.

Mr. Mamdouh similarly has had a long and distinguished history with the GATT and WTO that stretches back to the Uruguay Round and continued in various capacities within the Secretariat ending with a sixteen year stint as Director of the Trade in Services and Investment Division.

Thus, if one was putting primacy on technical expertise or a deep understanding of the origins of the WTO (arguably relevant to current crisis issues like the impasse over the Appellate Body), then one would have expected both of these individuals to get past the round one consultations. As they didn’t, it follows that depth of technical capability was not a driving consideration for Members in the first round of consultations.

Although Dr. Seade has held various government positions including Under Secretary for North America and chief negotiator for the US-Mexico-Canada Agreement), he has never served as a Minister (Secretary) in the Mexican government. Moreover, Mexico, while part of North America, is typically referred to as part of Latin America. Since the last Director-General was from Brazil (also included in “Latin America”), this fact could have been viewed as a negative for Dr. Seade.

For the enormous history that Mr. Mamdouh has had with the WTO, he never served as either an Ambassador or took the position of Minister for the Egyptian government. Thus, to the extent Members were putting primacy on candidates who had served in a high political position for their host government, Mr. Mamdouh would have been viewed as not meeting that criteria.

Amb. Ulianovschi served both as Moldova’s Ambassador to Switzerland and Liechtenstein (including being Ambassador/Permanent Representative to the WTO) and later served as a Minister of Foreign Affairs. Thus, he has both familiarity with WTO issues and had a prior senior political position. Since Moldova is part of Europe and most Directors-General of the GATT and WTO have been from Europe, this could have been viewed as a negative for Amb. Ulianovschi (though the same was also true for Dr. Liam Fox of the United Kingdom who has advanced to the second round of consultations).

2. The five candidates who have advanced to round two

Of the five candidates who have advanced, all have served as a Minister in their home government with four — Dr. Ngozi Okonjo-Iweala of Nigeria, H.E. Amina C. Mohamed of Kenya, H.E. Mohammad Moziad Al-Tuwaijri of Saudi Arabia and the Rt Hon Dr. Liam Fox MP of the United Kingdom having served two terms or in two different Minister positions. The fifth, H.E. Yoo Myung-hee of the Republic of Korea is the current Minister for Trade in Korea.

The differentiation between those who advanced and those who didn’t thus seems to hinge in significant part of the perception of political weight a candidate would bring based in part on the senior government role each has played. While Amb. Ulianovschi of Moldova did not advance and yet was a Minister, his being from a European country may have been the distinguishing factor. He was also the youngest candidate by more than a decade which may have been another factor for some.

Moving into the second round of consultations, what considerations may influence who makes the next cut?

The Chairman of the General Council indicated that WTO Members viewed all eight candidates as highly qualified and respected. This means for many Members the important factors may be less about the qualifications but more about geographical diversity of the membership. The Procedures adopted at the end of 2002 for the selection of Directors-General has a paragraph dealing with the representativeness of candidates (WT/L/509 at para. 13):

“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.”

As there has not been a Director-General from Africa or from the Middle East and only one from Asia, geographical diversity could have aided four of the five candidates who advanced to the second round of consultations.

In addition, no GATT or WTO Director-General has been a woman to date. One of the UN Sustainable Development Goals (SDGs) is gender equality (SDG 5). Three of the candidates who have advanced are female. A fourth, Dr. Liam Fox, committed to ensuring that half of the senior WTO Secretariat would be women if he were selected as the next Director-General.

While all eight candidates indicated their preference for the selection to be of the best qualified candidate, it is certainly likely that other criteria will weigh in the second and third round consultation process which leads to the selection of a single candidate.

The three women candidates

Among the three women candidates, H.E. Mohamed has a proven track record on trade within the WTO and as Chair of the 2015 Nairobi Ministerial. H.E. Yoo’s career has been entirely in trade, and she has dealt with each of the U.S., China and the EU in her trade capacity for Korea. Dr. Okonjo-Iweala has never been Minister of Trade though her role (twice) as Minister of Finance for Nigeria included some trade-related areas (customs, trade facilitation) and she had a distinguished career at the World Bank and is now active in various organization relevant to the recovery from COVID-19 such as GAVI (focused on getting vaccines to countries in need).

Obviously two of the three women candidates have serious trade/WTO backgrounds. The third is often viewed as having the largest political profile. Depending on how large the preference is for a strong leader with significant political experience or a strong leader with significant understanding of the trade problems before the WTO, this could lead to Dr. Okonjo-Iweala and H.E. Mohamed as being the top two women candidates or H.E. Mohamed and H.E. Yoo filling that role.

Possible wild cards that could hurt one or two of the women candidates are (1) the ongoing Japan-South Korea conflict that H.E. Yoo has been involved in; (2) China’s view towards H.E. Yoo if concerned about whether China will maintain a Deputy-Director General slot going forward if an Asian candidate is selected as the next Director-General; (3) the late disclosure that Dr. Okonjo-Iweala is a dual Nigerian-U.S. citizen and whether that is problematic for China or other Members.

The two remaining male candidates

It is unlikely that Dr. Fox makes it to the third round based simply on the Paragraph 13 indication of importance of geographical diversity and the long history of European Directors-General. He would bring a unique viewpoint to the Director-General position being the only candidate who has repeatedly stood for election in his country. His commitment to ensure half of the senior WTO Secretariat are women may also be a plus for him if only one of the women candidates advances.

Similarly, unless the membership decides that what they want as a Director-General is someone who will move the organization to a more business-like functioning approach, it is unlikely that H.E. Al-Tuwaijri makes it past round two. He has the advantage of being from an area (Middle East) that has not had a Director-General. Moreover, he has worked closely with G20 countries which could be a plus if only one of the women candidates advances to round three.

Likely outcome of Round Two Consultations

The second round of consultations starts on September 24 and concludes on October 6. At the meeting of the Heads of Delegation that follows the close of the consultations (probably October 8), it is likely that H.E. Amina C. Mohamed and Dr. Ngozi Okonjo-Iweala advance to the third round of consultations.

Who will likely emerge as the sole remaining candidate after Round Three?

If H.E. Mohamed and Dr. Okonjo-Iweala advance beyond round two, the selection of a candidate most likely to achieve consensus among the WTO Members in round three will depend on whether Members prefer a candidate who has a record of achieving results in the WTO or prefer a candidate with a large record of in-country reform and of achievement within the World Bank and ability to focus Members on post COVID-19 recovery needs.

Either would be an interesting choice and would bring great energy to what will be a very challenging job at a time of multiple crises for the WTO and concerns about its continued relevance. Based on what seems to have mattered in Round One of the consultations, I would predict that Dr. Ngozi Okonjo-Iweala will be the next Director-General with the one caveat of whether her dual citizenship with the U.S. in addition to her home country of Nigeria becomes problematic in fact. If the caveat applies, then look for H.E. Amina C. Mohamed to be the next Director-General.

Race for becoming the next Director-General of the WTO — five candidates advance; three are asked to withdraw

At a Heads of Delegation meeting held at the World Trade Organization this morning (11:00 a.m. Geneva time), the Chairman of the General Council, Amb. David Walker, and his facilitators, Amb. Dacio Castillo of Honduras (Chairman of the Dispute Settlement Body) and Amb. Harald Aspelund of Iceland (Chairman of the Trade Policy Review Body) informed the WTO Members that their consultations with Members had identified the five candidates (of eight total) who had received the broadest and deepest support and hence would be moving on to round two of the consultation process.

The five candidates who move to the second round of consultations include (in order that they were put forward as a candidate by their government):

Dr. Ngozi Okonjo-Iweala of Nigeria;

H.E. Yoo Myung-hee of the Republic of Korea;

H.E. Amina C. Mohamed, of Kenya;

H.E. Mohammed Moziad Al-Tuwaijri of Saudi Arabia;

The Rt Hon Dr. Liam Fox MP of the United Kingdom.

The three candidates who have been asked to withdraw based on the results of the first round of consultations include:

Dr. Jesus Seade Kuri of Mexico;

Mr. Abdel-Hamid Mamdouh of Egypt;

Amb. Tudor Ulianovschi of Moldova.

The WTO press release can be found here, WTO members narrow field of DG candidates, https://www.wto.org/english/news_e/news20_e/hod_18sep20_e.htm

A field that had originally consisted of five men and three women with two being Europeans, three being Africans, one being from the Middle East, one being Asian, and one being North American (Latin) is now a field of three women and two men with one from Europe, two from Africa, one from the Middle East and one from Asia.

As the biographies posted on the WTO webpage and the candidates prepared statement to the General Council, subsequent press conference, and interviews, webinars and other press report make clear, the eight candidates were all highly qualified individuals with a good grasp of issues currently facing the WTO and the challenges of reform. This fact and that all eight candidates were respected by the Membership was confirmed by Amb. Walker at today’s Heads of Delegation meeting.

The elimination of the three candidates removes two with the longest engagement with the GATT/WTO — Dr. Jesus Seade and Mr. Abdel-Hamid Mamdouh and the youngest candidate, Amb. Tudor Ulianovschi.

Of the five remaining, only two have extensive WTO/trade experience — H.E. Amina C. Mohamed, H.E. Yoo Myung-hee, although Dr. Liam Fox served as the U.K. Secretary of State for trade for a period of time as well and H.E. Al-Tuwaijri has a broad portfolio with trade issues included. Dr. Ngozi Okonjo-Iweala has extensive experience as Nigeria’s Finance Minister (with customs responsibilities) and as a senior official at the World Bank.

Second Round of Consultations

During the Heads of Delegation meeting, Amb. Walker announced that the second round of consultations would start on September 24 and run until October 6 after which there will be another Heads of Delegation meeting to review which two candidates advance to the third and final round of consultations.

During the first round, each Member was asked to identify four candidates as preferences. During the second round, each Member will be asked to identify two candidates as preferences. The three Ambassadors who are conducting the consultations with Members will then announce the results further narrowing the field from the current five to just two candidates.

Third Round of Consultations

The timing of the third round of consultations will be announced at the next Heads of Delegation meeting when the second round is completed. It is anticipated that the third round and its results will be completed ahead of November 7 consistent with the procedures adopted by the General Council back in December 2002. Procedures for the Appointment of Directors-General, WT/L/509. The results of the third round of consultations will be the candidate that is viewed as most likely to achieve consensus from the Membership. If consensus is likely, a General Council meeting will be called to confirm the selection. If consensus is not achieved, the process forward is unclear but can include taking a vote instead of pursuing consensus.

Conclusion

The selection process to date is running smoothly. The WTO was fortunate that so many talented individuals were willing to step forward to seek to become the next Director-General of the WTO and go through the grueling process that has characterized the first three months. Congratulations to the five candidates who advance. Heartfelt thanks go out to the talented candidates whose run is now ended.

The procedures adopted in 2002 seem overly complicated and time consuming to many who look in from the outside. Complicated and time consuming the procedures certainly are. However, the procedures were adopted in an effort to have Members focus on the positive question – who is your preference — and avoid Members politically committing to who was unacceptable as had happened in 1999.

Let’s hope that the remainder of the selection process proceeds smoothly and without incident.

Race for WTO Director-General — additional material on H.E. Yoo Myung-hee (Republic of Korea)

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about Amb. Tudor Ulianovschi (Modolva), the day before on Mr. Abdel-Hamid Mamdouh (Egypt), on September 1 on Dr. Ngozi Okonjo-Iweala (Nigeria) and on August 31 on Dr. Jesus Seade Kuri. See September 3, 2020,   Race for WTO Director-General – additional material on Amb. Tudor Ulianovschi (Moldova), https://currentthoughtsontrade.com/2020/09/03/race-for-wto-director-general-additional-material-on-amb-tudor-ulianovschi-moldova/; September 2, 2020, Race for WTO Director-General – additional material on Mr. Abdel-Hamid Mamdouh (Egypt), https://currentthoughtsontrade.com/2020/09/02/race-for-wto-director-general-additional-material-on-mr-abdel-hamid-mamdouh-egypt/; September 1, 2020, Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

There is no intention on my part to be exhaustive, and the research has been limited to press pieces or videos in English. Rather the intention is to identify information not addressed in my earlier posts that may be of interest to readers.

Today’s post looks at a few articles featuring H.E. Yoo Myung-hee from the Republic of Korea, the fifth candidate nominated.

  1. Hankyoreh, August 9, 2020, S. Korea’s candidate for WTO director-general emphasizes reform, http://english.hani.co.kr/arti/english_edition/e_international/957072.html.

“Speaking with reporters at the Government Complex in Sejong on Aug. 6, Yoo provided an explanation on the current situation with the director-general election.

* * *

“’What I detected from my conversations with dozens of ministers is that many countries are feeling disappointed and frustrated with the WTO’s inability to do its job. They all agreed that there need to be reforms to restore the WTO’s functions in terms of negotiations, disputes, and implementation,’ Yoo said. Regarding the methods of carrying out WTO reforms, she said she planned to ‘hold discussions involving several different approaches,’ noting that there were ‘large differences of opinion among member countries on the role and authority of the Appellate Body.’

“Yoo also stressed that the WTO ‘will need to guarantee free movements of products and services, particularly in the event of another future crisis like the COVID-19 pandemic, while ensuring that [such a crisis] is not abused as an opportunity for applying protective trade measures.’”

2. Inside U.S. Trade’s World Trade Online, August 5, 2020, Korea’s DG candidate on retoling the WTO: ‘Success breeds success,’ https://insidetrade.com/daily-news/korea%E2%80%99s-dg-candidate-retooling-wto-%E2%80%98success-breeds-success%E2%80%99.

As part of Inside U.S. Trade’s series of interviews with each of the eight candidates, Minister Yoo was interviewed in early August. In the August 5 write-up by the publication on the interview, Minister Yoo covered both her experience as a trade negotiator and her ability to close deals as strengths in her candidacy and stressed that achieving some successes at the next WTO Ministerial Conference was crucial to permit the organization to move forward and rebuild trust and be able to address the larger reform issues before the WTO.

Restoring the negotiating function is key to progress, to helping major members like the U.S. and China see that their concerns can be handled through the WTO and would take pressure off of the dispute settlement system.

On dispute settlement, all Members want an effective system, but there are wide differences on what that means. Minister Yoo would urge engagement by Members, outreach to capitals to encourage political will, and perhaps outside input for novel possible solutions.

3. Chatham House, 25 August 2020, In Conversation with Minister Yoo Myung-Hee:  Candidate for Director-General of the World Trade Organization, https://www.chathamhouse.org/file/conversation-minister-yoo-myung-hee-candidate-director-general-world-trade-organization; https://www.youtube.com/watch?reload=9&v=8ebGAH4MYOM.

The webinar was part of Chatham House’s series talking to each candidate for the Director-General post. The event was an “on-the-record” event. Below are my notes on some of the questions posed to Minister Yoo and her responses

Q:  Tell us about your overarching view of international trade? 

A:  Minister Yoo stated that trade has been the engine for global economic growth and has contributed to a very large reduction of poverty.  Trade is a means not an end.  Since 1995 trade has increased from $5.2 trillion to over $19 trillion in 2018 with a significant reduction in global poverty occurring during the same time.  But the trading system must adapt, change and evolve.  The world has seen slowing economic growth, rising protectionism, and in the last year the emergence of the COVID-19 pandemic.  Global trade contracted last year for 1st time since the 2008-2009 financial crisis and will do so again this year.  At the same time, there has been concern among some as trade is affecting more aspects of our lives than ever before.

Minister Yoo believes that in a rapidly changing world, the WTO has not been able to pull its weight. The WTO has struggled with all three pillars of the system – negotiations, transparency, dispute settlement.  She states that the WTO needs to come out of the crisis stronger than before.  To do that, Minister Yoo believes the next Director-General must work with Members to achieve what she describes as her three Rs – relevance, resilience and responsiveness. First, the WTO must be relevant. To do that, the WTO rule book must evolve with the changing realities of 21st century trade. It is critical that the WTO reenergize its negotiating function and restore the two-tier dispute settlement system.  Second, the WTO must be resilient.  The WTO must address the needs of countries who haven’t gotten many benefits from WTO membership. Third, the WTO must be responsive to future emergencies.  In times of crisis, like the current COVID-19 pandemic, the WTO must be there to ensure stability and predictability.  Historically, in times of crisis, world collaboration has emerged to help the world move forward. This was true at the end of World War II with the creation of the Bretton Woods organizations and during the 2008-2009 financial crisis with the emergence of the G20.  So the current COVID-19 crisis could be an opportunity to move the global trading system forward.   

Q:  The U.S. led the Bretton Woods efforts, but today the U.S. is skeptical of global collaboration.  How can the WTO foster the role of global engagement?

A: The U.S. has shown continuing interest in the multilateral trading system as can be seen from their various proposals for WTO reform and their extensive materials on dispute settlement.  But over the last 25 years, there have been no major trade agreements at the WTO other than trade facilitation. This lack of ability to update the rule book has led to frustration and loss of trust in the WTO not just by the U.S. but by others as well.  So we need to use this moment to reform the WTO to revitalize the system. Such revitalization could provide an important reason for countries to handle problems through the WTO rather than outside of the system.  Minister Yoo, based on her conversations with trade ministers around the world and ambassadors in Geneva, sees the same frustration with the WTO from many Members.  However, Members are committed to the multilateral system.  COVID-19 provides an impetus for taking action.  Minister Yoo believes that the WTO needs successes. The WTO needs to go step by step; success will spur success and permit addressing larger issues over time.

Q:  You mentioned the slowing down of the global economy and the COVID-19 pandemic.  What role should the WTO play in COVID-19?  

A: Minister Yoo believes that the WTO can and should play many roles.  COVID-19 is both a health crisis and an economic crisis.  First, the WTO can enhance transparency of trade restrictive measures adopted and ensure that such measures are consistent with WTO obligations (e.g., targeted, temporary).  Second, the WTO needs to ensure the free flow of goods and services (during the pandemic this is basically medical and agricultural goods and services).  The WTO should review its rules to ensure that in a future crisis, the WTO can in fact ensure stability and predictability in the trade arena.  Third, the WTO can work with other multinational organizations to overcome both the health and the economic crises.  On the health crisis, the WTO should work with the WHO and other organizations dealing with availability and affordability of medical goods, on the promotion of R&D so we can have vaccines and therapeutics and so that there can be equitable and affordable availability to the people of the world.     On the economic crisis, the WTO should work with IMF, the World Bank, regional development banks and others to reduce the damage caused by the pandemic and to promote a quick recovery and build back better.  For vulnerable economies (and sectors within economies), there is likely ongoing needs for assistance from the WTO and other organizations to weather the pandemic.  Minister Yoo believes that there are also many other roles that the WTO could play.

Q:  There have been growing trade tensions between the U.S. and China, but specifically when it comes to industrial subsidies, S&D in the WTO, what role should WTO take to reduce tensions.

A:  In Minister Yoo’s view, the WTO must revitalize the multilateral trading system. This is important to permit countries to handle trade issues within the WTO versus taking action outside of the system.  On bilateral issues, such as industrial subsidies, the WTO should look at the spillover effects of such policies on other WTO Members and examine the existing rule book.  If rules address the specific problem, then the issue may be enforcement of existing obligations.  But if rules are unclear or don’t cover the policy involved, then Members need to be open to revising existing agreements or adopting new agreements consistent with basic principles of the WTO (e.g., fair competition).  While this is a member-driven organization, the Director-General plays the role of facilitator.

Q:  On WTO dispute settlement, what needs to be changed?

A:  Restoring a functioning dispute settlement system is a top priority issue for the next Director-General.  Why is there the current impasse at the WTO on the Appellate Body?  Minister Yoo believes that the impasse flows from longstanding different views of Members on the role of dispute settlement.  Some are concerned that the Appellate Body is creating rights or obligations — that is overreaching their authority — contrary to the limits in the Dispute Settlement Understanding.  Other Members say that the Appellate Body’s actions are necessary as the Appellate Body is tasked with finding a positive resolution to a case and that may lead to interpretations of gaps or silence or ambiguous language.  Minister Yoo believes that the lack of progress in negotiations may have led Members to overly rely on dispute settlement for issues that could have been resolved through negotiations.  Still, based on her extensive discussions with ministers and ambassadors, Minister Yoo understands that Members share the value of having an effective dispute settlement system.  There are some proposals for reform before the WTO. The Walker proposal addresses some suggestions on procedural and some substantive issues.  US has put forward their views on the problems.  But, as said before, there are very fundamental differences in the views of Members.  Minister Yoo believes that the next WTO Director-General needs to put all proposals on the table and have Members engage in discussions.  She believes that outreach to capitals will also be necessary to secure Members’ buy-in to resolving the current impasse.

Q:  What should WTO do to address the environmental crisis (e.g., coordinate carbon taxes)?

A;  COVID-19 has put a focus on the need for sustainable development.  The pandemic could wipe out economic progress over the last decade.  Thus, it is important to pursue sustainable development.  The question is how to achieve sustainable development in trade, or how to operationalize sustainable development goals in trade?  Minister Yoo started by reviewing what the WTO is currently doing. She noted that the fisheries subsidies negotiations are ongoing. A conclusion of the negotiations would advance sustainable development goals.  Similarly, the WTO has had a Committee on Trade and Environment.  WTO Members and the next Director-General should look at the Committee’s agenda and see if Members are open to updating the agenda. Finally, there used to be negotiations to liberalize trade in environmental goods. Hopefully, such negotiations can be resumed.

As to anti-carbon measures, Minister Yoo understands that the objective is to reduce carbon gases  It is important that trade agreements and environmental agreements be able to work together.  Some countries have expressed concerns about environmental objectives being applied to discriminate against trade from certain countries.  Minister Yoo states that it is important that any such measures be done on a nondiscriminatory basis.  If selected as the next Director-General, Minister Yoo hopes to help Members to find mutually acceptable solutions on these matters.

Q:  On developed and developing countries, should there be different obligations in the environmental area?

A:  WTO Members understand that developing countries may need additional policy space when adopting various agreements.  So during negotiations, it is often the case that Members adopt flexibilities for developing and least developing countries.  In trade negotiations, Members negotiate those flexibilities.  The key in Minister Yoo’s view is to focus on the actual needs of Members. Those needs may be longer implementation periods, the need for technical assistance, the need for capacity building, etc.  The WTO should be able to provide technical assistance and capacity building where needed.

Q:  Currency in U.S.-China trade affects the value of other currencies in Asia and elsewhere.  How can you deal with these trade tensions?

A:  In many areas, there are tensions between U.S. and China.  At the WTO, Members can deal with trade-related tensions.  The WTO can provide a meaningful platform to address trade-related issues.  The WTO has not fully addressed currency issues as curency is largely in the IMF’s area of expertise.  Minister Yoo noted that the WTO has received no official proposal to address currency at the WTO.  It is an issue that can be addressed in some trade remedy cases.  But there is limited actual case law, so it is too early to consider the issue at the WTO.  On other issues, WTO can be part of the solution through both dispute settlement and by updating the rule book.  The WTO should provide a platform for the U.S. and China to address trade issues between them.  This could permit building up new rules.  Even small successes between the Members would permit addressing larger issues.

Q:  WTO must be able to deal with state capitalism.  Is there an inevitability of increased tension? 

A:   On state capitalism, rather than addressing the economic model itself, the WTO should look at specific government policies since those can have spillover effects on other countries. If the policies have negative effects on trade that are inconsistent with WTO principles, then WTO Members should review the rule book and see if Members need to be updated existing rules or if new rules are needed or if the question is simply enforcement of existing rules.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Minister Yoo are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Future posts will look at additional materials for other candidates.

The race to become the next WTO Director-General — where the candidates stand on important issues: fisheries subsidies and e-commerce/digital trade

[Updated on August 27 to incorporate comments by Amb. Tudor Ulianovschi of Moldova at a WITA webinar held on August 26.]

The eight candidates for the position of Director-General of the World Trade Organization, in looking at what topics should be moved forward or completed in negotiations were uniformly in support of an early conclusion to the negotiations on fisheries subsidies and on updating the rule book by moving the plurilateral negotiations on e-commerce/digital trade forward to at least a draft document by the twelfth WTO Ministerial Conference in 2021.

Background on fisheries subsidies

Fisheries subsidies have been subject to negotiation within the WTO since the launch of the Doha Development Agenda in December 2001 with limited forward movement in recent years. With the world’s wild caught supply of fish under severe pressure from overfishing, curbing illegal fishing and overfishing through subsidy disciplines became part of the UN’s Sustainable Development Goals in 2015 (Goal 14.6)(SDG). This led WTO Members at the eleventh Ministerial Conference in Buenos Aires to commit to completing the negotiations on fisheries subsidies by the twelfth Ministerial Conference which was scheduled for early June 2020 to permit completion within the time frame laid out in the UN SDG. With the COVID-19 pandemic and the lockdown in Geneva and in many countries, the time frame for completing the fisheries subsidies has slipped, although in late June, the Chair of the Rules Negotiating Group released a draft consolidated text to permit Members to see if a final push to complete negotiations could be made possibly yet in 2020. I have reviewed the fisheries subsidies in a number of prior posts. See, e.g., June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/; January 13, 2020, Fisheries Subsidies – Will the WTO Members Reach Agreement Before June 2020? https://currentthoughtsontrade.com/2020/01/13/fisheries-subsidies-will-the-wto-members-reach-agreement-before-june-2020/.

Background on electronic commerce/digit trade

The agenda for the Uruguay Round was established in 1986 with negotiations completed in 1993 and the agreements that created the WTO signed in 1994. At that time, there was little electronic commerce. The driver of world economic growth over the last twenty-five years has increasingly been the rapidly developing technology that permits large amounts of communication and business activity to occur electronically. Music, movies, television, books, magazines have largely gone digital. Consumer purchases of goods and services have increasingly been done digitally. During the COVID-19 pandemic much of the world has depended on electronic communications to buy groceries, handle some medical needs, eliminate in person meetings replaced by virtual meetings and much more.

While the WTO as early as the second Ministerial Conference in 1998 agreed to study issues surrounding electronic commerce to develop rules that might be necessary, the WTO’s efforts have struggled for more than twenty years with periodic agreement to continue the review and extend a moratorium on customs duties on electronic commerce. See, e.g., Work Programme on Electronic Commerce, adopted by the General Council on 25 September 1998, WT/L/274 (30 Sept. 1998); Work Programme on Electronic Commerce, Ministerial Decision of 13 December 2017, WT/Min(17)/65, WT/L/1032 (18 December 2017). These two documents are embedded below.

274

65

At the eleventh Ministerial Conference in Buenos Aires, WTO Members with an interest in particular issues issued Joint Statement Initiatives basically indicating that the group of listed Members were going to move forward developing potential rules on the subject matter of interest, keeping the process open to any Member wishing to participate. One of the Joint Statements was on Electronic Commerce. See JOINT STATEMENT ON ELECTRONIC COMMERCE, WT/MIN(17)/60 (13 December 2017). The statement is embedded below.

60

The JSI on e-commerce has been making good progress under the leadership of Australia, Japan and Singapore. A review of progress from the March 5 General Council meeting minutes is copied below (WT/GC/M/182 at 117):

“47. Australia (Joint Statement Initiative on Electronic Commerce)

“I will first provide a report on negotiations under the Joint Statement Initiative on Electronic Commerce on behalf of the co-convenors: Australia, Japan and Singapore.

“I will start with a short summary of the informal meeting of Ministers on the Ecommerce JSI held in Davos on 24 January.

“At this meeting, Ministers underscored the importance of this initiative both commercially and systemically for the WTO and affirmed their commitment to a high standard outcome, with the participation of as many WTO members as possible.

“Ministers welcomed the good progress achieved over the first year of negotiations, including the range of proposals received, the diversity and growing number of participants, and the strong levels of engagement in negotiating rounds.

“Ministers emphasized the need to keep working hard to ensure substantial progress by MC12 and agreed to develop a consolidated negotiating text by MC12 and a pathway for the future conclusion of the negotiations.

“The Philippines also announced it would join the JSI, bringing the number of signatories to 83, representing over 90% of global trade.

“Since our last report at the December HODS/TNC, we have held an organisational meeting, on 16 December, that set a work plan leading up to MC12.

“We also convened a negotiating round from 11-14 February, which covered electronic transactions, non-discrimination and liability, consumer protection, transparency, domestic regulation, cooperation and telecommunications. These negotiations were structured around revised streamlined texts drawn from proposals made by Members, and made further progress on streamlining text.

“Two more rounds are scheduled before MC12: 17-20 March and 28 April-1 May.

“We look forward to a continuation of the constructive engagement and momentum demonstrated in February with the aim of developing a consolidated negotiating text by MC12.

“The co-convenors continue to ensure this JSI is transparent and inclusive: meetings are open to all WTO Members; and all proposals and reports are available on the WTO’s web portal.”

The JSI group had hoped to have a consolidated draft text by the 12th Ministerial Conference in June this year before the Ministerial Conference was cancelled because of the pandemic. While the COVID-19 pandemic has slowed down progress for a few months, the joint convenors (Australia, Japan and Singapore) remain confident that a draft agreement can be achieved with a roadmap for completion by the 2021 Ministerial. Most documents generated by the JSI group are not publicly available. However, the titles of documents are available publicly. As of August 21, 70 documents are listed as having been submitted by Members on the JSI on electronic commerce. The most recent document is dated August 19 and is titled a “Stocktake text” (INF/ECOM/57). A July 23 document is titled “Facilitator’s note – Services Market Access — List of Proponents’ sectors of interest”).

Statements by the eight candidates seeking to become the next WTO Director-General

What follows are excerpts from candidates’ prepared statements to the General Council, my notes of their responses to questions at their press conferences following meeting with the General Council, and my notes on their comments at webinars hosted by the Washington International Trade Association (WITA) and the Asia Society Policy Institute.

Dr. Jesus Seade Kuri (Mexico)

In his prepared statement to the General Council on July 15, Dr. Seade listed completion of the fisheries subsidies negotiations as an issue to be resolved in the first 100 days of his becoming Director-General. The Joint Statement Initiative (JSI) on E-commerce was one of a number of JSIs announced at the 11th Ministerial Confernce in Buenos Aires in 2017. Dr. Seade included all JSIs as areas where he would be expecting concrete results by June 2021.

“1. Within the first hundred days: I will work closely with
members in seeking to i. reach agreement on fisheries subsidies.” (Google translation from French).

“2. Second horizon, towards our MC12 conference, and aware of the fact that its date is not yet fixed, it is important that we look for concrete results
by June 2.021, both in joint initiatives and in issues that aim to give us a more transparent and effective WTO.” (Google translation from French).

At his press conference on July 15 after his meeting with the General Council, Dr. Seade was not asked any questions about the fisheries subsidies negotiations or about the e-commerce JSI.

WITA had a webinar with Dr. Seade on July 7. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-seade/. During the webinar, Dr. Seade was not asked specifically about either the fisheries subsidies negotiations or about the Joint Statement Initiative on E-commerce. However, he was asked a question on whether, if he was selected as the next Director-General, he would encourage plurilateral negotiations. All of the JSIs are plurilateral negotiations open to any Member who wishes to join. Below are my notes on the question asked and Dr. Seade’s response on plurilaterals.

Q: On the role of plurilaterals in the WTO, would you encourage their use if you are selected as the next Director-eneral?

A:  On plurilaterals, Dr. Seade tries to take a pragmatic and historic approach.  Looking at the history of the multilateral trading system, the Tokyo Round created a host of plurilaterals which were powerful to create rules that were accepted by many of the most important countries on a range of subjects (AD, Subsidies) — the so-called Tokyo Round Codes.  It was a great way to move the process of liberalization forward.  In Dr. Seade’s view, the great achievement in the Uruguay Round was to move to substantively universal rules (agriculture and textiles which had previously been outside of GATT rules were brought inside; the Tokyo Round Codes moved to Agreements applicable to all).  The Uruguay Round was possible because there were huge inducements for developing countries to accept services, TRIPs in exchange for textiles and agriculture liberalization.  However, the negotiating environment has changed. It is no longer possible to get liberalization through negotiations just betweenthe U.S. and the EU where the results are then accepted by others (e.g., agriculture). Now negotiations need to include China, India and others who need to be part and where large differences in objectives may make multilateral negotiations more difficult.  Therefore the WTO needs plurilaterals to permit forward movement.  However, the WTO and its Members need to work largely on the basis that any benefits from plurilaterals will be provided to all Members and that the agreement is open to any Member to join later if desired.  In Dr. Seade’s view, if the WTO doesn’t allow use of plurilaterals, progress at the WTO will stop.

Dr. Ngozi Okonjo-Iweala (Nigeria)

Dr. Okonjo-Iweala mentions both concluding the fisheries subsidies negotiations and updating the WTO rules to include rules on e-commerce. She adds the need to bridge the digital divide so that any such rules will have broader application and broader input.

“The WTO appears paralysed at a time when its rule book would greatly benefit from an update to 21st century issues such as e-commerce and the digital economy, the green and circular economies. Issues of women and trade and Micro Small and Medium Enterprises (MSMEs) are important to ensure greater inclusion. Bridging the digital divide to enable Least Developed Countries and other developing countries to participate will be key.”

“My vision is also of a rejuvenated and strengthened WTO that will be confident to tackle effectively ongoing issues such as the fisheries negotiations. With political will, outstanding issues of subsidies that lead to overfishing and unsustainable fishing can be concluded.”

“A rejuvenated WTO must also take on fresh challenges, such as ensuring optimal complementarity between trade and the environment and ensuring that WTO rules best respond to the realities of e-commerce and the opportunities and challenges of the digital economy.”

“Should I be elected, I would work with Members to prioritize delivering a successful MC12 with good outcomes on fisheries, agriculture and other areas. I would also prioritize updating the rulebook * * *.”

During the press conference on July 15 after her meeting with the General Council, Dr. Okonjo-Iweala was asked a question on what progress in negotiations was achievable by the next Ministerial Conference and was also asked a question on how she would work towards ensuring a successful outcome on e-commerce negotiations. My notes on her responses to those questions follow.

On the question of what is achievable by the next Ministerial in 2021 and whether it is best to go after issues one at a time or in a larger grouping, Dr. Okonjo-Iweala indicated that she hoped the WTO Membership would make a decision soon on who should be Director-General so whoever is selected has more time before the next Ministerial. But even if a decision is not made until November 2020, there are some areas that could be ready by the next Ministerial. For example, a fisheries subsidies agreement should be achievable. There was a lot of discussion in the General Council on trust and building trust to move negotiations along. Trust is obviously an important issue. So the WTO may need to sequence issues to build trust by achieving a win or two. Once there are some successes, it should be possible to handle more issues in parallel.

The question on what Dr. Okonjo-Iweala would do as Director-General to see that an agreement on e-commerce was pursued was answered by noting that there was extensive work being done plurilaterally by many Members as one of a number of joint statement initiatives. Dr. Okonjo-Iweala agrees that an agreement on e-commerce is very important, but she notes that there is a digital divide where many poorer countries don’t have the infrastructure to take advantage of e-commerce. The WTO, working with other multilateral organizations, needs to see that resources are put together to help countries address the digital divide. Once the digital divide is addressed, all Members should want to and be able to participate in the e-commerce negotiations, so that the agreement becomes a multilateral one.

WITA had a webinar with Dr. Ngozi Okonjo-Iweala on July 21. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-dr-ngozi-okonjo-iweala/. During the webinar, Dr. Okonjo-Iweala made an opening statement in which she reviewed the need to generate some early wins for the WTO at the 12th Ministerial Conference including both fisheries subsidies and e-commerce. Dr. Okonjo-Iweala was also asked speciically about e-commerce and digital trade and how to move those talks forward. Below are my notes on those portions of the webinar.

Dr. Okonjo-Iweala stated that the WTO is really at a critical moment, an existential crisis.  She believes that something needs to be done to give a lift to the organization.  Dr. Okonjo-Iweala would focus as Director-General on the next Ministerial Conference and what wins could be obtained at the Conference.  She believes that concluding the fisheries subsidies negotiations with its issues of overcapacity and overfishing should be pursued and could be concluded even before the Ministerial Conference.

Dr. Okonjo-Iweala also believes that the WTO must update the rule book to cover 21st century issues.  As she has noted, the digital economy is driving the world during the COVID-19 pandemic and is of great importance to many Members.  Dr. Okonjo-Iweala believes that the WTO needs to develop rules for e-commerce as e-commerce is the future of much of trade. At the same time, the WTO must address the digital divide so participation and benefits are available to all.

Q: On e-commerce and digital trade, how do you see rules being developed? Should the rules be based on the historic principles of the WTO?

A:  Dr. Okonjo-Iweala believes that ecommerce and digital trade are very important topics. The WTO must ensure two things. First, traditional WTO principles should apply (non-discrimination, etc.).  She believes that it would be important to get many more countries to join the talks. Stated differently, Dr. Okonjo-Iweala believes the WTO should always prefer a multilateral negotiation and agreement. However, sometimes plurilaterals are needed to make progress.  Second, the WTO working with other organizations needs to address the digital divide. In Dr. Okonjo-Iweala’s view, the fact that many developing countries are not participating flows from the fact that they don’t have the infrastructure to engage in e-commerce to a significant extent and hence neither participate in the talks nor gain benefits.  This is the digital divide.  WTO is not a financial institution, so the WTO needs to team with other organizations to help developing countries overcome the digital divide which will permit these Members to then participate in the negotiations.  Dr. Okonjo-Iweala also believes that the level of commitments under an e-commerce agreement will need to vary based on the ability of Members to accept obligations and to contribute.

Mr. Abdel-Hamid Mamdouh (Egypt)

Mr. Mamdouh’s prepared statement to the General Council on July 15 identified both fisheries subsidies and the various Joint Statement Initiatives, including e-commerce, as priorities for movement by the 12th Ministerial Conference (MC12).

“For the immediate future, we need to set clear priorities. MC12 is around the corner and it needs to be a turning point in the direction of the WTO and take it on a different path towards ‘positive territory’. I believe we need to do two things: 1) agree on a reform agenda and 2) achieve concrete progress on issues currently under negotiation.

“On current negotiating subjects, fisheries subsidies come first as the one item expected to be concluded by the end of 2020. It is crucial for our future to have a successful conclusion of the fisheries subsidies negotiations.

“There are also the Joint Statement Initiatives on e-commerce, domestic regulation in services, MSMEs and investment facilitation. These initiatives address pressing issues of importance to many Members and pause new challenges.”

During Mr. Mamdouh’s press conference after his meeting with the General Council, he was asked one question about the agenda for the twelfth Ministerial Conference which resulted in an answer that included pursuing completion of the fisheries subsidies agreement and work on the Joint Statement Initiatives. My notes on Mr. Mamdouh’s response is provided below.

Mr. Mamdouh was asked if there will be enough time to prepare for the next Ministerial to have a positive agenda/outcome. He answered that if the selection process concludes before November, there should be sufficient time. In his view, the next Ministerial needs to be a turning point for the WTO. At MC12, the WTO must have a clear agenda for reform. There is not currently a mainstream focus on reform; issues are being raised ad hoc. Second, the WTO needs to score successes – fisheries subsidies and progress on joint statement initiatives are the likely areas for success.

WITA had a webinar with Mr. Mamdouh on June 23. https://www.wita.org/event-videos/conversation-candidate-hamid-mamdouh/. During the webinar, Mr. Mamdouh was asked a question about e-commerce and was also asked his views on plurilaterals and whether he would support their use if he becomes the next Director-General. As all of the Joint Statement Initiatives involve plurilateral negotiations, the question applies to e-commerce along with the other JSIs. Below are my notes on the questions and Mr. Mamdouh’s responses.

Q: U.S. has raised various issues of importance to them. How do you see elements of a reform agenda getting U.S. support if U.S. concerns are not addressed or included in the agenda?

A: Mr. Mamdouh indicated that U.S. concerns were being examined at the WTO. He took e-commerce as an example. Looking at the e-commerce agenda at the WTO, Mr. Mamdouh is of the view that there needs to be discussions that haven’t taken place at the WTO in a very long time.  Trade issues today are of increased complexity where issues of increased trade liberalization are juxtaposed with regulatory interests. E-commerce/digital trade has a slew of legitimate regulatory issues where Members can have very different perspectives. Examples would include privacy policies, cyber security, localization among others.  In Mr. Mamdouh’s view, these regulatory policy issues are both legitimate and of different importance to different Members.  So the question arises as to how new rules deal with these diversities of Member needs while ensuring rules that respect different needs while ensuring actions by Members are the least trade restrictive  While the Sanitary and Phytosanitary Agreement and Technical Barriers to Trade Agreement are examples of issues with similar types of competing regulatory needs, many of the new issues are as or more complex. These new complex areas are not seeing discussions to date between trade folks, regulators and lawyers to help clarify the needs, challenges and options that may be available to permit WTO progress on fashioning new rules. In Mr. Mamdouh’s view, WTO Members must do a much better job of discussing issues and clarifying them so the options can be taken back home and reviewed to permit Members to get into real negotiations.

Q: Plurilaterals can be defined as agreements by like minded countries on topics.  How do you view plurilaterals and would you support them if you were selected as the next Director-General?  Should most favored nation treatment be eliminated for plurilaterals, so the benefits of plurilateral liberalization only goes to those who are participating?

A:  In Mr. Mamdouh’s view, one needs to clarify what is meant by plurilaterals.  Are we talking about plurilateral processes or outcomes?  Mr. Mamdouh views that there are two types of plurilaterals that have been pursued over time. The first is a plurilateral process that produces plurilateral outcomes — that is where the Agreement applies only to the signatories to that agreement. These are like the agreements in Annex 4 to the WTO (civil aircraft, government procurement, dairy and bovine meat). While these can be pursued they are less likely as they require the consent of all Members.  There are also plurilateral negotiations that produce multilateral outcomes. That is, the resulting agreement provides benefits to all even though the agreement was among some of the Members.  These are quite normal and are clearly within the spirit of the WTO.  Practically, Members engaged in plurilaterals will want there to be a critical mass of Members engaged for these types of plurilateral agreements to move forward. Moreover, Mr. Mamdouh noted that there is no requirement that all Members agree to the launch of plurilateral negotiations. That is not a requirement of the WTO and should not be assumed.  On the question of whether plurilateral agreements will opt increasingly to limit benefits to members, Mr. Mamdouh believes that the concept of most favored nation treatment in plurilaterals will undergo a stress test in the coming years as there are issues re reciprocity.    

Amb. Tudor Ulianovschi (Moldova)

On July 16, Amb. Ulianovschi was the first candidate to meet with the General Council. In his prepared statement when Amb. Ulianovschi got to what he thought the immediate priorities for the new Director-General should be, completing the fisheries subsidies negotiations and making progress on Joint Statement Initiatives were two of the priorities listed.

“In terms of immediate priorities for the future Director General of the WTO, the following should be considered (including in the preparation process for MC12):

“2. Build upon the progress achieved already on the fisheries subsidies negotiations and strongly support Members to achieve a negotiated text by MC12;

* * *

“4. Further encouraging and supporting discussions on new and existing Joint Initiatives, particularly: on Elecronic Commerce, Investment Facilitation for Development, Domestic Services Regulation, as well as the dialogs of the informal group on MSMES and SMEs and others.

“5. Promoting negotiations of new commercial disciplines and address issues of the digital environment and new areas of intellectual property.”

During Amb. Ulianovschi’s press conference after his meeting with the General Council, the last question he was asked had Amb. Ulianovschi point to the Joint Statement Initiatives (which include electronic commerce) as a sign Members could make progress on reform issues. Amb. Ulianovschi was not asked specifically about either fisheries subsidies or electronic commerce. My notes on the question asked and Amb. Ulianovschi’s answer are provided below.

Q: The last question asked was about getting the WTO out of crisis; in particular, what is the core factor causing the crisis and how would Mr. Ulianovschi address the factor if he was selected as Director-General.

A: Mr. Ulianovschi answered that this is an existential question for the WTO. The first priority, in his view, to get out of the crisis is for there to be trust among Members. The role of the Director-General is to enhance feelings of trust through confidence building steps. Many issues which have been unresolved for a long time have undermined trust. Joint initiative statement issues are advancing and give hope that the organization is relevant and can deliver. This is a good sign that there is a common purpose among the Members.

WITA held a webinar with Amb. Tudor Ulianovschi on August 26, 2020.  https://www.wita.org/event-videos/conversation-with-tudor-ulianovschi/. During the webinar, Amb. Ulianovschi was asked two questions where his response included views on the fisheries subsidies negotiations and/or on e-commerce/digital trade. My notes on the questions asked and on Amb. Ulianovschi’s responses are provided below.

Q:  If you are the next Director-General, what would be your priorities for the 2021 Ministerial Conference and how would you define success?

A:  In Amb. Ulianovschi’s view, the next Ministerial must show some results.  He believes the top priority would be completing the ongoing negotiations on fisheries subsidies, which is important to fulfill U.N. Sustainable Development Goal 14.6.  He believes that the Members are close to getting language agreed to.  Completing the fisheries subsidies agreement Is just the first step, but it is an important one.  He would also focus on ongoing Joint Statement Initiatives (JSI) such as on  digital trade/e-commerce.   JSIs are plurilateral negotiations as opposed to multilateral ones.  As seen by Members during the COVID-19 pandemic, digital trade is of growing importance.  A key question is how to help least developed countries get involved and get help building the infrastructure so such Members can participate.  Also Members will need to deal with a range of issues surround digital trade such as cybersecurity, privacy, etc.  Amb. Ulianovschi stated that a Ministerial declaration would be expected at the 2021 Ministerial on e-commerce.  He also noted that there are other JSIs as well that are being discussed.  He believes that at the next Ministerial Members should have a clear message of support for small, medium and micro enterprises.  Such enterprises are a huge issue for most Members.  Many of these businesses are being severely challenged by the COVID-19 pandemic and many will likely go bankrupt.  WTO Members need to help identify how the WTO and other organizations can work with them (financial institutions and ICC). 

Q:  You say that business as usual isn’t viable anymore.  What has changed?  If plurilateral work is where we are headed,  do we need to rethink the most favored nation principle?

A:  Amb. Ulianovschi stated that when one looks at the WTO, one sees that there is a lack of trust which in turn has meant there is lack of forward movement on negotiations.  Thus, it is clear that  business as usual isn’t working.  But that recognition doesn’t mean that the organization starts from zero.  What is clear is that things need to change.  The WTO is not responding to 21st century issues which cannot continue if the organization is to maintain relevance.  On the issue of multilateral vs. plurilateral negotiations, the only multilateral negotiation that is proceeding is on fisheries subsidies.  As noted, Amb. Ulianovschi hopes that the fisheries subsidies negotiations will be completed by the next Ministerial in 2021.  Where trust is lacking, he belives Members need to seek progress from the bottom up – finding like-minded Members who are concerned about an issue and willing to negotiate rules on the issue.  Plurilaterals are going on (JSIs are an example).  This is a good sign as plurilaterals show that a number of members are concerned with a topic.  Any plurilateral negotiation must be done in a transparent and inclusive manner.  Based on his discussions with Members, Amb. Ulianovschi knows that there is a large support for keeping MFN applicable to benefits from plurilaterals.

H.E. Yoo Myung-hee (Republic of Korea)

Minister Yoo in her prepared statement to the General Council identified both fisheries subsidies and the JSI on electronic commerce as priorities for the 12th Ministerial.

“MC12 will be a critical milestone of Members’ ability to deliver results and set the agenda for the future. The new Director-General must help make it a success in order to build trust in the WTO.

“A successful outcome on fisheries subsidies will demonstrate the credibility of the WTO and its ability to contribute to global objectives on sustainable development. It will also provide the world with the benefits for
trade and environmental sustainability. I will do everything I can to support these negotiations and bring them swiftly to a successful conclusion, for endorsement by Ministers at MC12.

“Electronic commerce is also an area in which we should work towards tangible outcomes. The COVID-19 pandemic has highlighted the importance of this issue. A comprehensive agreement by next summer may be ambitious, but I think we can take some concrete steps and lay out the path forward for post-MC12 work.”

During Minister Yoo’s press conference after her meeting with the General Council, she was asked questions on how she would restore trust if selected the next Director-General and how she would bring major Members onto issues being considered. Fisheries subsidies and e-commerce are mentioned in one or the other answers. My notes on the questions and answers provided are presented below.

Q: A question was asked as to how Minister Yoo would restore trust if selected as the next Director-General.

A: Minister Yoo noted her experience in negotiating trade deals with all level of countries around the world. She knows what it takes to negotiate and what it takes to bring negotiations to a close. She is confident that she can earn confidence from Members and achieve tangible outcomes. The key is to obtain even a small success at the MC12 (e.g., fisheries subsidies agreement by then) which would help build trust and convince the world that progress can happen at the WTO.

Q: What does it mean for the WTO to be relevant, and how would you bring on major members who may not agree with the issue being considered?

A: Minister Yoo stated that the WTO needs to revitalize its negotiating function and must be able to enforce its rules (by restoring the Appellate Body). Given 21st century realities, the WTO needs to update its rule book and to achieve agreement on issues that have real global effects such as the joint initiative efforts on e-commerce, MSMEs, investments, and other issues. That said, there are open issues from The Doha Development Agenda that are not moving because there are different views on how to move forward. In terms of how you bring members to the negotiating table, part of the answer is to obtain small successes to build trust and momentum.

WITA had a webinar with Minister Yoo on August 11.  https://www.wita.org/event-videos/candidate-h-e-yoo-myung-hee/. During the webinar, Minister Yoo was asked both about the e-commerce negotiations and about the ongoing fisheries subsidies negotiations. My notes on the questions and her responses are provided below.

Q: How important is it to move forward with a WTO reform agenda? In particular digital trade and e-commerce have become much more important to global trade during the pandemic.  How important is it for the WTO to address the lack of rules on digital trade and e-commerce?

A:  Minister Yoo indicated that the negotiations on e-commerce were important before the pandemic and are even more important now. Thus, it is critical to have successful negotiations.  WTO reform is very important generally.  All three pillars of the WTO — negotiations, dispute settlement and notifications and monitoring — need to be strengthened.  The WTO rule book was largely created 25 years ago.  Minister Yoo noted that the world didn’t have the smart phone or even much e-commerce back then.  So the existing WTO rules are limited in their ability to deal with current commercial reality.  It is important that the WTO achieve an agreement on e-commerce to show that the WTO can adapt to 21st century needs.  That said, Minister Yoo cautioned that Members have different views on various aspects of e-commerce.  She believes there are some low hanging fruit — e-signature and trade facilitation issues — that Members could be able to agree on relatively quickly.   However, Minister Yoo also noted that there are difficult issues in e-commerce tied to other government policy objectives — e.g., data transfer, localization — that may take longer to reach agreement on.  In tackling the more difficult set of issues, WTO Members need to look to see if the proposed rule serves a legitimate policy objective of Members.  If yes, then Members need to see if there is a way to achieve the objective in the least trade restrictive manner while facilitating e-commerce.  Considering the full set of issues that are present in the e-commerce talks, it may be too ambitious to achieve an agreement by the 12th Ministerial Conference in 2021.  Hopefully, WTO Members engaged in the talks can achieve a consolidated text by the Ministerial.  And then hopefully Members could agree on a path forward.  Minister Yoo is optimistic that Members will be able to come up with an ambitious agreement.

Q: Fisheries subsidies negotiations were hopefully going to conclude by this summer before the COVID-19 pandemic delayed negotiations. What are your thoughts on how talks can be brought to a successful conclusion?

A:  Minister Yoo stated that the fisheries subsidies negotiations are important to conclude to show the continued relevance of the WTO. The fisheries subsidies negotiations are the only multilateral talks at the WTO that are active (most others are plurilateral).  Achieving agreement on fisheries subsidies can also contribute to the UN’s sustainable development goals.  For both reasons, concluding the negotiations is very important.  Minister Yoo believes that Members should focus their energies on completing the negotiations by the end of this year so that the agreement can be endorsed by Ministers at the next Ministerial Conference in 2021.  For the next Director-General, the most urgent agenda item is to help facilitate the conclusion of the fisheries subsidies talks by the end of this year or at the very latest by the next Ministerial Conference in 2021.

H.E. Amina C. Mohamed (Kenya)

Minister Mohamed was the last candidate to appear before the General Council on July 16. Minister Mohamed did not address specifically either fisheries subsidies or the Joint Statement Initiative on e-commerce in her prepared statement to the General Council.

Similarly, during Minister Mohamed’s press conference after her meeting with the General Council, she was not asked a question dealing specifically with fisheries subsidies or the Joint Statement Initiative on e-commerce, nor did she include mention of either in answer to any of the questions asked.

WITA had a webinar with H.E. Mohamed on August 6. https://www.wita.org/event-videos/ambassador-amina-mohamed/. During the webinar, Minister Mohamed referenced digital trade in her opening comments and was asked a question about plurilateral negotiations. As noted before all of the Joint Statement Initiatives (including e-commerce) are plurilateral negotiations . My notes on her comments on these issues are provided below.

Opening statement:  Once the world recovers from the pandemic, the WTO will still face challenges of renewal and updating the rules to address global issues such as climate change, the digital revolution, and sustainable development.

Q: on developing new rules at the WTO, it has proven difficult to get agreement among all Members.  This has led to many Members turning to plurilaterals to achieve progress.  What are your views on plurilaterals?  Should MFN treatment of benefits be reconsidered where plurilateral agreements are the basis for liberalization or new rules?

A:  Minister Mohamed noted that plurilateral agreements are not new in the WTO; there were plurilateral agreements in the GATT.  She believes that plurilateral agreements will continue to be pursued and be part of the trading system.  Indeed, Minister Mohamed stated that the completion and/or start of plurilateral negotiations was a “good” that came out of the Nairobi and the Buenos Aires Ministerial Conferences in 2015 and 2017 respectively.  Countries that want to take on additional obligations will come together to negotiate new obligations for themselves.  In this way, plurilaterals complement the multilateral system.  Minister Mohamed stated that once there is a plurilateral agreement, it is important to share the benefits on an MFN basis if you want broad acceptance by Members.  Minister Mohamed had been the chair of the Nairobi Ministerial at which an update to the Information Technology Agreement (ITA2) was agreed to. Before the Ministerial, Minister Mohamed had had to travel to a number of capitals to get agreement to apply benefits on an MFN basis. At the end, the benefits of ITA2 are shared on an MFN basis and the agreement is open to all Members who want to join at a later date.  This led to unanimous acceptance of the ITA2 at Nairobi in 2015.  Minister Mohamed believes that it is important for ongoing plurilateral negotiations to ensure that the benefits are applied on MFN basis and that the agreement is open to all Members.

H.E. Mohammed Al-Tuwaijri (Saudi Arabia)

Minister Al-Tuwaijri was the first candidate to meet with the General Council on July 17. In his prepared statement, Minister Al-Tuwaijri identifies fisheries subsidies and e-commerce as two early deliverables for the WTO at the 12th Ministerial Conference in 2021.

“And finally, concerning the first question on what opportunities and solutions will emerge from current challenges, the existing delay in convening Ministers for the 12th Ministerial Conference may be a blessing in disguise. If we move quickly to take advantage of the opportunity of having an additional year to prepare, we could find and deliver solutions at MC12, particularly on fishery subsidies and electronic commerce and digital trade, which would demonstrate that the WTO can address issues in the public good – that would deliver on your goal of ‘optimal use of the world’s resources in accordance with the objective of sustainable development’ – while recognizing the contribution of e-commerce to economic growth in all markets, which has been emphatically affirmed during the COVID-19 pandemic.

“Although concluding the fishery subsidies negotiations would be a welcome sign that WTO Members can agree on something, we should not exaggerate the impression that this small step will make on our constituents. We need to aim higher, and the DG must work overtime to support a more complete agenda for the future of the WTO by MC12.”

During Minister Al-Tuwaijri’s press conference after meeting with the General Council, one question asked about WTO reform resulted in an answer by the Minister which provided both fisheries subsidies and e-commerce as issues where results by the 12th Ministerial Conference were possible. My notes on the question and Minister Al-Tuwaijri’s answer are provided below.

On the issue of WTO reform, Minister AlTuwaijri recognized that the WTO is a member driven organization. Second, the Director-General has a function to facilitate and to assess, but there is also room to improve the Director-General’s role. For example, the next ministerial (MC12) has been delayed til 2021. The delay provides an opportunity to improve the discussion at MC 12 and the outcomes that are possible. Bringing management and leadership skills to the Director-General position will permit setting goals, metrics for measuring progress in achieving those goals and providing a feedback loop on gaps that need to be addressed. Certain current issues should be achievable, such as fisheries subsidies and e-commerce. In the Minister’s view, COVID-19 and post-pandemic recovery provide the WTO an opportunity to address core needs of Members by doing a performance assessment. Where are the gaps in performance? Why did those gaps develop? How should the WTO proceed to eliminate the gaps? From his business and government experience, Minister Al-Tuwaijri knows that this type of transformation of the WTO to a more goal-oriented organization is possible.

WITA held a webinar with Minister Al-Tuwaijri on August 5, https://www.wita.org/event-videos/director-general-candidate-he-mohammed-al-tuwaijri/. During the webinar, Minister Al-Tuwaijri was asked his views on plurilateral agreements, which include the Joint Statement Initiatives such as the one on e-commerce. My notes on the question and Minister Al-Tuwaijri’s response follows.

Q: Do you see plurilateral negotiations as a good alternative to the lack of progress in multilateral talkes?

A:  Minister Al-Tuwaijri responded that his short answer would be Yes.  Members need to be able to move on where multilateral talks are blocked or not occurring.  So in Minister Al-Tuwaijri’s view plurilateral negotiations and agreements are part of the answer.  Because plurilateral agreements have existed for some time, Minister Al-Tuwaijri is interested in why some Members don’t join the agreement over time if the agreement is open to all and provides MFN benefits.  The answer to the “why” question is important if plurilaterals are to be more effective and lead to the agreements becoming multilateral over time.

The Rt Hon Dr. Liam Fox MP (United Kingdom)

Dr. Fox was the last candidate to appear before the General Council. His prepared statement has a section which reviews what Dr. Fox considers one of the new Director-General’s first tasks, delivering a successful 12th Ministerial Conference in 2021. Among the issues to be addressed are completion of the fisheries subsidies negotiations and progress on the Joint Statement Initiatives, including on e-commerce.

“Now, one of the first tasks for a new DG will be to deliver a successful 12th Ministerial Conference. The contents are, of course, for the members to agree but it is essential that the DG works with members to produce ideas and an agenda that, yes, excites us here at the WTO but is also seen as relevant outside. It must focus on outcomes, not process, helping the real businesses – large, medium, small and micro – upon which real prosperity depends.

“So what are some of our specific challenges?

“Well, despite remaining gaps, members are perhaps closer than they have been in the past to agreeing new rules to discipline harmful fisheries subsidies, and we must push for an outcome as soon as possible to meet the SDG goal set by Leaders. But, this is not just about fish, but about showing that the WTO can take steps on sustainability more generally – an area where members are rightly bringing forward other ideas, and where the public attach great importance.

“I know many members are also keen to make progress on Joint Initiatives on e-commerce, services, MSMEs and investment – these will be an important part of the discussions in the coming months.”

During Dr. Fox’s press conference after his July 17th meeting with the General Council he was asked one question on the types of reform needed. In his answer Dr. Fox mentioned fisheries subsidies as one topic. My notes on the question and his answer are provided below.

The last question inquired into what reform is needed. Dr. Fox articulated that reform should be viewed in three buckets. The first is conceptual reform. By this he means, Members recommitting to the basic principles of the WTO (most favoured nation, national treatment and transparency of commitments). He believes this is what MC 12 needs to focus on. The second is organizational reform. By this Dr. Fox means what does the team look like, the Director-General being first among equals; selecting Secretariat staff that are the most talented and challenging group. The third is policy reform. By that, Dr. Fox means what issues will be addressed — legacy issues and issues to update organization such as fisheries subsidies; resolution of the Appellate Body impasse. Dr. Fox concluded by saying that the Director-General position is a job for a politician and not for a technocrat at this time.

WITA had a webinar with Dr. Fox on July 30, 2020. https://www.wita.org/event-videos/conversation-with-dr-liam-fox/. During the webinar, Dr. Fox referenced each of the fisheries subsidies negotiations and updating the rules to cover e-commerce briefly. My notes on his comments are provided below.

Dr. Fox opined that the fisheries subsidies negotiations and around that the broader question of sustainability are issues which are not being addressed in the best way by the WTO Members.  The WTO and its Members don’t seem interested in using NGOs and young people who have a deep interest in the oceans by including them in the communication process so that there is better understanding that what the WTO is concerned about are issues of interest to the people of the world.  In Dr. Fox’s view, there is a disconnect between what the WTO is doing and what the general public is concerned about that has undermined the sense of joint endeavor that was important in the Uruguay Round.

Dr. Fox reviewed the importance of taking forward issues on e-commerce and trade in services. For Dr. Fox, the key question is how does the WTO bring its rule book up to date particularly on the changes in technology. Once the rule book is brought up to date, then the key is ensuring that all Members comply with the rules.

Conclusion

All eight of the candidates to become the next Director-General of the WTO view the completion of the fisheries subsidies as an important early objective and deliverable to demonstrate the WTO’s continued relevance. An agreement on fisheries subsidies would also help support the UN’s sustainable development goals.

All candidates also understand that there is an urgent need to update the WTO’s rule book with the most obvious example being the lack of agreed rules on electronic commerce and digital trade. All recognize that the role of digital trade has been critical to help countries during the COVID-19 pandemic and will be a critical aspect of global trade in goods and services going forward. The Joint Statement Initiative on e-commerce announced at the 2017 Buenos Aires Ministerial Conference currently has more than 80 WTO Members participating in the negotiations. Those Members account for more than 90% of global e-commerce. Reports from the co-convenors indicate the likelihood that there will be at least a consolidated text available by the next Ministerial Conference to be held in 2021. However, because the JSI is a plurilateral negotiation and not a multilateral one, it is envisioned that benefits will be available on an MFN basis (i.e., to all Members of the WTO whether part of the negotiations or not) and that the agreement will be open to all Members to join as desired.

The race to become the next WTO Director-General – where the candidates stand on important issues: convergence vs. coexistence of different economic systems; possible reform of rules to address distortions from such economic systems – Part 2, comments by the candidates

[Updated on August 27 to incorporate comments by Amb. Tudor Ulianovschi of Moldova at a WITA webinar held on August 26.]

In a post on August 17, I provided background on a group of issues that are important to various Members though opposed by some that for shorthand will simply be referred to issues surrounding WTO rules’ applicability to economies operating differently than market economies. See August 17, 2020, The race to become the next WTO Director-General – where the candidates stand on important issues:  convergence vs. coexistence of different economic systems; possible reform of rules to address distortions from such economic systems – Part 1, background on issues, https://currentthoughtsontrade.com/2020/08/17/the-race-to-become-the-next-wto-director-general-where-the-candidates-stand-on-important-issues-convergence-vs-coexistence-of-different-economic-systems-possible-reform-of-rules-to-address-dist/.

What follows is a review by candidate of his/her prepared statement to the General Council (Juy 15-17, 2020), my notes from the press conference for each candidate which followed immediately after his or her meeting with the General Council and my notes on each candidate’s webinar organized by the Washington International Trade Association (WITA) and generally also by the Asia Society Policy Institute (ASPI).

Dr. Jesus Seade Kuri (Mexico)

Dr. Seade did not in his prepared comments address directly any of the issues surrounding the question of compatibility of different economic systems with the WTO rules, or whether changes in rules to address some of the distortions perceived to be caused by economic systems which vary widely from market-economy structures are needed. Dr. Seade did include at the end of his prepared statement an indication of neutrality to all Members.

“All along my career I have worked with Ministers and legislators, often Heads of State. I present myself to you with my fullest energy, passion and experience, at a difficult time for the WTO. My commitment is to achieve with you the reform and restoration of a WTO back at the center of global governance for the benefit of world economic growth. My solemn commitment to you is to be an effective DG and interlocutor, close to all members north and south, east and west, and indeed fully equidistant from you all.”

During the press conference held after his meeting on July 15 with the General Counsel, Dr. Seade was not asked a question dealing with any of the issues surrounding different economic systems.

WITA had a webinar with Dr. Seade on July 7. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-seade/. During the webinar, Dr. Seade was asked several questions that dealt with U.S.-China tensions. My notes on Dr. Seade’s responses (and on at least one of the questions) follow.

The animosity between the United States and China in a way is understandable.  The hardest part of negotiations during the Uruguay Round for GATT Contracting Parties to conclude was not the agriculture negotiations or the negotiations on intellectual property but rather the negotiations on antidumping.  To simplify, the antidumping negotiations pitted the U.S. and EU against the Asian tigers who were excessively competitive and creating problems in world markets.  But the Asian tigers were much smaller in size than China is today and were much more market oriented than China is today.  So the chasm in the system was much smaller than what exists today   So it is not surprising that there is a big challenge today.  But challenges are there to be met and solutions found. Dr. Seade is convinced that China will want to respond to avoid chaos in the system.  Once they view the U.S. as serious about engaging, China will want to know what they need to do to get the WTO functioning again.  The same question should apply to the U.S. and the EU.  So we should be able to save the system.

Question on the U.S.-China dynamic: USTR Lighthizer has indicated he has three criteria for next DG – he or she must support a robust reform agenda; he or she must acknowledge that the current system doesn’t adequately deal with China’s economy and state trading practices; he or she can’t have a “wiff” of anti-Americanism.  China may have a different set of priorities.  How do you get US and China to do business in the WTO? 

Dr. Seade response:  on the US-China conflict, how do you handle China?  One way is through dispute settlement.  To date there have been 44 cases brought by WTO Members against China.  This is a good way to address problems a Member has with another Member, and it has worked.  We have to resolve the problems with the dispute settlement system and make it work better. At the same time, there are initiatives that have been begun by the US (e.g., EU, Japan and US) on industrial subsidies.  Dr. Seade believes that it is really for US to work out with China how to incorporate more disciplines on industrial subsidies or other issues. This will likely require the U.S. and others to add items of interest to China to make negotiations more acceptable to China.  While China is a tough negotiator, China will not risk bringing down the WTO.  In Dr. Seade’s view, the most important thing China has done in last fifty years other than the start of the reform process back in 1978 was joining the WTO.  So we need to amend the dispute settlement system which would be a good starting point to helping address existing problems.  Dr. Seade agrees with the U.S. that there have not been real negotiations on most agreement areas in the last 25 years. As China was not part of WTO in the 1990s, there can be little question that rules need to be updated both to reflect changing trade realities and to incorporate China in the process and resulting rules.   

Dr. Ngozi Okonjo-Iweala (Nigeria)

Dr. Okonjo-Iweala in her prepared statement reflected that Members have differenting views on “new or enhanced rules” identifying state-owned enterprises (SOEs) but by implication including industrial subsidies.

“Members’ views differ on a number of fundamental issues, such as special and differential treatment or the need for the WTO to tackle new issues and develop new or enhanced rules to deal with SOEs and agricultural subsidies, for example. Trade tensions among the membership have flared up, threatening the fundamental architecture of the MTS. With all these, the WTO, unfortunately, is now perceived by some as an inefficient organization that has failed to keep abreast of developments in the global economy.”

Her prepared statement goes through a range of issues that need to be addressed by the WTO but does not include in that list any of the issues flowing from different economic systems. Dr. Okonjo-Iweala does link being able to renew the WTO to getting Members to recall core objectives and principles. The objectives and principles to many would be understood to require updating rules so that different economic systems are subject to effective rules to eliminate or minimize distortions.

“Renewing and improving the organization will require recalling the core objectives and principles on which the MTS was built – the value of open trade, competition and non-discrimination, security and predictability of market access, and transparency. These principles have contributed to economic growth and development and will continue to do so if Members renew their commitment to them.”

During the press conference on July 15th after Dr. Okonjo-Iweala had met with the General Council, she was asked one question about what she would say to the U.S. about staying in the WTO. The question doesn’t directly address different economic systems, but concerns about U.S. staying in the WTO are generally understood to reflect U.S. problems with many aspects of the WTO including rules which do not effectively address distortions created by non-market economies. My notes on Dr. Okonjo-Iweala’s answer to the question are provided below.

On the question of why the U.S. should stay in the WTO, Dr. Okonjo-Iweala indicated she would communicate to the U.S. that the WTO delivers for all Members. The GATT and WTO have provided shared prosperity which has lifted millions of people out of poverty. Where the trading system is not working, Members need to fix the problems. Peace, security and stability are needed now just as they have been over the last decades. These are what the WTO rules-based system provides. If we didn’t have the WTO, we would need to invent it.

WITA had a webinar with Dr. Ngozi Okonjo-Iweala on July 21. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-dr-ngozi-okonjo-iweala/. During the webinar, Dr. Okonjo-Iweala was asked a number of questions that resulted in answers that touched on tension between the U.S. and China, industrial subsidies and more. My notes on Dr. Okonjo-Iweala’s responses and to some of the questions follows:

Q: On the important issue of building trust between Members, there are major differences between the U.S. and China, including (for the U.S.) whether existing WTO rules adequately discipline Chinese policies and (for China) whether US is abiding by the rules.  What do you see to be the main challenges to building trust among Members to permit a reform agenda to move forward?

A:  Dr. Okonjo-Iweala noted that building trust between the Members is critical.  When developed countries bring an agenda item to the WTO, developing countries may view the issue as not in their interest (and vice versa) because of a lack of trust.  On the conflicts between the U.S. and China, we need to find areas of common interest for the two Members. We are used to looking at what are the differences between the Members, but we should be looking for common interests among Members. If we can use those common interests to accomplish incremental progress, that will help build trust..  You build trust negotiation by negotiation (using the issue of special and differential treatment as example).  If we can solve any problem, it helps build trust.  Another way to build trust between developed and developing Members is to conclude the fisheries subsidies negotiations taking into account the needs of individual Members.  If the WTO Members can wrap up those negotiations, the success will start to build trust. 

Q: On resetting of tariff commitments (comment from USTR Lighthizer as a problem within the WTO based on changing economic development of many countries), would this be in the best interest of the system? 

A:  This is a critical question and issue.  Renegotiating any agreement would require consensus building that would be very difficult to achieve.  That would certainly be true on bound tariffs. The balance of rights and obligations raised by the United States flows from the concerns about state-led economies and state-owned enterprises and whether such economies belong in the system.  Dr. Okonjo-Iweala stated that the WTO is not there to comment on the economy of any Member.  In her view, the key question is what disciplines does the WTO have around any issue that arises.  Are the disciplines sufficient to address the imbalances in rights and obligations that may arise?  We need to start there.  What are the fundamental issues —  state-owned enterprises (SOEs), public body.  Can we come to agreement on the meaning of the term public body?  Can we tighten subsidy disciplines that already exist or can we negotiate new subsidy or other disciplines to address the concerns that arise from these types of economies? That is the approach all Members should be pursuing. 

Q: On industrial subsidies, China has signaled that they will oppose tightening disciplines.  The U.S., EU and Japan have been working on a proposal and discussing with some Members.  How can the Director-General help the membership navigate these issues? 

A:  If Dr. Okonjo-Iweala becomes the next Director-General, she would encourage that proposals from the U.S., EU and Japan be tabled so all Members can see what they are and how acceptable they are to other Members (including China).  Let’s start to work with an actual proposal.  Sometimes countries are not as far away as one might think.  Members need to work on a specific proposal and see what happens.

Mr. Abdel-Hamid Mamdouh (Egypt)

Mr. Mamdouh in his prepared statement to the General Council on July 15 made only one reference to the issues pertaining to differences in economic systems when he acknowledged that addressing industrial subsidies should be a priority.

“Reviving the built-in agenda of agriculture and services must be a priority because WTO Members agreed on this, and it has not happened. Trade distorting subsidies, both agricultural and industrial, will also be a priority.”

During Mr. Mamdouh’s press conference on July 15 after his meeting with the General Council, Mr. Mamdouh was asked one question about the U.S.-China conflicts. My notes on his response to the question are provided below.

A question was asked on what should be the role of the US and China in the new WTO. Mr. Mamdouh responded that the role of these two Members is to engage in the WTO. Start from the point that bilateral disputes should be resolved in the WTO. Since we all believe in the multilateral process, Members must keep in mind that bilateral disputes and solutions have effects on other Members. Moreover, bilateral solutions are less likely to be effective and are likely to be short lived.

WITA had a webinar with Mr. Mamdouh on June 23. https://www.wita.org/event-videos/conversation-candidate-hamid-mamdouh/. During the webinar, Mr. Mamdouh was asked various questions that dealt with the U.S.-China conflicts, need for better rules on industrial subsidies, state-owned enterprises and more. My notes on Mr. Mamdouh’s response and to some of the questions follows.

Q:  Why are you well suited to deal with the deep and potentially ruinous conflicts between US, China, EU?  How would you get these big powers to do business with each other?

A:   Mr. Mamdouh responded that this issue is the first frontier for a new Director-General.  The key is to have the right attitude toward the conversation (less political).  The types of problems that Members face deal with noncompliance and with inadequacy of rules.  Both need to be handled. The issues must be addressed in an intellectually honest and politically courageous way if there is to be progress.  In the past, reform occurred at the GATT when there was a perceived threat to the survival of the system.  Mr. Mamdouh believes that the WTO is facing such a threat now.  Do WTO Members have a common purpose?  Do Members need a WTO?  If the answer to the latter question is no, the conversation among Members has nowhere to go.  It is in everybody’s interest to have the answer to the question be “yes”.  For progress, the Director-General needs to bring the players to the table to identify problems with the current system.  The system needs more transparency.  For progress, it is important to keep the conversation at the level of looking at the contract and whether the contract adequately addresses the problems identified.  If the contract is not adequate to the current needs, then WTO Members must modify the contract.

Q:  is the near death experience the WTO is experiencing now an opportunity to move to a meaningful reform agenda?

A:  Mr. Mamdouh responded that yes the current crisis can lead to a meaningful reform agenda, if there is the political will of the Members.  But political will can only be generated if there is a common purpose. 

The WTO needs to address issues of interest to Members, including those raised by the US (e.g., e-commerce, SOEs, forced technology transfer).  Increasingly, the WTO is facing complex issues that go beyond simple trade liberalization but also deal with regulatory objectives. In these complex areas, such as e-commerce, the WTO Members need to find ways to accomplish differing regulatory objectives in a least trade restrictive manner. That can only be accomplished if there is a thorough discussion of the regulatory needs and development of factual information on possible trade options that can be taken back to capitals for review and for negotiation.  Unfortunately, the deliberative function has nearly died at the WTO. To address the increasingly complex issues of importance to Members, the WTO needs to restore the deliberative function.

Amb. Tudor Ulianovschi (Moldova)

Amb. Ulianovschi’s prepared statement that he provided to the General Council on July 16 doesn’t contain direct reference to any of the issues dealing with different economic systems. Amb. Ulianovschi does indirectly reference the need to address other important issues through negotiations.

“In terms of immediate priorities for the future Director General of the WTO, the following should be considered (including in the preparation process for MC12): * * *

“3. Facilitating dialogue with Members regarding on-going negotiations on the remaining and other important issues.”

During the July 16th press conference following Amb. Ulianovschi’s General Council meeting, Amb. Ulianovschi was asked a question about U.S.-China conflict and how he, as Director-General, would be able to reduce tensions. My notes on his response to the question are provided below.

On the question of how he would use the role of Director-General to ease tensions between U.S. and China, Mr. Ulianovschi responded that this topic had been discussed with Members during his meeting with the General Council. In his view, the role of the Director-General is to be an honest broker between WTO Members. The Director-General must be able to listen to concerns with a view to using his offices to engage Members involved in a dialogue process. At the same time, the Director-General is not there to impose a solution but to listen and raise awareness of the impact of actions on the larger organization and to mitigate harm to others. The next Director-General needs to engage in talks both in Geneva and in capitals and see that any outreach is transparent and inclusive.

WITA held a webinar with Amb. Tudor Ulianovschi on August 26, 2020, https://www.wita.org/event-videos/conversation-with-tudor-ulianovschi/. During the webinar, Amb. Ulianovschi was asked several questions where answers dealt with some aspect of the U.S.-China conflict, differences in economic system, need for improved rules, etc. My notes on the questions and responses from Amb. Ulianovschi follow.

Q:  How important is it to have a reform agenda, and how can you convince the major Members to agree on a common agenda?

A:    Amb. Ulianovschi stated that reform is absolutely necessary.  In his view, cosmetic reform is not sufficient, a fact made clear by major Members.  Amb. Ulianovschi believes that political experience and dialogue by the Director-General will be key to get those who have put forward proposals to get into a discussion that is inclusive and transparent.  There are a large number of issues that are affecting the environment at the WTO.  For example, the current situation between the U.S. and China is affecting the system. 

Q:  US-China relations and how it affects the WTO.  Amb. Lighthizer says he is looking for a Director-General who recognizes that the current system doesn’t address Chinese trade practices and that changes need to be made.  Do you agree?  There has been some work done by the U.S., EU and Japan on industrial subsidies and other topics.  Would you support improving industrial subsidies?

A:  Amb. Ulianovschi believes that the topic has to be of priority for the next Director-General.  The Director-General can provide his/her good offices to the U.S. and China to take up any issue, but such discussions must be consensual.  Based on Amb. Ulianovschi’s conversations with the broader membership, he knows that there is interest by many on the spillover effects on other economies from the US-China conflict.  Having said that, Amb. Ulianovschi reiterated the need for the organization to have a Director-General with political experience not to politicize the organization but to reach out to the decision makers and raise awareness of the concerns of the larger membership and encourage the two Members to sit down and discuss issues they consider appropriate.  On industrial subsidies and other issues, we need to have more indepth discussions at the WTO to have a better understanding of the issues, coverage of the current rules and the existing situation.  As a member driven organization, the incoming Director-General will have to see whether the membership is willing to move to more discipline on industrial subsidies.  Amb. Ulianovschi also believes  that a review of transparency and notifications could be useful.  An open, sincere dialogue based on timely and full information would lead to a better understanding of the issues of concern and then lead to a better decision making process to address the issues.

H.E. Yoo Myung-hee (Republic of Korea)

Minister Yoo included a general reference in her July 16 prepared statement to the General Council to “sensitive” proposals for reform which presumably include the U.S. proposal on non-market economies and the efforts by the European Union, Japan and United States to tighten disciplines on industrial subsidies.

“I am well aware of the proposals that Members have put forward on WTO reform. I also know how sensitive these issues can be to individual Members. A high degree of trust among Members must be the starting point in exploring cooperative solutions.”

Minister Yoo was not asked a question during her press conference that dealt with different economic systems or distortions flowing therefrom.

WITA had a webinar with Minister Yoo on August 11.  https://www.wita.org/event-videos/candidate-h-e-yoo-myung-hee/. Minister Yoo was asked some questions on how she would address the U.S.-China conflicts and the U.S. view that the current WTO rules don’t adequately address the market distortions caused by the Chinese economic model. Below I provide my notes on the questions and Minister Yoo’s responses.

Q: In prepared statement you mention you can serve as a bridge between US and China.  Please elaborate.  Second, Amb. Lighthizer is looking for a Director-General who recognizes that current rules don’t adequately discipline China. Do you agree there is a problem in terms of adequacy of WTO rules for China’s policies?

A:  On the first issue of serving as a bridge, Minister Yoo believes that the WTO can provide a good place for US-China issues to be addressed if the negotiating function is working.  In her view, part of the problem which has led to actions outside of the WTO has been the lack of progress on negotiations.  Thus, Minister Yoo believes WTO Members need to revitalize the negotiating function, so Members will use the WTO to ensure adequacy of rules in an evolving world.  Minister Yoo believes the next Director-General needs to engage in dialogue with the U.S. and China to find and understand the real issues between them.  Minister Yoo reviewed that she has done negotiations with both the United States and China.  She believes that she can use that experience to engage in dialogue with each country and find commonalities between them among the real issues.  By focusing on commonalities, Minister Yoo believes that one can find a path forward to achieve a negotiated success, even if small, and build trust.  After finding small successes, the Members then move forward to address the more challenging issues.

On the second question relating to Amb. Lighthizer’s concern that current rules are not sufficient to discipline China’s practices, Minister Yoo believes one needs to look at the rule book.  In her view, all policies adopted by governments can have spillover effects on trade.  If policies do have such spillover effects and are not covered by existing WTO rules, one needs to evaluate whether the policies are consistent with WTO principles (fair competition, nondiscrimination, etc.).  If a policy is not consistent with WTO principles and has spillover effects on trade, one must determine if current rules can be used to address the policy. If not, then the WTO needs to look at whether modifications to existing rules or the addition of new rules are needed.  Minister Yoo believes Members will need to be willing to engage in this type of process.

H.E. Amina C. Mohamed (Kenya)

Like other candidates, Minister Mohamed didn’t directly address the issue of different economic models reflecting the conflicting positions of some major Members. Rather, Minister Mohamed acknowledged that there were different reform priorities for different Members and that Members needed to get past the challenges in current negotiating approaches. The following four paragraphs from Minister Mohamed’s prepared statement to the General Council on July 16 provides some general comments on the road forward which can be viewed as applicable to differing economic models and many other contentious issues.

“12. You do not all share the same reform priorities. This makes it essential to work together for convergence around elements that all can support. We need to break the cycle of despair and enter into a new phase of hope and realism.

“13. Renewal has to start with facing up to the defects that have weakened the system in recent years: the inability to update rules to reflect the changing realities of how trade is conducted; the sterility of ideological standoffs; the retreat into defensiveness; and the sense of the benefits of trade not being equitably shared.

“14. The WTO has to engage again in good faith negotiations, and this means openness to change and to new ideas, within a culture of inclusiveness and transparency.

’15. Renewal should also build upon the WTO’s core values and achievements. Trade has been transformational. It has helped to lift close to 1 billion people out of poverty and facilitated the attainment of higher living standards in countries at all levels of development. These successes were possible because Members did not see trade as a zero-sum game. They understood that trade-offs were needed to produce outcomes. All Members should contribute to trade opening and facilitation efforts, especially those most in a position to do so.”

During Minister Mohamed’s press conference on July 16 after her meeting with the General Council, she received two general questions about how she would work with major players to resolve trade tensions. Below is my summary of the questions asked and her response.

Q: If selected as the next Director-Generaly, will you be more engaged in resolving trade tensions between major players? If yes, what tactics would you use?

A: Minister Mohamed reviewed the types of powers that a Director-General has to work with Members. For example, the Director-General has engagement powers and can encourage members to consult, to use the good offices of the Director-General. So while the Director-General has only limited powers, those powers ca be used effectively by a Director-General to help Members to use the WTO system to resolve differences.

When asked what her approach would be to deal with trade tensions between US and China, Minister Mohamed stated that she would encourage all members to resolve their trade differences within the WTO rules.

WITA had a webinar with H.E. Mohamed on August 6. https://www.wita.org/event-videos/ambassador-amina-mohamed/. During the webinar, Minister Mohamed addressed briefly the rise of China as a major trading nation and was asked about whether current WTO rules adequately address distortions that flow from China’s policies. My notes from Minister Mohamed’s comments follow.

Minister Mohamed stated that since the WTO was set up in 1995, new and powerful players have emerged onto the trade scene, in particular China.  The resulting tensions with the United States have fed the dysfunction within the WTO.  Minister Mohamed believes that to address the tensions, the WTO needs to pursue reform.  However, governments don’t share the same reform priorities.  The WTO needs to identify issues all can support if reform is to move forward. 

Q: Amb. Lighthizer has raised his concern that the current WTO rules are not capable of disciplining conduct of non-market economies, particularly China.  Do you agree?  How would you go about finding common ground?

A:  Minister Mohamed’s response was that one needs to start by looking at the existing rule book.  The rule book is outdated in some cases.  Moreover, some rules are weak and are being circumvented.  If you have candid discussions with WTO Members, you will find the problems are with the adequacy of the rules.  If the rules are inadequate, WTO Members need to address them to achieve modifications or new rules.  For example, the U.S.-EU-Japan effort on industrial subsidies is potentially important.  If Minister Mohamed becomes the next Director-General she would urge the U.S., EU and Japan to table their proposal, so all WTO Members can discuss what are being raised as the real issues.  It is important to understand what conduct is driving up the tension between Members.

H.E. Mohammad Al-Tuwaijri (Saudi Arabia)

Minister Al-Tuwaijri was the first candidate the General Council met with on July 17. In his prepared statement, Minister Al-Tuwaijri did not directly address the issue of different economic systems and the potential distortions created by non-market economies. Rather he indicated that any negotiating agenda would work only where all Members view the agenda as including items of interest to them. Applied to different economic systems, this would suggest that for negotiations to occur on the topic it would have to be part of a larger package of issues of interest to those Members (like China) who would potentially perceive themselves the target of the industrial subsidies issue or the differing economic systems issue.

“Concerning working together through negotiations, I believe that Members will participate in negotiations when they are convinced that the agenda includes an incentive for them to participate. Therefore, in order to have a successful multilateral negotiation, the agenda needs to be balanced – it needs to include something for everyone.”

At the press conference after his meeting with the General Council, Minister Al-Tuwaijri was not asked any questions dealing with the issue of differing economic systems or on industrial subsidies.

WITA had a webinar with H.E. Al-Tuwaijri on August 5. https://www.wita.org/event-videos/director-general-candidate-he-mohammed-al-tuwaijri/. During the webinar, Minister Al-Tuwaijri was asked several questions dealing with the relationship between some of the major trading Members (U.S., China, EU) and specifically whether he supported negotiations on industrial subsidies to address U.S. concerns that existing rules don’t discipline the policies of China. Below are my notes on the questions asked and answers provided.

Q: Can you have a successful launch of a reform agenda if the leaders in key Members (China, US, EU) aren’t committed to help you make it work?  In the first six months as the new Director-General if selected, how would you get these Members to buy into a reform ageanda?

A:  Minister Al-Tuwaijri started his response by noting his involvement in working with G20 countries where the major WTO Members are involved. He noted that one of the issues G20 countries have supported is engaging in reform at the WTO.  Individual countries may have different views on reform — how, when, and what — but all agree reform is needed.  Minister Al-Tuwaijri believes that six-months is too long a period to determine if there is support among the major Members for a reform initiative.  He believes that within the first two – three months of becoming the next Director-General he should know if the intent of the major Members is to support reform or not.  He would reach out with a specific set of questions (e.g., here are top five issues for reform discussions) and seek input on where Members are on a willingness to address the issues.  Minister Al-Tuwaijri has the ability to reach out to the major Members and be viewed as an honest broker.  Saudi Arabia has always been a neutral country and has been serving as President this year in the G20. 

Q:  On China, Amb. Lighthizer is looking for a candidate to be the next Director-General who understands that the current WTO rules don’t discipline China.  Do you agree that the current rules don’t adequately discipline China?  Would you support efforts to improve disciplines on industrial subsidies?

A:  Minister Al-Tuwaijri supports all efforts of WTO Members to engage in negotiations.  China is a major country and major trading nation.  He believes that the more that is done to promote negotiations and promote timely resolution of issues, the better it is for restoring the negotiation function.  He believes that the U.S. and China should bring all of their issues with each other to the table.  He knows that there are many.  But WTO Members need to move the negotiating process forward to ensure rules are adequate.

The Rt Hon Dr. Liam Fox MP (United Kingdom)

Dr. Fox was the last of the candidates to meet with the General Council and the second candidate who met on July 17. His prepared statement talks about the array of issues likely to be addressed heading into the twelfth Ministerial Conference in 2021 and the agreed need for broader reform. However, he does not mention in his prepared statement the issues surrounding different economic systems or the need for revised rules on industrial subsidies.

During Dr. Fox’s press conference on July 17, he was asked one question that was broad but fairly did include the U.S. effort to address non-market economies (how would you deal with the broad U.S. concerns with the WTO). Dr. Fox viewed the main U.S. concerns as being with the Appellate Body and limited his remarks to that issue.

He was asked a different question on why the multilateral trading system is important to large parties. My notes on his response are provided below.

Q: Why is the multilateral trading system important to the large parties?

A: Dr. Fox indicated that he viewed the Director-General position to not be one of taking sides in bilateral disputes but to maintain the international trading system. If Members don’t enforce what currently exists, what is the credibility of new rules signed onto later? He stated that all Members have benefited from the multilateral trading system. The alternative to a rules- based system is not acceptable. That is true for most countries, not just smaller countries. He used the examples of the 4th and 5th largest economies, Germany and UK, for whom global trade is a major component of their economies.

WITA had a webinar with Dr. Fox on July 30, 2020. https://www.wita.org/event-videos/conversation-with-dr-liam-fox/. During the webinar, Dr. Fox was asked several questions about China, including whether existing rules adequately discipline China’s policies and whether new negotiations on industrial subsidies are needed. My notes on the questions asked and Dr. Fox’s responses are provided below.

Q:  USTR Lighthizer has indicated there are three factors he is looking for in considering candidates for the Director-General post: (1) no anti-Americanism; (2) a belief that there is a need for broad reform at the WTO; and (3) someone who understands that the current WTO rules don’t adequately discipline China’s policies.  Do you agree with Amb. Lighthizer’s last point on the need for new rules to address Chinese policies?

A:  Dr. Fox’s answer dealt with all three factors including that he is not anti-America. He also believes there is a need broad-based reform.  In Dr. Fox’s view, the reform needed is both internal at the Secretariat as well as in changing the rule book.  For example, Dr. Fox had had dozens of meetings by the time of the webinar with WTO Members. Many countries felt that if you weren’t a large Member or a squeeky wheel, your voices were not heard.  In Dr. Fox’s view, the next Director-General needs to review the operation of WTO Secretariat to be sure all Members can be heard and improve the outreach to all Members and listening to their views and concerns.   Dr. Fox believes that there is also a need to reform how the WTO operates during negotiations.  He used the example of the fisheries subsidies negotiations. He opined that better outreach to NGOs and other groups about the negotiations and encouraging their engagement with Members would help constituencies better understand that the WTO is engaged in issues that are importance to them. The failure to have such engagement can undermine the concept of shared endeavor which is important to forward movement at the WTO.  So different forms of reform are needed at the WTO.

On the question about whether rules adequately discipline the policies of China, Dr. Fox stated that reform is not about focusing on any one country.  He stated that, of course, all Members must comply with the existing rules.  In his view, Members need an effective dispute resolution system to ensure such compliance.  Beyond that, the question is how do WTO Members take forward and address common challenges (e.g., e-commerce).  The key for the WTO is to bring the rule book up to date with the changing commercial realities.  Up-to-date rules and getting all Members to comply are the main objectives of reform.

Q:  what about industrial subsidies.  Is this an area that needs to be updated.

A:  Dr. Fox indicated that WTO Members have a lack of trust in each other.  One way to improve trust is to improve transparency.  Dr. Fox used as an example, efforts by the OECD to quantify subsidies to aluminum producers around the world. He had visited the OECD recently and heard from them about the extraordinary efforts they went to to make up for a lack of available data on items like production capacity and production. The efforts undertaken were both expensive and time consuming.  The example of aluminum indicates that it is important to improve objective data that are provided by Members to the WTO.  If WTO Members want improved transparency and improved accuracy of information provided, the WTO also will need to find better ways to verify data submitted.

Conclusion

The question of whether non-market economies or state-directed economies or state-capitalist economies properly fit within the WTO Agreements was not addressed by any candidate, though Dr. Okonjo-Iweala took the position that the nature of the economic system of any Member was not an issue for the WTO to consider.

On whether the current rules of the WTO adequately discipline the policies of China (and more broadly other non-market economies), candidates generally were of the view that the reform process should permit an evaluation of the changing global landscape and developments and where issues were not addressed or inadequately addressed by current rules, Members should consider what changes would be appropriate. Dr. Seade noted that since China was not part of the GATT in the 1990s during the Uruguay Round negotiations, with all the change that has occurred in the first 25 years of the WTO and limited update of rules, there is little doubt that rules need to be updated both to address practices of new Members and to incorporate their views on needed updates. Minister Yoo suggested a somewhat similar approach.

On the question of the need for an update to the rules on industrial subsidies, Minister Mohamed and Dr. Okonjo-Iweala were of the view that the proposal being worked on by the U.S., EU and Japan should be tabled in Geneva so all Members could start the process of understanding the concerns and appropriateness of the approaches recommended to address. Mr. Mamdouh included updating industrial subsidies rules as one of the priority issues to be addressed by the WTO.

The race to become the next WTO Director-General — where candidates are on important issues: eligibility for Special and Differential Treatment/self-selection as a developing country

[Updated August 27 to incorporate comments by Amb. Tudor Ulianovschi of Moldova at a WITA webinar held on August 26]

During the years of the General Agreement on Tariffs and Trade, countries engaged in a series of rounds of tariff liberalization. The basic principle of Most Favored Nation ensured that any participating country or customs territory would receive the benefits of trade liberalization of others whether or not the individual country made tariff liberalization commitments of its own.

Moreover, the GATT and now the WTO have recognized that countries at different levels of economic development will be able to make different contributions and some may need special and differential treatment to better participate.

Historically, there has been a distinction between developed countries and developing countries, with special and differential (S&D) treatment reserved for the latter. Typically, S&D treatment would permit, inter alia, lesser trade liberalization commitments and longer phase-ins for liberalization undertaken.

During the Uruguay Round, least-developed countries, as defined by the United Nations, were broken out from developing countries to receive lesser obligations than other developing countries. But the categorization as a developing country has always been a matter of self-selection within the GATT and now within the WTO.

Some three quarters of WTO’s current 164 Members have self-declared themselves to be developing countries or are least-developed countries under UN criteria. Thus, only one fourth of WTO Members shoulder full obligations under the current system.

While the Uruguay Round negotiations attempted to deal with “free riders” by requiring all countries and customs territories to bind all or nearly all tariff lines, the results at the creation of the World Trade Organization was a system where the vast majority of Members had relatively high tariff rates in their bindings while developed countries typically have very low tariff rates bound.

After twenty-five years of operation and dramatic economic development by many Members and limited trade liberalization through WTO multilateral negotiations, questions have been raised by the United States and others as to whether the concept of self-selection by countries of developing country status has contributed to the inability of the WTO to achieve further liberalization through negotiations. The U.S. has put forward a definition of who would eligible for developing country status based upon a country not qualifying under any of four criteria. See December 28, 2019, WTO Reform – Will Limits on Who Enjoys Special and Differential Treatment Be Achieved? https://currentthoughtsontrade.com/2019/12/28/wto-reform-will-limits-on-who-enjoys-special-and-differential-treatment-be-achieved/. Countries who would not qualify under the U.S. proposal include:

Member of the OECD or in the accession process:

Chile, South Korea, Mexico, Turkey, Colombia, Costa Rica.

Member of the G-20:

India, South Africa, Turkey, Argentina, Brazil, Mexico, China, Indonesia, South Korea.

Classified by World Banks as “high income” for 2016-2018 (includes):

Antigua and Barbuda, Bahrain, Brunei Darussalam, Chile, Hong Kong, South Korea, Kuwait, Macao, Panama, Qatar, Saudi Arabia, Seychelles, Singapore, St. Kitts and Nevis, Trinidad and Tobago, United Arab Emirates, Uruguay.

0.5% of Merchandise Trade (includes):

China, South Korea, Hong Kong, Mexico, Singapore, United Arab Emirates, Thailand, Malaysia, Vietnam, Brazil, Indonesia, Turkey, South Africa.

For many countries who have self-declared as developing countries, the concept of changing their status, regardless of economic development, is untenable and has been actively opposed at the WTO (including by China, India and South Africa).

Four WTO Members who had self-declared as developing countries — Korea, Singapore, Brazil and Costa Rica — have indicated to the WTO that they will not seek special and differential treatment in ongoing or future negotiations (but maintain such rights for existing agreements). Other countries who are self-declared developing countries have blocked an Ambassador from one of the four who have agreed to accept greater obligations from assuming the Chair post for one of the WTO Committees.

The United States has also raised questions about the imbalance of tariff bindings which have flowed from economic development of some countries without additional liberalization of tariffs by those countries and the lack of progress on negotiations. Thus, for the United States there is also the question of whether tariff bindings should be reexamined in light of economic developments over the last twenty-five years. From the WTO’s World Tariff Profiles 2020 the following simple bound tariff rates for all goods are identified for a number of countries. See https://www.wto.org/english/res_e/booksp_e/tariff_profiles20_e.pdf. While for developing countries, bound rates are often much higher than applied rates, the bound rates give those countries the ability to raise applied tariffs without challenge:

“Developed Countries”

United States: 3.4%

European Union: 5.1%

Japan: 4.7%

Canada: 6.4%

“Developing Countries”

China: 10.0%

Brazil: 31.4%

Chile: 25.2%

Costa Rica: 43.1%

Republic of Korea: 16.5%

India: 50.8%

Indonesia: 37.1%

Singapore: 9.5%

South Africa: 19.2%

Thus, for the eight candidates competing for the position of Director-General of the World Trade Organization, a challenging topic within the WTO for possible reform is whether the issue of Special and Differential treatment needs review to ensure that its provisions apply to those who actually have a need and not to three quarters of the Members simply because they self-selected. While not necessarily encompassed by the S&D question, for the United States, the issue also subsumes whether WTO reform needs to permit a rebalancing of tariff bindings based on changing economic development for WTO Members.

What follows is a review of the prepared statements to the General Council made by each candidate during July 15-17, my notes on candidates’ responses to questions during the press conference immediately following each candidate’s meeting with the General Council, and my notes on candidates’ responses to questions during webinars hosted by the Washington International Trade Association (WITA) and Asia Society Policy Institute (ASPI) (as of August 13, seven of the eight candidates have participated in such webinars; the webinar with the Moldovan candidate is being scheduled).

Dr. Jesus Seade Kuri (Mexico)

Dr. Seade did not take up the question of special and differential treatment directly as part of his prepared statement. One can read part of his statement to indicate that part of the challenges facing the WTO flow from the lack of success of the negotiating function on traditional issues (which would include further tariff liberalization). Also one could construe the need to modernize the organization as including the need to better reflect the need for all Members to carry the extent of liberalization that their stage of economic development permits.

“In the medium and long term, and in order to prevent the Organization from becoming obsolete and obsolete, it is important that mechanisms be
adopted to modernize it. I will seek to establish an informal dialogue on the
weaknesses and challenges of the Organization in the current context, through annual forums or specialized conferences.

“But thinking about long-term expectations, I am convinced that they have been affected by the lack of significant results in the negotiations since the
creation of the WTO. Thus, as results are achieved on 21st century issues, it will be very important to also energetically take up the traditional priority issues on the sustainable development agenda.” (Google translation from French)

During the press conference, Dr. Seade was asked a question on the issue of developed versus developing country designation. My notes on his response are as follows:

On the question of developed vs. developing country, Dr. Seade looks at it from the perspective of special and differential treatment. On the one hand the world keeps changing, so it’s reasonable to ask what a Member can do. The idea of changing classification of countries from developing to developed will take a very long time and so is probably the wrong approach. The question should be what contribution can a particular member make, which may be different in different industries.

WITA had a webinar with Dr. Seade on July 7. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-seade/. Dr. Seade was asked about the issue of self-selection of developing country status and how he would try to get Members to address. My notes on his response follow:

Dr. Seade had this to say:  he believes countries are looking at the issue the wrong way.  Special and differential treatment is like a discount card which you can use at a store.  Some customers have the discount card; some don’t.  The reality in the WTO is that everything is negotiated.  When you negotiate, you can talk to every Member.  If Members make whether and what type of special and differential treatment a Member needs part of negotiations, the outcome can be tailored so that Members are contributing what they can while still accommodating Members where there is a real need. While seeking to define who is a developing country may be an approach that can be taken, Dr. Seade believes that actually getting Members to agree to changing status is an impossible issue.  In his view, status is “theological” for many Members. 

One can look at the trade facilitation agreement for an example of where Members were asked to take on obligations to the extent they could; there were negotiations if more was felt possible from a Member.  The same type of approach can be taken in ongoing and new negotiations.  He believes this is the way to go.  The key question is not who is eligible, but for what does a Member need S&D.  This will be true at a country level (e.g., in Dr. Seade’s view Mexico and Brazil don’t need the same flexibilities as Angola).  But the need for differentiation in a given country may also differ by sector.  In fact the need for special and differential treatment can vary by product. Dr. Seade mentioned Mexico’s agriculture sector, where corn production is not efficient or modern and hence S&D may be necessary but where that is not the case for fruits and vegetable production.  Thus, Dr. Seade believes that going about it on a more practical way is the right way to make progress in the WTO.  Negotiate by agreement by country, etc.

Dr. Ngozi Okonjo-Iweala (Nigeria)

Dr. Ngozi Okonjo-Iweala’s prepared statement directly notes the differing positions on the issue of special and differential treatment and also mentions concerns of Members in terms of imbalances in rights and obligations and distribution of gains (which presumably includes the U.S. concern about high bound tariff rates of many countries who have gone through significant ecoonomic growth in the last 25 years).

“Members’ views differ on a number of fundamental issues, such as special and differential treatment or the need for the WTO to tackle new issues and develop new or enhanced rules to deal with SOEs and agricultural subsidies, for example.”

“While a key objective of the WTO is the liberalization of trade for the mutual benefit of its Members, it appears that this very concept is now a divisive issue as a result of the perceived imbalances in the rights and obligations of Members and the perceived uneven distribution of the gains from trade. I would constantly remind Members about the value of the MTS and help energize them to work harder to overcome the challenges that have paralyzed the WTO over the years.”

During the press conference on July 15th, Dr. Ngozi Okonjo-Iweala was not a question on S&D treatment, classification of developing countries or on tariff bindings.

WITA had a webinar with Dr. Ngozi Okonjo-Iweala on July 21. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-dr-ngozi-okonjo-iweala/. Dr. Ngozi Okonjo-Iweala in her opening comments identified the issue of special and differential treatment as an issue that could be considered as part of WTO reform, although it wasn’t in her list of topics for tackling by the next WTO Ministerial Conference. She was asked a question about how to restore trust among Members and used that question to review her thoughts on special and differential treatment and the question of self-selection by Members as developing countries. Below is my summary of Dr. Ngozi Okonjo-Iweala’s discussion of the issue.

One issue being pushed by the United States and others that is very divisive is the issue of special and differential treatment and self-selection of developing country status.  The concern of those wanting a change is that self-selection and the automatic entitlement to S&D treatment shifts the balance of rights and obligations to advanced developing countries.  There is no disagreement that least-developed countries need special and differential treatment. In her view, the real question is whether other countries that view themselves as developing should get special and differential treatment automatically.  Dr. Ngozi Okonjo-Iweala believes the WTO needs a creative approach to resolve the issue.  For example, Members should address the need of individual Members for special and differential treatment on a negotiation by negotiation basis.  Members should, as part of each negotiation, consider what other Members believe their needs are based on level of development.  She references the Trade Facilitation Agreement as an example where Members took on obligations based on their level of development vs. a one size fits all approach.  Dr. Ngozi Okonjo-Iweala believes that if the Members can reach a resolution on this issue, the resolution would help build trust among Members and hence help the WTO move forward.

Mr. Abdel-Hamid Mamdouh (Egypt)

Mr. Mamdouh’s prepared statement did not directly deal with the topic of special and differential treatment or the changing economic competitiveness of Members. There is one statement towards the end of his statement which recognizes the evolving nature of the Membership.

“Since then, global trade has transformed, and trading powers have evolved. The circumstances and dynamics have changed. But the skillset we require of the leadership: imaginative thinking, and the ability to come up with legally sound and enforceable solutions – remain the same.”

During his press conference on July 15, Mr. Mamdouh was not asked a question on S&D treatment or the criteria for being a developing country.

WITA had a webinar with Mr. Mamdouh on June 23. https://www.wita.org/event-videos/conversation-candidate-hamid-mamdouh/. Mr. Mamdough was asked a question during the webinar on whether the large number of WTO Members who have self-declared as developing countries and hence are eligible for special and differential treatment doesn’t undermine the credibility of the organization and what he would do about it if he was Director-General. Below is my summary of Mr. Mamdouh’s response.

Mr. Mamdouh believes that the issue should be addressed in a pragmatic maner. He referred back to the General Agreement on Trade in Services (GATS) negotiated during the Uruguay Round and noted that the GATS contains no special and differential treatment provisions.  Thus, in the GATS, Members moved away from a system of country classifications.  In Mr. Mamdouh’s view, obligations should be customized based on a Member’s needs/abilities through negotiations.  Flexibilities to address particular Member needs can be determined individually.  While this was the approach in GATS, Members can do that on goods on any area that can be scheduled but also rule making areas.  In Mr. Mamdouh’s view for any substantive obligations, there is room to customize obligations through negotiations.  He believes that big developing countries wouldn’t oppose different countries taking on different obligations.  He doesn’t believe that a solution will be in negotiating a different categorization system.  The solution for the WTO is to take a pragmatic approach and customize the outcome based on negotiations.  Mr. Mamdouh referenced fisheries subsidies as an example where that could occur.  He believes customizing obligations based on individual Member needs will be increasingly necessary, citing the 164 current Members.  But he cautions that no “one size fits all”.  Every solution would need to be tailored on the basis of the area being negotiated.

Amb. Tudor Ulianovschi (Moldova)

Amb. Ulianovschi’s prepared statement to the General Council on July 16 covers a wide range of issues that need to be addressed going forward, but, does not mention the issue of special and differential treatment or which Members should not be eligible to be developing countries based on economic developments. Amb. Ulianovschi does have one sentence in his prepared statement which talks generally about addressing global inequalities.

“The WTO is one of the most complex organizations in the world today, and it’s one of the most needed as to ensure open, predictable, inclusive, rule based multilateral trading system, as well as – to address global inequalities and bridge the gap between the least developed, developing and developed countries.”

At the press conference on July 16, Amb. Ulianovschi was asked many questions but none of the developing country/special and differential treatment issue.

WITA held a webinar with Amb. Tudor Ulianovschi on August 26, 2020. https://www.wita.org/event-videos/conversation-with-tudor-ulianovschi/. During the webinar, Amb. Ulianovschi mentioned special and differential treatment both in his opening statement and in answer to a question. My notes on Amb. Ulianovschi’s comments are provided below.

From his opening statement, Amb. Ulianovschi noted that as a member driven organization, the WTO needs Members to negotiate to move forward.  He believes that a diplomatically active Director-General can help the WTO move forward, and he can help address lack of trust which he believes is largely psychological primarily based on unfinished business but also dispute settlement, special and differential treatment and other issues.

Q:  How important is it to have a reform agenda, and how can you convince major Members to agree on a common agenda? A:    Amb. Ulianovschi stated that reform is absolutely necessary.  In his view, cosmetic reform is not sufficient, a fact made clear by major Members.  Amb. Ulianovschi believes that political experience and dialogue by the Director-General will be key to get those who have put forward proposals to get into a discussion that is inclusive and transparent.  There are a large number of issues that are affecting the environment at the WTO.  For example, the WTO needs to address the horizontal issue of Special and Differential Treatment (S&D).  The S&D principle is at the core of the organization, but it is how you apply the principle which determines commitments of Members.  From that point of view, Amb. Ulianovschi sees it as a positive signal that major players are putting forward proposals on this topic.  The proposals should be the starting point for discussions.  Amb. Ulianovschi would invite those who have put forward proposals to start discussions with other Members.  Negotiations need political will to succeed, and Members need to agree on how to proceed.  He believes that if he is Director-General, he can get Members to that point.

H.E. Yoo Myung-hee (Republic of Korea)

Minister Yoo’s prepared statement covers many issues but does not address the issue of special and differential treatment/developing country classification.

In her press conference on July 17 after meeting with the General Council, Minister Yoo was asked a question on developing vs. developed country status. My notes on her response follow:

A question was asked how Minister Yoo viewed the question of the status of Members as developed or developing countries particularly in light of Korea viewing itself as a developing country in the WTO although Korea has indicated it will not seek additional special and differential treatment under future WTO Agreements. Minister Yoo started her response by noting that the Marrakesh Agreement requires that the WTO work to help developing and least developed countries secure their fair share of trade. There are competing issues at the WTO. Should the WTO make special and differential treatment provisions more operational in existing Agreements is one issue. Should the WTO change the classification status of some countries based on economic development is the other issue. For Korea, the. world has changed, and countries have changed in terms of their stage of economic development. Korea decided to take on more responsibility based on its changing level of economic development. But many countries continue to need special and differential treatment. It would be ideal for developing countries to take on more responsibilities as they are able. But this is a sensitive issue on which there is no consensus as yet.

WITA had a webinar with Minister Yoo on August 11.  https://www.wita.org/event-videos/candidate-h-e-yoo-myung-hee/. Below is my summary of the question asked on the issue of special and differential treatment and self-selection of developing country status, and Minister Yoo’s response:

Korea has informed the WTO that Korea will not seek S&D treatment in ongoing or future negotiations.  Many Members thinks the self-selection of developing country status is undermining the system.  How do you evaluate the issue and how important is it to resolve?

Minister Yoo indicated that this is an important issue to resolve to make progress in ongoing and future negotiations.  She believes it is important to reflect on a core principle of the WTO to ensure that developing countries and least-developed countries secure their fair share of global trade.  The question for the WTO is how to effectuate this embedded principle.

Over half of WTO Members are developing countries and 36 others are least developed countries. In total roughly three fourths of all Members get special and differential treatment.  If so many are eligible for special and differential treatment, it likely means that the countries with the greatest needs are not receiving the assistance actually needed to help their development and greater participation in international trade.

In Minister Yoo’s view, the WTO has very divergent views among Members about changing the classification process for Members from self-selection to a set of factual criteria.  US has put forward a proposal to categorize members as developed based on different factual criteria.  However, there is no consensus at the WTO at the moment which means that changing the classification process will not happen until there is consensus.  In light of the lack of consensus, a pragmatic approach may be to have countries who can take on more responsibilities to do so voluntarily.  This will permit those who need assistance to get it.

Looking at the Trade Facilitation Agreement, while the Agreement is not necessarily representative of other areas under negotiation, it shows one way to handle the issue of special and differential treatment in a pragmatic way.  Some developing countries take on more responsibility than others without S&D treatment and without a transition period.  This is an example of how through negotiations, Members can customize obligations to individual Member capabilities.  Such an approach is practical and pragmatic.

In Korea’s case, Korea indicated that they would not seek S&D treatment in ongoing and future negotiations based on Korea’s state of economic development.  It was not an easy decision and required extensive internal consultations.  Korea wants to promote the WTO system.  She believes it is useful for each country to step up and take on more responsibility if they are capable of doing so.  The U.S. proposal has been important in raising the issue.  While no consensus exists at the moment, the U.S. action has gotten Members discussing the matter.  If Minister Yoo is selected to be the next Director-General, she would continue to raise the issue with Members to achieve a good outcome for all. She believes resolution of the issue can help unlock progress in ongoing and future negotiations.

H.E. Amina C. Mohamed (Kenya)

Minister Mohamed’s prepared statement contains a number of statements which recognize the need of Members to contribute according to their ability, although she does not address the classification of developing countries or the need for special and differential treatment specifically.

“Renewal has to start with facing up to the defects that have weakened the system in recent years: the inability to update rules to reflect the changing realities of how trade is conducted; the sterility of ideological standoffs; the retreat into defensiveness; and the sense of the benefits of trade not being equitably shared.”

“All Members should contribute to trade opening and facilitation efforts, especially those most in a position to do so.”

“We need a WTO that is fair and equitable, taking into account the level of economic development of each member. All WTO Members must be prepared to contribute to improving and strengthening the organization, so that it can facilitate trade for the benefit of all, and contribute to economic recovery from the effects of the pandemic.”

During Minister Mohamed’s press conference on July 16, no questions were asked about developing country status or on special and differential treatment.

WITA had a webinar with H.E. Mohamed on August 6. https://www.wita.org/event-videos/ambassador-amina-mohamed/. During the webinar, Minister Mohamed both made several comments on special and differential treatment and self-selection of developing country status, but also answered a question. My notes on her comments and the question asked are summarized below:

One of issues needing to be addressed by the WTO are the current “divisions over developing country status”.

We need a WTO that is fair and equitable considering the level of economic development of each Member.  The WTO should give effect to its development objectives in a practical and enabling way that takes into account needs and results.  All WTO Members must be prepared to contribute to strengthening and improving the WTO system.

Q: The U.S. has raised the issue of self-declaration of developing country status.  How would you handle the issue if you become Director-General?

Minister Mohamed noted that special and differential treatment is an integral part of existing agreements.  However, going forward, the journey to modify the approach to S&D has already begun. ” The train has already left the station.” Minister Mohamed noted that in the Trade Facilitation Agreement, any special treatment was based on the need of the individual Member. Countries assumed obligations they were able to, so different developing countries assumed different levels of obligations with or without transition periods.

Second, self-declaration by certain countries that they would no longer seek special and differential treatment has already occurred (Korea, Brazil, Singapore and Costa Rica).  Minister Mohamed believes the WTO will see more of this going forward by other countries.  If Minister Mohamed is selected to be the next Director-General, she would continue discussions among the Members and have candid discussions with some of the Members.  But she believes moving forward, special and differential treatment will be increasingly based on actual need.

H.E. Mohammed Maziad Al-Tuwaijri (Saudi Arabia)

Minister Al-Tuwaijri in his prepared statement to the General Council on July 17 addressed briefly the proposal from the U.S. on special and differential treatment (classification of developing countries):

“Concerning Special and Differential Treatment, the bottom line is, without negotiations that include incentives for everyone to participate actively, I do not think it will be possible for Members to address the issue of SDT. This is one of the main reasons that the negotiating function needs to start working. Members have various capacities to implement and take advantage of new rules and commitments, so it is clear that each Member must decide for itself what is in its own interest.”

At his press conference on July 17, Minister Al-Tuwaijri was not asked a question on special and differential treatment or of classification of developing countries.

WITA did a webinar with Minister Al-Tuwaijri on August 5. https://www.wita.org/event-videos/director-general-candidate-he-mohammed-al-tuwaijri/. During the webinar Minister Al-Tuwaijri was not asked a question on self-selection of developing country status or on special and differential treatment.

The Rt Hon Dr. Liam Fox MP

Dr. Fox’s prepared statement to the General Council on July 17 did not include any references to special and differential treatment or to the classification of developing countries.

During his press conference on July 17, Dr. Fox was not asked a question dealing with special and differential treatment or the classification of developing countries.

WITA had a webinar with Dr. Fox on July 30, 2020. https://www.wita.org/event-videos/conversation-with-dr-liam-fox/. Dr. Fox was asked about the concerns expressed by the U.S. and others that the process of self-selection of developing country status had resulted in too many Members having special and differential treatment. There was a need to see that S&D is limited to those who actually need help. How would Dr. Fox address this issue if he were selected as the Director-General? What follows reflects my notes on Dr. Fox’s response.

Dr. Fox stated that first, the WTO must reassess that we are all aiming at the same goal.  As the WTO has expanded membership, Members knew that the organization would have countries with vast differences in capabilities and that it would take different countries different amounts of time to get to full implementation.  Thus, special and differential treatment is available. However, Dr. Fox understands that there are some WTO Members who want to be perpetually exempted from undertaking full obligations regardless of the level of economic development they have achieved. Dr. Fox views this approach as unacceptable. Membership in an organization envisions equal rights and obligations, though it may take some members longer to get there.

On the topic of special and differential treatment, Dr. Fox believes that it is important to accelerate the rate of development for countries that are developing or least-developed, so that their improved level of economic development means they don’t need special and differential treatment.  One of the reasons some Members gave Dr. Fox for not wanting to be moved into a different category, was the concern over loss of trade preferences.  Dr. Fox used as an example, small coastal economies who can experience wide swings in per capita GDP based on external events (hurricanes, etc.) which can move them from high income to low income and back in short order.  Dr. Fox believes WTO Members must think creatively on how to address concerns of Members that giving up developing country status will put them in difficulties. On his example, he suggested using multiple year averages.

Conclusion

As the WTO has become a much more universal organization, membership has widely expanded beyond the historical developed country proponents of the GATT. At the same time, in recent decades there has been tremendous economic development by many countries which should mean that the ability of Members to handle full or increased obligations of the WTO has increased for many countries.

Yet, the current system does not provide a means for modifying obligations of Members who joined as developing country members regardless of the level of development achieved after joining. The view of some Members is that this disconnect between actual economic development and level of commitments undertaken has contributed to the inability to conclude negotiations. The issues raised by the United States have resulted in a few countries indicating that they will not seek special and differential treatment in ongoing or future negotiations. In at least one recent agreement, the Trade Facilitation Agreement, countries have assumed obligations based on their perceived need and not as a general right with the result of countries who may have self-selected developing country status taking on more obligations with lower or no delay in implementation than other developing countries.

For the incoming Director-General, finding a solution to this issue acceptable to all Members could be critical to unlocking progress on other negotiations.

The race to become the next WTO Director-General — where candidates are on important issues: reform of the Appellate Body

[Post updated on August 27 to incorporate comments by Amb. Tudor Ulianovschi of Moldova made at the WITA webinar on August 26. The post was previously updated on August 11 to incorporate comments by Minister Yoo Myung-hee of Korea at the WITA webinar that morning]

With less than a month to go before the last phase of the selection process begins for the next Director-General of the World Trade Organization, the eight candidates have engaged in large numbers of meetings (in person or virtually) with Missions in Geneva, with trade officials in capitals and have done outreach to the media and have participated in webinars put on by various organizations. These meetings and outreach are part of Phase 2 of the selection process where candidates make themselves known to the WTO Members. This phase ends on September 7.

All candidates are understandably guarded on specifics about many issues, all recognizing the WTO is a member driven organization. Similarly, with sharp divisions within the WTO membership, candidates are also careful not to express support for any of the major Members as a general rule. At the same time, all candidates have been asked about current pressing issues before the WTO and the topic of overall WTO reform.

Today’s post looks at how candidates have positioned themselves on one such issue — the impasse over the functioning of the Appellate Body.

Presentations to the General Council and Later Press Conferences

During the three days of meetings of the General Council in mid-July, each candidate was able to provide a statement of his/her vision for the WTO, answer questions posed by WTO Members and also had a thirty minute press conference. In a prior post, I had summarized the prepared statements and the press conferences. 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/. In addition to prepared statements and press conferences after meeting with the General Council, I am also including selected comments made by the candidates during webinars held by the Washington International Trade Association (WITA) and the Asia Society Policy Institute (ASPI) with six of the candidates (through August 6; a seventh is scheduled for August 11).

On the topic of the Appellate Body, the eight candidates had the following public comments:

Dr. Jesus Seade Kuri (Mexico):

From his prepared statement to the General Council, Dr. Seade made it clear that a top priority for him if selected as the next Director-General would be to get the Appellate Body refunctioning, something he would work to see happened in the first 100 days he was Director-General: “It is also necessary to give back to the dispute settlement mechanism its strength and certainty.” (Google translation from Spanish) “Within the first hundred days: I will work closely with members in seeking to * * * ii. restore the second instance of the dispute settlement system.” (Google translation from French).

In the press conference, Dr. Seade was asked how he would address the Appellate Body impasse. My notes on his answer are as follows:

On the question of the Appellate Body impasse, Dr. Seade noted that none of the Members were denouncing any provision within the Dispute Settlement Understanding. Rather concerns had been voiced on how DSU provisions had been applied. Dr. Seade believes that what is missing is the way to operationalize the role of the Dispute Settlement Body (all WTO Members sitting as the DSB) which is organizationally above the Appellate Body but for which there are currently no procedures for communications from the DSB to the Appellate Body to address issues generally (vs. in specific disputes). Such procedures were needed. He also had other ideas for how to resolve the impasse that he was interested in reviewing with Members to see if there could be movement. On the question of the interim arbitration arrangement, Dr. Seade thought a temporary arrangement made sense as it provided Members a second stage to dispute settlement as provided in the DSU. Key is finding a solution to the impasse so the two-tier dispute settlement system is restored for all.

WITA had a webinar with Dr. Seade on July 7. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-seade/. During the webinar, Dr. Seade addressed the need to get the Appellate Body functioning again. In pointing out why he would be the right person to be the next Director-General, Dr. Seade reviewed the importance of bringing to the table a knowledge of the underlying Uruguay Round negotiations and the purpose of the provisions in the agreements. He asked “Why is the U.S. frustrated with the Appellate Body?” It is because of the history of the negotiations and what was actually agreed to. Dr. Seade also viewed restoring the dispute settlement system as important to address problems other Members are having with China (in addition to negotiations on issues like industrial subsidies). He stated that the U.S. points about problems with the Appellate Body are good. The U.S. is not challenging the Dispute Settlement Understanding (“DSU”), but rather is arguing that the provisions of the DSU are not being respected by the Appellate Body. Thus, the problem is with the application of the DSU not the terms of the DSU as such. Dr. Seade believes that it is possible to find solutions that all Members can live with. He noted that the Appellate Body issue reflects different views of the DSU by the EU and the U.S.

Dr. Ngozi Okonjo-Iweala (Nigeria):

From her prepared statement, Dr. Ngozi Okonjo-Iweala had relatively short statements about the Appellate Body: “A refreshed WTO must find solutions to the stalemate over dispute settlement. It is clear that a rules-based system without a forum in which a breach of the rules can be effectively arbitrated loses credibility over time.” “I would also prioritize updating the rulebook, unlocking the dispute settlement system, working on transparency and notification, enhancing the work of regular bodies, and strengthen the Secretariat.”

While Dr. Ngozi Okonjo-Iweala was asked many questions at the press conference, none dealt with the Appellate Body.

WITA had a webinar with Dr. Ngozi Okonjo-Iweala on July 21. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-dr-ngozi-okonjo-iweala/

Dr. Ngozi Okonjo-Iweala noted that addressing the Appellate Body impasse was a priority for the next Ministerial and repeated her view that a WTO without effective dispute settlement would lose its legitimacy over time.

In response to a question on how she would restore dispute settlement, Dr. Ngozi Okonjo-Iweala noted that there is a common desire among WTO Members to have the dispute settlement system work and function. The question is how. There is a common belief that the panel process has been working well, so that places the focus on the Appellate Body. To address the various issues that have been raised by the United States, the WTO has the work product of the Walker process (note: Amb. Walker (NZ) was a facilitator to the General Council in 2019 to see if he could work with Members to find a solution to issues raised by the U.S.). Some of the proposals made by Amb. Walker can be used to move the process forward. The U.S. is seeking to go back to what the existing Dispute Settlement Understanding requires — 90 days for decisions, not creating rights or obligations (“overreach”), Appellate Body members working on appeals after their terms have expired, etc. We should take them up one at a time and find solutions that work. Can Members agree that appeals should be resolved in 90 days? Very likely. Can Members agree that the Appellate Body is limited to reviewing issues of law and not reviewing fact finding by panels? Very likely.

Mr. Abdel-Hamid Mamdouh (Egypt):

Mr. Mamdouh in his prepared statement reviewed the challenge to the WTO from the imbalance resulting from growing importance of dispute settlement while the negotiating function has been reduced in effectiveness:

“In my view, over the past quarter of a century, the WTO has suffered from a chronic imbalance across all its vital functions. That is, dispute settlement, negotiation, and the transparency/deliberative functions

“In any legal system, there needs to be a balance between the ‘legislative’ and the ‘judicial’ functions. For the WTO, these are the negotiating and the dispute settlement functions. While dispute settlement gained strength due to the inherent automaticity of procedures, the negotiating function has broken down. This created an unsustainable imbalance.” (Page 3)

During the press conference, Mr. Mamdouh was asked about how to bring the Appellate Body back. My notes on his answer are as follows:

Asked what he would do to revive the Appellate Body, Mr. Mamdouh responded that he would build off of the work already done. Most logical and productive first step is to build on that work and see what else is needed. And there is a need to look deeper into causes which he believes are rooted in differences in legal and regulatory systems. Mr. Mamdouh has not heard any suggestions that rules within the Dispute Settlement Understanding need to be changed. He concluded by saying that the size of the problem needs to be put into perspective and one needs to remember that on this issue, the WTO Members are not starting from zero.

WITA had a webinar with Mr. Mamdouh on June 23. https://www.wita.org/event-videos/conversation-candidate-hamid-mamdouh/. There were no specific questions asked on dispute settlement, but Mr. Mamdouh provided some introductory thoughts on the genesis of the crisis in the WTO. He noted that the WTO has been suffering from a chronic imbalance between the negotiating function and the dispute settlement function.  He indicated that the negotiating function has underperformed miserably.  Dispute settlement system, being automatic adoption at the end of disputes absent a negative consensus has grown in importance and hence has created imbalance.  Mr. Mamdouh views that there is a critical need to reboot the negotiating function to help restore better balance.

Amb. Tudor Ulianovschi (Moldova):

Amb. Ulianovschi, in his prepared statement, had reform of the Appellate Body as a top priority for the incoming Director-General:

“Dispute Settlement

“The reform of the dispute settlement mechanism and particularly the reform of the Appellate Body will be one of the main priorities for the next Director General. This process needs to be open, inclusive and constructive. We need to find a way for all members to accept a two-step binding independent Dispute Settlement system.

“I believe that the issues and concerns were clarified by the members already and now they have to be addressed.

“I am aware of the on-going consultations on this important matter among the Members. In my opinion, there is a general common understanding on fundamentals of the DSU, which is already a good start.

“The least a DG can do is to facilitate discussions among Members to agree together on how to move forward and eventually agree on a roadmap and mechanisms – ‘agree on how to agree’ on this sensitive but crucial issue and devise a process of further engagement to reach an acceptable solution.”

During the press conference following his appearance before the General Council, Amb. Ulianovschi was asked several questions about the Appellate Body impasse. Below are my notes on Amb. Ulianovschi’s answers.

There were several questions on the Appellate Body including how Mr. Ulianovschi would reactivate the Appellate Body and whether reform of the dispute settlement system should be broader than getting the Appellate Body back functioning. Mr. Ulianovschi indicated that on the provisions of the Dispute Settlement Understanding, all Members agree on the provisions as written. With the application of the DSU by the AB, there are concerns raised by the U.S. and others. The Director-General can provide a process to help Member’s discuss. Solutions to the concerns raised need to be found, but the parameters of the solutions need to be found by members themselves. In his view, the Director-General’s role is to help Members identify how to move forward on the Appellate Body impasse with resolution by the next Ministerial Conference. On the question of breadth of action on the dispute settlement system, Mr. Ulianovschi stated that Members are not looking for a complete redrafting of the Dispute Settlement Understanding. What is needed is a targeted approach to address issues raised by certain members on the operation of the Appellate Body.

WITA held a webinar with Amb. Tudor Ulianovschi on August 26, 2020. https://www.wita.org/event-videos/conversation-with-tudor-ulianovschi/. Amb. Ulianovschi referenced the impasse on the Appellate Body (dispute settlement system) both in his opening statement at the webinar and in answer to a number of questions. My notes on his statements are provided below.

In his opening statement, Amb. Ulianovschi noted that as a member driven organization, the WTO needs Members to negotiate to move forward.  He believes that a diplomatically active Director-General can help the WTO move forward, and he can help address lack of trust which he believes is largely psychological primarily based on unfinished business but also on the dispute settlement impasse on the operation of the Appellate Body, Special and differential treatment and other issues.

Q:  How important is it to have a reform agenda, and how can you convince the major Members to agree on a common agenda?

A:    Amb. Ulianovschi stated that reform is absolutely necessary.  In his view, cosmetic reform is not sufficient, a fact made clear by major Members.  Amb. Ulianovschi believes that political experience and dialogue by the Director-General will be key to get those who have put forward proposals to get into a discussion that is inclusive and transparent.  There are a large number of issues that are affecting the environment at the WTO.  For example, the current situation between the U.S. and China is affecting the system.  Also the impasse on dispute settlement and the concerns raised by the United States and the EU position on an interim arbitration agreementwith MPIA.  He sees a positive signal that major players are putting forward proposals; this should be starting point for discussions.  He would invite those who have put forward proposals to start discussions.  The process will require political will, and members will need to agree on how to proceed).  Amb. Ulianovschi believes he can get Members to that point.  On dispute settlement, Members have the paper from Amb. Walker which can be used to move forward.  Will have to see how deep reforms will be.

Q:  If you are the next Director-General, what would be your priorities for the 2021 Ministerial Conference and how would you define success?

A:  In Amb. Ulianovschi’s view, the next Ministerial must show some results.  He believes the top priority would be completing the ongoing negotiations on fisheries subsidies, which is important to fulfill U.N. Sustainable Development Goal 14.6.  He believes that the Members are close to getting language agreed to.  Completing the fisheries subsidies agreement Is just the first step, but it is an important one.  On the current impasse on the Appellate Body (and hence the lack of a second-tier dispute settlement stage), Amb. Ulianovschi doesn’t see a clear cut resolution of the reform needed by the next Ministerial but rather hopes the Members will have a road map of how to proceed by the Ministerial. 

Q:  On dispute settlement, it is becoming quite clear that the divergences are growing between the Trump Administration and some of our trading partners.  Many Members have shared the view that there have been problems with the Appellate Body engaging in overreach in certain situations.  The recent Op Ed in the Wall Street Journal by USTR Lighthizer suggests that Amb. Lighthizer is looking to eliminate the Appellate Body and change the system so that panels’ role is limited to helping resove specific disputes between Members, more like commercial arbitration, without broader effect of the decisions.  Is it realistic to go back to a system without an Appellate Body?

A:  Amb. Ulianovschi responded that understand the U.S. concerns at the WTO on the Appellate Body both procedural (e.g., decisions within 90 days; Appellate Body members not involved in appeals after their four year term expires) and substantive (e.g., overreaching).  He recognizes that the U.S. concerns are shared by other members of the organization.  Amb. Ulianovschi believes that this is the moment to put forward different opinions on both problems and how to proceed, but all issues have to be negotiated.  The role of the Director-General is to put Members together to permit Members to present the details of their proposals.  In Amb. Ulianovschi’s view, the Recent Op Ed by Amb. Lighthizer is another idea put forward to find a solution to the ongoing problem at the WTO.  He has talked with all of the major Members on how to deal with the broader issue of Appellate Body reform.  The Director-General is there to encourage members to put forward proposals but also to use his/her good offices to encourage discussions.  Having said that, Amb. Ulianovschi noted that some Members have undertaken different initiatives under Rule 25 of the Dispute Settlement Understanding, such as MPIA, to provide a second-tier of review.  These initiatives are interim efforts.  Such actions don’t have to distract the Members from the main task of finding a common understanding on the purpose of the dispute settlement understanding or on a sustainable solution.  So the WTO Members have to identify the consensual solution and how we can ensure a compliance mechanism so that the system works as intended and agreed to.  This should be a top priority of the next Director-General.

H.E. Yoo Myung-hee (Republic of Korea):

In her prepared statement, Minister Yoo includes one paragraph on the Appellate Body impasse:

“Another urgent, pressing issue is restoring the dispute settlement system. We need a stable and fully-functioning dispute settlement system which would effectively contribute to the prompt and satisfactory resolution of the disputes. I will act as an honest broker to facilitate constructive discussions to find an effective and permanent solution.”

During the press conference, Minister Yoo was asked two questions about dispute settlement, one dealing with resolving the impasse on the Appellate Body and the other on the Multi-Party Interim Arbitration Agreement. My notes of Minister Yoo’s responses to these questions follows:

On the issue of The Appellate Bidy impasse, Minister Yoo was asked how she would solve the impasse. She indicated that Members have very divergent views on the role of the Appellate Body. All members understand the need for a two-tier dispute settlement system. If selected as the next Director-General, Minister Yoo would accelerate members’ consultations to resolve the issue.

On the interim arbitration mechanism adopted by the EU, China and about 20 other Members, Korea is not a party. Does Minister Yoo have any concerns that the interim arrangement (MPIA) might become permanent? Minister Yoo responded that the MPIA was being used by some Members to overcome the current vacuum with the Appellate Body being shut down. The key for the WTO is to focus on finding a permanent solution, and she would do that if selected as the next Director-General.

WITA had a webinar with H.E. Yoo scheduled on August 11,https://www.wita.org/event-videos/candidate-h-e-yoo-myung-hee/. My summary of Minister Yoo’s comments on dispute settlement follow.

from her opening comments: Restoring dispute settlement system is an urgent need.

Questions asked on Dispute settlement – do you share assessment of US and others that there have been problems of overreach by AB?  Secondly, there are procedural flaws that need to be addressed?  What can a DG do about it?

Minister Yoo’s response: Clearing impasse on the Appellate Body is a top priority.  The WTO needs a prompt resolution to restore the two-tier dispute settlement system.  There are divergent views of the proper role of the Appellate Body.  Some countries, like the United States, have said the Appellate Body has gone too far — overreaching by creating or diminishing rights and obligations of Members.  However, some members say that the Appellate Body has been working to clarify of the provisions of Agreements to provide stability to the multilateral trading system.  So there are competing views of what the role of the Appellate Body is supposed to be.  The Walker process has put forward certain ideas.  Still the gap is very wide between the two views.  If we look at three pillars of WTO (negotiations, notifications, dispute settlement), over the first 25 years of the WTO, there have been no major agreements from negotiations other than Trade Facilitiation Agreement. This failure of the negotiating function to work has put much strain on the dispute settlement system.  Members are resorting to dispute settlement to address issues not handled by negotiations.  So, lacking periodic updates through negotiations, it is easy for the Appellate Body to engage in creating obligations to fill gaps.  So Minister Yoo agrees to some extent with US (and others) about of overreach.  The question for the WTO and the incoming Director-General is how to move forward to find solutions acceptable to all.  There have been very divergent views within the WTO for a long time.  If Minister Yoo becomes the Director-General, she would try to increase communication with missions in Geneva and ministers in capital.  Need some political involvement to resolve the impasse.  Minister Yoo would also look at some ideas floated by academia as well to see if those views might provide different approaches that would be of interest of Members.  Several examples would include strengthening qualifications of AB members and what role of Appellate Body Secretariat should be, etc.  I would encourage Members to engage in open, transparent and inclusive discussions on these issues. 

Minister Yoo wanted to highlight importance of revitalizing negotiating function. If there is a more active negotiating functions, Members would be able to address needs to update and clarify agreements which should be done by Members and not the dispute settlment system.

H.E. Amina C. Mohamed (Kenya):

Minister Mohamed in her prepared statement reviewed the need for a functioning dispute settlement system:

“The WTO’s dispute settlement function is key to the credibility and effectiveness of the rules. We need to find a way through its problems to make it once again an instrument that all Members can use with confidence.”

During the press conference, Minister Mohamed was asked about the Appellate Body impasse. My notes on her response are as follows:

On the issue of how to remove the impasse on the Appellate Body, Minister Mohamed indicated that Members need to consult and negotiate. The WTO needs members to find solutions to permit the second-tier of dispute settlement to be restored. A Director-General DG can offer technical assistance and process to help Members find the solutions.

WITA had a webinar with H.E. Mohamed on August 6. https://www.wita.org/event-videos/ambassador-amina-mohamed/. Minister Mohamed had a number of comments about the Appellate Body impasse.

Restoring the Appellate Body is an important priority for the incoming Director-General.

The WTO dispute settlement process is key to the credibility and effectiveness of the WTO.  Members have been working for some time on finding solutions.  Minister Mohamed takes seriously US concerns about the operation of the Appellate Body. If she becomes Director-General, she will use her skills at building consensus to help Members find solutions.  Finding solutions is important so that the WTO Members can get back to a dispute settlement system that all can use.

Minister Mohamed was Chair of the Dispute Settlement Body in 2004.  She made sure that there was continuous flow of information from the Dispute Settlement Body to the Appellate Body.  She had lunch with the Appellate Body quarterly.  Issues she had been raising back in 2004 as of concern to Members remain unresolved today. 

WTO Members designed a system that was complete from negotiations to dispute settlement.  In Minister Mohamed’s view the system was designed really well.  Now there is a gap in the system with the inoperability of the Appellate Body.  The WTO needs to fill the gap quickly. Absent a resolution, some Members will comie up with an interim system (MPIA).  Thus, Minister Mohamed believes the WTO needs to deal with the issues raised by the United States urgently.  She agrees with some of the issues raised by the U.S.  Many of those same concerns were around in 2004 when she chaired the Dispute Settlement Body.  In her quarterly meetings with the Appellate Body, Minister Mohamed told the Appellate Body members that they had a specific mandate laid out by Members in the Dispute Settlement Understanding.  It was not the role of the Appellate Body to add to or diminish the mandate.  Minister Mohamed believes that Members need to see where the Appellate Body veered off of the mandate.  She believes that the new Director-General should look at te Walker process (note: Amb. Walker (NZ), as facilitator to the General Council in 2019 had met with Members to see if solutions to the U.S. concerns could be found) and see how to move forward.  But it is critical for the WTO to resolve the issues raised by the U.S. to permit the Appellate Body to resume.

H.E. Mohammad Mazaid Al-Tuwaijri (Saudi Arabia):

In his prepared statement, Minister Al-Tuwaijri referenced the challenges in the dispute settlement system but did not identify any specific approach to addressing Appellate Body reform if selected as the next Director-General other than his overall approach reviewed in the statement on all issues. Several quotes from his prepared statement follow:

“As you all know, the WTO has three main functions for monitoring trade issues, settling disputes, and negotiations, which include improvements to existing rules, new rules and market access.”

“We also need to recognize the consequences for the WTO of over-performance in litigation, while neglecting the negotiating and monitoring functions. A system out of balance cannot move forward.”

During the press conference, Minister Al-Tuwaijri was asked what his plan was to address U.S. concerns with the Appellate Body. My notes on his response are provided below.

On the Appellate Body, what is your plan to addressing U.S. concerns and do you plan to get it back functioning? Minister Al-Tuwaijri’s approach is the same as reviewed elsewhere. Determine what is the root cause of AB not functioning. He believes it is because negotiations are not functioning well. Therefore, he wants to get the negotiating process to improve and to gain data to improve the system. For example, he believes it is important to be able to quantify the effect of delay of even one month in resolution of disputes.

WITA did a webinar with Minister Al-Tuwaijri on August 5. https://www.wita.org/event-videos/director-general-candidate-he-mohammed-al-tuwaijri/.

Minister Al-Tuwaijri provided some comments in his opening statement and responded to a question on the dispute settlement system.

The structure of the organization is not functioning – negotiations, dispute settlement, notifications.  Key is what type of change is needed to help organization be fit for the 21st century.

Minister Al-Tuwaijri believes the correct analysis for any issue is: what is the problem, what needs to be done, consult with the Members for possible solutions.

Does Dispute Settlement reform need to be taken up as a condition precedent to broader WTO reform?

In Minister Al-Tuwaijri’s view, the role the Director-General can play is resolving the impasse on the Appellate Body is somewhat limited. Can the Director-General help with a procedural question?  Yes. Is there an interpretation issue that the Director-General may be able to assist in resolving?  Yes.  In 2019, the General Council had Amb. Walker, acting as a facilitator, work with Members to see if solutions could be found to the issues raised by the U.S. So that work product is available.  The EU has also pursued a multi-party interim arbitration agreement to help at least some Members handle a second stage dispute process while the Appellate Body is not functioning.  Despite these efforts, there is the question why resolution of the impasse is not happening.  Minister Al-Tuwaijri believes that the answer goes back to his core point, the WTO must fix its negotiating function.  If Members want to change the rules on the operation of the Appellate Body, that is for the Members to decide.  As Director-General, Minister Al-Tuwaijri would encourage Members to think differently about the impasse and the options for finding solutions.

The Rt Hon Dr. Liam Fox MP (United Kingdom):

Dr. Fox’s prepared statement talked about many topics, including WTO reform, but did not speak specifically about the impasse on the Appellate Body or needed reforms to permit reactivating the second stage of dispute settlement.

During the press conference, Dr. Fox was asked about how he would address U.S. concerns with the WTO. My notes on his response are provided below:

A question was asked of how Dr. Fox would address the broad concerns of U.S. with the WTO. Dr. Fox noted that the U.S. has some very specific concerns with the WTO, particularly with regards to the Appellate Body. Dr. Fox stated that the WTO has the Appellate Body because countries felt panels in GATT disputes went too wide. The Appellate Body was set up with a limited mandate. He is aware that there are different views of the role of Appellate Body and whether it has engaged in mission creep or handled incomplete texts by filling them out. If WTO Members are able to get back to a more narrow definition of the function of the Appellate Body, there may be some concept of precedent being set. Dr. Fox asks the question, does everyone want the AB to be functioning properly or not. If not, the multilateral trading system is under threat as obligations can’t be enforced. Believe there is room for compromise.

WITA had a webinar with Dr. Fox on July 30, 2020. https://www.wita.org/event-videos/conversation-with-dr-liam-fox/. His comments on dispute settlement from the webinar are summarized below.

A rules-based system must have a functioning dispute settlement system, a top priority for the incoming Director-General.  To have a rules-based system without a functioning dispute settlement system is nonsensical.  For many countries, the dispute settlement system is the value added that membership in the WTO brings.

All members need to focus on adhering to the rules that they have already agreed to.  The WTO needs an effective dispute settlement system for that.  The WTO needs all Members to adhere to all rules they have signed up for and not decide that some rules don’t apply to them.

Questions asked of Dr. Fox: There have been some problems with the Appellate Body overreaching.  Do you agree we need a more realistic approach by Appellate Body where there is ambiguous language in an agreement?  How would you resolve the impasse on the Appellate Body?

Resolution of the Appellate Body impasse is the most urgent task facing the incoming Director-General.  Dispute Settlement is the value-added to many Members of joining the WTO.  Many members view the Appellate Body as having gone beyond the Dispute Settlement Understanding.  Moreover, the excessive length of time to render an appeal decision undermines the system by itself — Members violating their obligations can get a three-year free ride.  The WTO needs to tighten up the parameters and limit the areas that the Appellate Body examines.  While the Appellate Body can’t create binding precedent, the need for consistency supports the ability to review how issues have been handled in other cases.  Thus, looking at prior disputes makes sense, but the Appellate Body can’t create law through the process.

On any negotiation there are technical, political and timing issues. WTO Members are not going to see any concessions from the U.S. before the presidential election.  It may be possible for the U.S. to make compromises, but the timing of major political events affects the ability to do so.    

Conclusion

One of the major current challenges for the WTO and its Members is finding solutions to the impasse on the Appellate Body. The eight candidates for the Director-General post have all expressed views on the importance of resolving the issue and where in the hierarchy of issues to be addressed by an incoming Director-General the impasse is found. Presumably, most Members will be carefully considering each candidate’s views and suggested approach on all key issues, including resolving the Appellate Body impasse.

The fundamental disconnect between the EU (which has been reluctant to recognize any deviation from the Dispute Settlement Understanding by the Appellate Body) and the United States (which has focused on the limited role of the Appellate Body as laid out in the Dispute Settlement Understanding) remains. The role of honest broker and consensus builder that the incoming Director-General will assume later this year will be tested by the gulf in positions of two of the WTO’s major Members.

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.

The eight candidates for WTO Director-General meet the General Council – recap of prepared statements and press conferences

On Friday, July 17th, the General Council of the World Trade Organization concluded three days of meetings with the eight candidates for the post of Director-General. With the current Director-General, Roberto Azevedo, stepping down on August 31st, the WTO is engaged in a somewhat truncated process for selecting a new Director-General, though it is likely that the selection will not conclude until early November of this year.

Each candidate had ninety minutes with the General Council and then were given a press conference for thirty minutes. At the press conference, the candidate would provide a short opening statement and then answer questions from journalists. The order of candidates meeting with the General Council followed the order of receipt of the candidate’s nomination from their government. Thus, Dr. Jesus Seade Kuri (Mexico), Dr. Ngozi Okonjo-Iweala (Nigeria) and Mr. Abdel-Hamid Mamdouh (Egypt), the first three nominations received by the WTO, met with the General Council on July 15. On July 16, the General Council met with Mr. Tudor Ulianovschi (Rep. of Moldova), H.E. Yoo Myung-hee (Rep. of Korea) and Amb. Amina C. Mohamed (Rep. of Kenya). On July 17, the General Council held meetings with H.E. Mohammad Al-Tuwaijri (Saudi Arabia) and Dr. Liam Fox (United Kingdom). The week also provided candidates with the opportunity to meet with individual WTO Members or groups of WTO Members based on availability, etc.

While the meetings with the General Council are simply an early part of the two month outreach by candidates to Members to become better known, the meetings are nonetheless important as they provide WTO Members the opportunity to hear from and to ask questions of each candidate under comparable circumstances. While the minutes of the General Council meetings will be generated by the WTO Secretariat in the coming months and made public some time after that, the General Council meetings are not open to the public. Hence the material available to evaluate the three days of meetings is limited to prepared statements made to the General Council and the press conferences for each candidate held after the candidate had met with the General Council. Those materials can be accessed from the WTO website. See Candidates for DG selection process 2020, https://www.wto.org/english/thewto_e/dg_e/dgsel20_e/dgsel20_e.htm (shows biography, statement to General Council, photo gallery and video press conference for each candidate); WTO members meet the candidates for Director-General, https://www.wto.org/english/news_e/news20_e/dgsel_17jul20_e.htm.

What follows are first my summary impressions from the public information of the candidates. Those are followed by my summaries of each candidate’s presentation and answers to questions.

Summary Impressions of the Candidates

In the challenging environment that confronts the world at the present time, one has to marvel that eight individuals were willing to be put forward by their governments to pursue heading the World Trade Organization. Despite some successes in its first twenty-five years, the WTO is viewed as being severely challenged. Its negotiating function, historically the most important function of the GATT and presumed to be critical in the WTO, has been at least seriously challenged, unable to deliver on many of the subjects that have been considered. This has led the WTO rules to be both outdated and not dealing with current issues of great importance. The dispute settlement system has seen the shutdown of the second-tier review (the Appellate Body) as a variety of longstanding concerns of the United States have not been addressed leading the U.S. to block appointing new members of the Appellate Body. Standing Committees that monitor notifications and discuss topics within the Committee’s jurisdiction have been less robust than historically was the case. Notifications are problematic for many Members in terms of completeness and timeliness of notifications. The lack of successful negotiations has raised concerns on obligations of members as economic development changes the relative ability of Members to contribute. Also the growth of Members operating on economic systems different than market economy models has created challenges as to practices that may not be addressed by WTO rules. And the COVID-19 pandemic has resulted in many export restraints to address concerns about adequacy of medical supplies or agricultural goods.

So it is encouraging that there are eight individuals willing to be considered to head the WTO going forward in such circumstances.

Each candidate has different backgrounds and experiences which may appeal to some WTO Members but not others. For example, Minister Mohammmad Al-Tuwaijri has an extensive business background as well as four years in a Minister position for Saudi Arabia and has focused on his management experience and his desire to develop goals and performance metrics to measure progress if selected the next Director-General.

That is a very different profile than that of Dr. Ngozi Okonjo-Iweala of Nigeria. While Dr. Okonjo-Iweala has some private sector experience, she is a development economist with deep experience at the World Bank and as Finance Minister for Nigeria who focuses on her political experience, ability to work with various multilateral and UN organizations to achieve coordinated actions for developing and least-developed countries and being able to bring “fresh eyes” to the problems of the WTO. She has a reputation as a reformer.

A number of the candidates have depth of GATT/WTO experience and/or trade ministry work. Dr. Jesus Seade Kuri was Mexico’s Ambassador to the GATT, went inside the GATT Secretariat to help conclude the Uruguay Round and was one of the first Deputy Directors-General of the WTO and has recent experiences with the Mexican government concluding the USMCA talks with the United States and Canada. His presentation had a very aggressive and active agenda presented with approaches on the Appellate Body and other issues that indicate he would be active as a Director-General in helping Members find solutions through his understanding of the Agreements, their history, and an ability to devise possible alternative approaches to resolve impasses. He is obviously fluent in all three official languages which is an aid in dealing with senior Mission officials and officials in capitals for many countries.

Mr. Abdel-Hamid Mamdouh similarly has very long experience at the GATT and WTO, first as a negotiator for Egypt and then as part of the WTO Secretariat where he served as Director of Services and Investment. He has significant technical expertise and views himself as having a history of being a trusted advisor to all WTO Members which is different from others who have more government specific experience. While he hasn’t filled senior political positions in the Egyptian government, he notes that political leadership, which is important for the Director-General position, is not the same as ministerial leadership experience.

Minister Amina C. Mohamed of Kenya touted her extensive experience both at the WTO where she was Ambassador for Kenya to the WTO including chairing the three major bodies (General Council, Dispute Settlement Body and Trade Policy Review Body) and her role as Foreign Affairs and International Trade Minister which included her chairing the 10th WTO Ministerial in Nairobi and achieving a series of breakthroughs on negotiations including an amendment to the TRIPS Agreement, expansion of the Information Technology Agreement and delivering an agreement on agriculture export subsidies to highlight her ability to build consensus should she be selected as the next Director-General.

Mr. Tudor Ulianovschi from Moldova similarly had served both as his country’s Ambassador to the WTO and Minister of Foreign Affairs. He presented himself as having political leadership experience and an understanding of current WTO challenges and having interfaced with governments around the world. As Moldova is neutral on many issues before major trading partners, Mr. Ulianovschi views he can be the honest broker and viewed as such by Members. He can handle the political and technical elements of the job and references his sixteen years of experience with Moldova’s government.

H.E. Yoo Myung-hee of Korea has spent twenty-five years in international trade for her government and is the first female Minister for Trade. While she has not served in Geneva in her country’s mission, she has engaged extensively in trade negotiations with countries at all levels of economic development and knows what is needed to conclude negotiations. The fact that she has experienced Korea’s change in economic status over the years helps her understand issues and needs of WTO Members at different economic levels of development.

Finally, Dr. Liam Fox of the United Kingdom believes the next Director-General needs to have political skills, not be a technocrat. He has been in the UK Parliament for several decades and has served in two different administrations (Secretary of State for Defence; Secretary of State for Trade). While he hasn’t served at the WTO, he is a strong supporter of free trade. He believes the WTO needs to recommit to the fundamental principles of most favoured nation, national treatment and transparency of commitment as part of the next Ministerial Conference in 2021. He also cautions that now is not the time for an incoming Director-General to overcommit on anticipated results.

There are factors that may influence some Members — geographical diversity, gender of candidate, whether the candidate is from a developed or developing country. In my last post, I provided a chart that graphed these and some other factors. See WTO Director-General selection process – this week candidates meet WTO Members in a General Council Meeting, https://currentthoughtsontrade.com/2020/07/14/wto-director-general-selection-process-the-week-candidates-meet-wto-members-in-a-general-council-meeting/.

On geographical diversity, there has never been a Director-General from an African country (three candidates – Nigeria, Egypt and Kenya), from an Arab country (Saudi Arabia, Egypt), from North America (Mexico).

On gender, there has never been a Director-General who was female. There are three candidates who are female in this selection process (Nigeria, Korea, Kenya).

On developed vs. developing country, there are two countries that are “developed” at the WTO (United Kingdom, Moldova). In my prior chart, Moldova had been listed as developing, flowing from the fact that in their trade policy review, it was indicated that Moldova is eligible for generalized system of preference benefits from a number of countries (GSP is intended to benefit developing countries). See Trade Policy Review, Report by the Secretariat, Republic of Moldova, WT/TPR/S/323 (14 September 2015) at 31, para. 3.24, https://www.wto.org/english/tratop_e/tpr_e/s323_e.pdf. Saudi Arabia was included in the chart as a developing country, despite being a high income country in the World Bank’s terminology, because the Saudi Arabia trade policy review indicates Saudi Arabia is a member of the Informal Group of Developing Countries. See Trade Policy Review, Report by the Secretariat, The Kingdom of Saudi Arabia, WT/TPR/S/333 (29 Feb. 2016) at 22, para. 2.20, https://www.wto.org/english/tratop_e/tpr_e/s333_e.pdf.

If WTO Members are looking for positions of candidates on particular issues, candidates were typically careful not to go in one direction or another where there are known differences in the position of Members. For example, on the question of the Appellate Body reform, candidates recognized the need to address both the concerns of the United States and the concerns of other Members to have the WTO Appellate Body reinstated in their prepared statements and were certainly asked questions both by the General Council and during the press conferences. Some, like Dr. Jesus Seade, had some broader ideas on how to resolve the Appellate Body issue without indicating what the resolution would look like. Others like Mr. Abdel-Hamid Mamdouh believed it would be possible to move forward from the work already done. Some like Dr. Liam Fox suggested that without resolution there was no dispute settlement, which is a sentiment that at least the United States would disagree with. Several were asked about the interim arrangement entered into by the EU, China, Canada and some 19 others. All who addressed the issue accepted the arrangement as interim only and not intended to replace the Appellate Body and focused on obtaining a solution to the impasse on the Appellate Body.

Similarly, many candidates were asked about the question of classification of countries as developing for special and differential treatment. Minister Yoo of Korea noted that Korea had decided that its economic development permitted it to accept higher levels of commitments and thought that was useful for countries who felt they could do so. But she recognized that it was a sensitive issue on which there was no consensus. Dr. Seade felt a more productive approach to the issue would be to look at whether any given country needed special and differential treatment on a product or sector basis in new agreements versus tackling what he viewed was a theological issue – country classification. Others deferred to what Members thought or wanted to pursue.

While all candidates talked extensively about reform, none can fairly be said to have embraced the U.S. call for broad-ranging reform of the existing organization and agreements. Nor did any candidate publicly indicate that the WTO did not address many of the practices of China which operates under a different economic system than most of WTO members, another issue viewed as important by USTR Lighthizer for candidates to recognize.

To sum up, the candidates are in the early days of their outreach to get better known by Members. The appearances before the General Council and the press conferences afterward provide a better understanding of their visions for the WTO and what the candidates believe they bring to the table. The next 51 days til September 8 will undoubtedly be an exhausting time for each candidate as outreach continues around the world. We wish all of the candidates success in their outreach efforts these next fifty-one days.

The immediate task for the General Council will be selecting an acting Director-General from the four existing Deputy Directors-General. It is not clear if this will be accomplished at this week’s General Council meeting on July 22 and 23, or if this week’s meeting will simply represent the start of the process.

What follows are summaries of prepared statements and of the press conferences held July 15-17, 2020

Dr. Jesus Seade Kuri (Mexico)

Dr. Seade was the first candidate nominated and so was the first before the General Council and the first to have a press conference after the meeting with the General Council. His statement to the General Council was the only one presented in all three of the official languages of the WTO with the first part in Spanish, the middle section in French and the last part in English.

Dr. Seade reviews his unique history with the GATT and WTO, having been Mexico’s Ambassador to the GATT during the Uruguay Round, part of the GATT Secretariat during the period that Peter Sutherland was Director-General working to conclude the Uruguay Round, and his role as one of the first Deputy Directors-General of the WTO when the WTO launched in 1995. The GATT and WTO have accomplished a lot in terms of expanding global trade and economic development over roughly three quarters of a century. The WTO provided needed stability during the 2008 financial crisis and is continuing to do so now during the COVID-19 pandemic. And the WTO has had some recent successes in terms of completing the trade facilitation agreement and agreeing to the elimination of agricultural export subsidies by some countries. Nonetheless, the WTO’s performance has not lived up to the initial high expectations of Members.

The WTO has the twin problems of limited results from negotiations and the paralysis of the Appellate Body. These problems are being exacerbated by the enormous negative effects of COVID-19 on trade. Key to restoring the role of the organization is to restore the negotiating function, restore a two stage dispute settlement system and start discussions to make the WTO more efficient, transparent and inclusive. On negotiations, the WTO needs to address issues currently being addressed, issues relevant to 21st century trade, and traditional issues where progress has not been made.

Dr. Seade presented a three-stage program for action:

  1. In the first 100 days, work with Members to (a) complete a fisheries subsidies agreement, (b) restore the Appellate Body, (c) work to reverse negative views of WTO and its ability to fulfill its mandate and (d) work with Members on the COVID-19 crisis both to increase transparency and address trade restrictions introduced.
  2. By the Ministerial Conference to be held in 2021, help Members achieve results (a) in joint initiatives and (b) on issues that will make WTO more transparent and effective, and establish a work program on issues where negotiations have been suspended.
  3. In the medium and longer term, work with Members to identify weaknesses in the organization and pursue modifications to strengthen the organization, take up traditional priority issues on the sustainable development agenda. Also ensure a high quality and effective Secretariat. Finally, address issues important to society, including those related to the environment, gender, MSMEs, etc.

Dr. Seade indicated that he possesses not only vision, leadership and political capacity but also an understanding of the trade agreements and the sensitivities behind the agreements. These are qualities he believes the next Director-General will need.

During the press conference, Dr. Seade provided a short opening statement which basically reviewed his special role in the creation of the WTO and his other positions. He noted that trade is very transformative for countries to help development and lift people out of poverty. He then reviewed the serious crisis at the WTO and why he has been put forward as a candidate.

Dr. Seade was asked many questions some of which sought information that is reflected in his prepared statement. Dr. Seade was asked why Members should choose him, how he would help Members address the Appellate Body impasse, what did he think of the interim arbitration arrangement entered into by a number of Members while the Appellate Body is not functioning, what is the most pressing challenge at the WTO, which Members were supporting his candidacy, what will the effect of the U.S. election be on the Director-General selection process and what Dr. Seade thinks of the issue of classification of Members as developed or developing. He was also asked questions about regional diversity and gender for the next Director-General noting Mexico is part of Latin America, the area where the current Director-General is also from, versus candidates from Africa or the Middle East which have never had a Director-General. Similarly, the GATT and WTO have had Directors-General all of whom have been male. The current field of eight candidates includes three women; isn’t it time for a woman to be Director-General?

Dr. Seade reviewed the capabilities he believes the next Director-General needs. While he wouldn’t make a comparison to other candidates, he felt that he had the capabilities in fact needed. His job as Director-General would be to come up with alternative ideas to help Members find solutions. He has that ability.

On the question of the Appellate Body impasse, Dr. Seade noted that none of the Members were denouncing any provision within the Dispute Settlement Understanding. Rather concerns had been voiced on how DSU provisions had been applied. Dr. Seade believes that what is missing is the way to operationalize the role of the Dispute Settlement Body (all WTO Members sitting as the DSB) which is organizationally above the Appellate Body but for which there are currently no procedures for communications from the DSB to the Appellate Body to address issues generally (vs. in specific disputes). Such procedures were needed. He also had other ideas for how to resolve the impasse that he was interested in reviewing with Members to see if there could be movement. On the question of the interim arbitration arrangement, Dr. Seade thought a temporary arrangement made sense as it provided Members a second stage to dispute settlement as provided in the DSU. Key is finding a solution to the impasse so the two-tier dispute settlement system is restored for all.

On the question of the major problem with the WTO, Dr. Seade identified two problems — the inability to negotiate and dispute settlement, although dispute settlement largely flows from the inability to negotiate. Because the nature of the world has changed so profoundly over the years, there are new issues and new actors. Where Members can’t negotiate new issues, there is enormous pressure put on the dispute settlement system to find solutions. The inability to negotiate is spurred on by an enormous lack of trust between Members. The issue of lack of trust needs to be addressed.

On the issue of support, he noted that obviously many Members want to meet all candidates as they consider who they will support. He has done extensive outreach already to many Members and believes those outreach efforts have generally been well received. While he has some Members who have indicated they will support his candidacy (about a half dozen), only two are public — Argentina and Bolivia. He did not view it as appropriate to mention other Members where support was not public. He was hopeful of obtaining support from all parts of the world including in North America.

On the question of the effect of the U.S. Presidential election in November on the Director-General selection process, Dr. Seade said that both parties in the United States have been critical of the WTO in various respects. So regardless of the election outcome, the WTO will need to address U.S. concerns. The key is to make the Director-General selection as soon as possible. This is because of the need to get working ahead of the Ministerial Conference which will be next year, but there is pent-up demand on issues since the last Ministerial was four years ago. While the schedule for the selection of the next Director-General could run to early November, he hopes it will be handled more quickly by Members.

On the question of developed vs. developing country, Dr. Seade looks at it from the perspective of special and differential treatment. On the one hand the world keeps changing, so it’s reasonable to ask what a Member can do. The idea of changing classification of countries from developing to developed will take a very long time and so is probably the wrong approach. The question should be what contribution can a particular member make, which may be different in different industries.

On the questions of geographical diversity and gender, Dr. Seade reviewed that Members will be making the selection. He believes the correct course is for Members to pick the individual best qualified for this particular time. He believes that he is that person.

Dr. Ngozi Okonjo Iweala (Nigeria)

Dr. Ngozi Okonjo-Iweala in her prepared statement includes sincere condolences for all who have lost a family member from COVID-19 in French. Later in her statement, Dr. Okonjo-Iweala includes a phrase from her native igbo language, and she gives thank yous in six languages. The main part of her statement is in English. Her statement reviews her record at the World Bank, her time as Finance Minister in Nigeria and her role as Chair of Gavi to stress her ability to achieve reform and to work with other multilateral organizations and her focus on the needs of development and the role trade plays in development.

Looking at the challenges confronting the WTO, Dr. Okonjo-Iweala flags a negotiating function that is underperforming “at a time when its rule book would greatly benefit from an update to 21st century issues such as e-commerce and the digital economy, the green and circular economies. Issues of women and trade and Micro Small and Medium Enterprises (MSMEs) are import to ensure greater inclusion.” (pages 2-3). Other challenges include improving transparency and notifications, improving the functioning of the regular WTO bodies and strengthening the Secretariat. There are important differences on issues such as SOEs and agricultural subsidies amongst Members and increased trade tensions.

These problems are exacerbated by the COVID-19 crisis which have resulted in export restraints by some and stimulus packages which may “undermine WTO commitments by distorting production and trade.” (page 4).

Dr. Okonjo-Iweala reviewed why she believes she is the person to be the next Director-General:

  1. She is a strong believer in the role of trade and of the multilateral trading system to bring shared prosperity. She brings a “fresh pair of eyes to the WTO’s challenges.”
  2. Need to build trust. Not a question of technical expertise but rather political will/solutions.
  3. She has a proven track record in carrying out successful reforms which is what will be needed at the WTO going forward.

After reviewing the range of pending issues before the WTO that need to be completed or addressed, Dr. Okonjo-Iweala reviews the need to work closely with other multilateral organizations and the UN and her ability to improve cooperation with these other entities.

“The rules-based MTS is a public good that underpins peace, security, stability and a chance for prosperity in the world. Every effort should therefore be made to safeguard, improve and renew it to enable it effectively address the challenges of the 21st century.” (Page 11)

During the press conference, Dr. Okonjo-Iweala provided her short statement and then received a large number of questions. Her short statement was that trade is important for the 21st century, for prosperity, resilience and growth. The WTO is at the center of global trade.

She was asked about whether three candidates from Africa hurt her chances to be selected, what she views as the role of the Director-General, how she views the question of fair trade particularly between north and south, what she believes is achievable in terms of deliverables by the next WTO Ministerial Conference in 2021, what she would say to the U.S. President on why the U.S. should stay in the WTO, what the WTO can do to ensure that small and micro-businesses survive the economic fallout from the COVID-19 pandemic, what her selection as the next Director-General would mean for women in Nigeria, if selected the next Director-General what would she do to ensure availability of medical supplies to all countries, and whether her perceived lack of a trade background was a handicap in the competition to become the next Director-General.

Her response on the question about multiple candidates from Africa was that Dr. Okonjo-Iweala viewed that it was a positive that there were three qualified candidates from Africa and not a problem. It is up to the Members to select from all of the candidates, a process which should focus on who is the best candidate. If from Africa, great.

On the question of the role of the Director-General, Dr. Okonjo-Iweala views the role to be working with Members to help them reach consensus. It is important that starting with the next Ministerial, the WTO show movement to achieve results.

On the question of fair trade, particularly between north and south, Dr. Okonjo-Iweala noted that the WTO’s role is to support all members to take advantage of fair and open trade. Where the South is getting fewer benefits from global trade, Dr. Okonjo-Iweala would use the instruments available to the WTO Director-General (e.g., Aid for Trade, working with other multilateral organizations) to get resources to South Members to improve their position in international trade.

On the question of what is achievable by the next Ministerial in 2021 and whether it is best to go after issues one at a time or in a larger grouping, Dr. Okonjo-Iweala indicated that she hoped the WTO Membership would make a decision soon on who should be Director-General so whoever is selected has more time before the next Ministerial. But even if a decision is not made until November 2020, there are some areas that could be ready by the next Ministerial. For example, a fisheries subsidies agreement should be achievable. There was a lot of discussion in the General Council on trust and building trust to move negotiations along. Trust is obviously an important issue. So the WTO may need to sequence issues to build trust by achieving a win or two. Once there are some successes, it should be possible to handle more issues in parallel.

On the question of why the U.S. should stay in the WTO, Dr. Okonjo-Iweala would communicate that the WTO delivers for all Members. The GATT and WTO have provided shared prosperity which has lifted millions out of poverty. Where the trading system is not working, Members need to fix the problems. Peace, security and stability are needed now just as they have been over the last decades. These are what the WTO rules-based system provides. If we didn’t have the WTO, we would need to invent it.

On the question of MSMEs, Dr. Okonjo-Iweala noted that they are very important globally but are being harmed by COVID-19 fallout. How to ensure MSMEs survive and get such entities better included in the global trading system is a matter of great interest to Dr. Okonjo-Iweala. There is a great need to facilitate provision of additional resources to help these entities. Dr. Okonjo-Iweala would work with other multilateral organizations to help facilitate assistance.

On the question of what will her getting selected Director-General of the WTO would mean for women in Nigeria, Dr. Okonjo-Iweala noted that women not just in Nigeria but around the world are ready for greater roles. But Dr. Okonjo-Iweala reiterated that selection of the WTO Director-General should be based on merit–if a woman, great; if from Africa, great.

On the question of what she would do as Director-General to ensure smooth trade of medical goods including therapeutics and vaccines, Dr. Okonjo-Iweala indicated that she would use the knowledge she has from the chair of GAVI and working with other groups and organizations to ensure that the WTO did its part to ensure equitable and afforadable access to any vaccines developed to address COVID-19. There should be no barriers to access to the medicines/vaccines while honoring intellectual property rights. It is critical that everyone have access to lifesaving medicines at the same time and at affordable prices.

On the question of whether the consensus rule at the WTO should be gotten rid of to overcome gridlock, Dr. Okonjo-Iweala responded that part of the strength of WTO is that agreements are reached by consensus. Where all sovereign states agree to a text, they are more likely to implement the provisions. The real question is how to make consensus better. In Dr. Okonjo-Iweala’s view, the underlying problem with the current consensus system is the lack of trust among the Members. Thus, there is an urgent need to rebuild trust. To rebuild trust, the WTO needs confidence building measures, i.e., obtaining wins in achieving new agreements. That will show that consensus can and does work.

The question on what Dr. Okonjo-Iweala would do as Director-General to see that an agreement on e-commerce was pursued was answered by noting that there was extensive work being done plurilaterally by many Members as one of a number of joint statement initiatives. Dr. Okonjo-Iweala agrees that an agreement on e-commerce is very important, but she notes that there is a digital divide where many poorer countries don’t have the infrastructure to take advantage of e-commerce. The WTO, working with other multilateral organizations, needs to see that resources are put together to help countries address the digital divide. Once the digital divide is addressed, all Members should want to and be able to participate in the e-commerce negotiations, so that the agreement becomes a multilateral one.

On the question of whether her career in finance is a handicap for a trade position, Dr. Okonjo-Iweala disagrees with the premise as her career has always involved trade as a development economist and also as finance minister where Customs was part of her responsibilities.

Abdel-Hamid Mamdouh (Egypt)

Mr. Abdel-Hamid Mamdouh is the one candidate with extensive WTO Secretariat experience (27 years), junior negotiating experience for Egypt during the Uruguay Round, but no Minister or Ambassador experience on his biography. His prepared statement concurs that the WTO needs reform, an updated rulebook for the 21st century and a Director-General with political leadership though he indicates political leadership doesn’t require or mean ministerial leadership. That said, Mr. Mamdouh indicates that a core problem is that the consensus or common purpose of the WTO has faded for many and to get that common purpose back, the WTO needs a different type of leadership, one that he is positioned to provide.

“In my view, over the past quarter of a century, the WTO has suffered from a chronic imbalance across all its vital functions. That is, dispute settlement, negotiation, and the transparency/deliberative functions

“In any legal system, there needs to be a balance between the ‘legislative’ and the ‘judicial’ functions. For the WTO, these are the negotiating and the dispute settlement functions. While dispute settlement gained strength due to the inherent automaticity of procedures, the negotiating function has broken down. This created an unsustainable imbalance.” (Page 3)

As international trade has evolved, the rules of trade have not done so which has added to imbalance through use of dispute settlement to address matters where no rules exist. Similarly, where transparency and notifications are not robust, Members don’t have the necessary information to confirm compliance, and that can lead to additional disputes.

“A deeper look into the root causes of this imbalance would reveal that there are three cross-cutting phenomena that hinder the functioning of the WTO: leadership deficit, increasing complexity of trade policy and negotiating issues, and a fading vision of the common purpose behind the system. Over time, these phenomena lead to the unsustainable imbalance across the vital functions.” (Page 4)

Reform of the WTO can only occur through negotiations. For the 12th Ministerial Conference to be held in 2021, the WTO needs to agree on a reform agenda and to “achieve concrete progress on issues currently under negotiation”. (Page 5) Fisheries subsidies, Joint Statement Initiatives on e-commerce, domestic regulation in services, MSMEs and investment facilitation along with backlog issues all need to be considered.

The next DG needs “authoritative knowledge of the system and long experience with its functioning” and “trust of Members in his or her impartiality”. (page 7). Mr. Mamdouh believes he is the best candidate to be the next Director-General.

During the press conference, Mr. Mamdouh responded to a wide range of questions (see below) following his opening statement. In his opening statement, Mr. Mamdouh indicated that he had reviewed with the General Council why he was running as a candidate and what he would do as Director-General. He touted his 35 years of experience and participation in the Uruguay Round. He reviewed why he perceives the organization in crisis, the root cause being the imbalance among the three legs of the system — negotiations, dispute settlement, transparency/notifications. He also talked about how to fix the problems and the differences between other organizations’ reform and that of the WTO where reform involves modifying the agreements.

On the question of whether the General Council had concerns with Mr. Mamdouh’s background (no position as minister or ambassador) and role of the Director-General, Mr. Mamdouh indicated that he hadn’t sensed any concern among the Members. In his view, ministers take national perspective, while the role of the Director-General is to be a facilitator and honest broker which requires independence. His background is exactly that. While Mr. Mamdouh agreed that political leadership is required for the next Director-General, political leadership is not synoamous with ministerial leadership.

On the question of his vision for fixing the WTO and his strategy for doing so, Mr. Mamdouh indicated that he believed the WTO Members needed to develop a sense of common purpose. His strategy would begin with reviving the negotiation function. The Director-General will need fact- based knowledge to help Members find solutions.

On the question of running against two other African candidates and whether it will make it harder to win, Mr. Mamdouh answered that it was the position of the Egyptian government that the Egyptian candidate is the only candidate who has been endorsed by the African Union through its process. Candidates from Nigeria and Kenya have not passed through the process established by the African Union.

Mr. Mamdouh was asked about whether changes were needed in the interaction between the WTO Secretariat and Members. Mr. Mamdouh responded that the WTO has a body of great expertise within the Secretariat that could be better utilized. The expertise needs to be put at the disposal of the membership; information from the Secretariat staff is provided to Members in negotiations, to panels in dispute settlement and in committees. Mr. Mamdouh wants to bring the role of the Secretariat back to where it was in the past.

Mr. Mamdouh was asked if there is an Egyptian vision that makes him unique as a candidate. He was also asked if he didn’t think it was time for a woman to lead the WTO. Mr. Mamdouh stated that his Egyptian perspective is that of a Egyptian negotiator struggling to navigate the challenges within the GATT and then deal with the new issues within the Uruguay Round (services, IP). Thus, he understands what negotiators from developing and LDCs face to effectively participate with new issues. On the question of when it is time for a woman to lead the WTO, Mr. Mamdouh indicated that any time is the right time. He believes in gender equality. But gender shouldn’t be the primary criteria in selecting a Director-General.

Mr. Mamdouh was asked a question based on his role in the GATS negotiations as to what is key to building consensus. Mr. Mamdouh believes that the key to building consensus is to mobilize support for the common purpose. Conversely, while consensus is the golden rule in how the WTO functions, Members shouldn’t impose a requirement of consensus where it is not required. If one follow these two approaches, one facilitates achieving consensus.

A question was asked on what should be the role of the US and China in the new WTO. Mr. Mamdouh responded that the role of these two Members is to engage in the WTO. Start from the point that bilateral disputes should be resolved in the WTO. Since we all believe in the multilateral process, must keep in mind that bilateral disputes and solutions have effects on others. Moreover, bilateral solutions are less likely to be disciplined and are likely to be short lived.

Asked what he would do to revive the Appellate Body, Mr. Mamdouh responded that he would build off of the work already done. Most logical and productive first step is to build on that work and see what else is needed. And there is a need to look deeper into causes which he believes are rooted in differences in legal and regulatory systems. Mr. Mamdouh has not heard any suggestions that rules within the Dispute Settlement Understanding need to be changed. He concluded by saying that the size of the problem needs to be put into perspective and one needs to remember that on this issue, the WTO Members are not starting from zero.

A question was asked on globalization, whether the golden age of globalization had passed, the challenges of new protectionism and what he would do to restore the golden age of globalization. Mr. Mamdouh indicated that he believes globalization has been in transition for a while. The challenges from the COVID-19 pandemic merely highlight some challenges and possible changes. Globalization won’t go away. Problems seen during COVID-19 relate to medical products and agricultural products. Problems with supply chains have to do with disruption. If trying to deal with resilience, solution may lie with diversification of supply vs. onshoring. Globalization is restructuring but not going away (supply closer to demand). Will continue to evolve but won’t disappear.

On the question of what is the top challenge facing the WTO and his priority actions to address, Mr. Mamdouh indicated that the top challenge is the failing sense of purpose within the membership. What he would prioritize would be working to revive the sense of common purpose.

Mr. Mamdouh was asked if there will be enough time to prepare for the next Ministerial to have positive agenda/outcome. He answered that if the selection process concludes before November, there should be sufficient time. In his view, the next Ministerial needs to be a turning point for the WTO. At MC12, the WTO must have a clear agenda for reform. There is not currently a mainstream focus on reform; issues are being raised ad hoc. Second, the WTO needs to score successes – fisheries subsidies and progress on joint statement initiatives.

Tudor Ulianovschi (Republic of Moldova)

Mr. Ulianovschi was the first candidate who met with the General Council on Thursday, July 16. He reviewed his time as the Moldovan Ambassador to the WTO and as Moldova’s Foreign Minister and his overall diplomatic and political career that spanned more than sixteen years.

He articulated his vision for the WTO if selected as the next Director-General as being

“a 3D vision and approach:

First D is Direct Access to Ministers and political decision makers — in my capacity as a recent Minister dealing with Ministers.

Second D is Dialogue and discussions with Geneva based Ambassadors — in my capacity as former Ambassador to the WTO — I was in your shoes and fully understand the process of work, its challenges and the potential efficient and effective solutions.

Third D is Driving the work of the WTO Management and Secretariat, so it can better and more efficiently serve Members’ needs and continue bringing its contribution to a better system for all Members.” (Pages 2-3)

There is a need to strengthen the system by reinvigorating the negotiation function, safeguarding and improving the WTO’s two-tiered dispute settlement system, and improving compliance with notification obligations. (Pages 2-3). Incremental progress on negotiations is what is achievable.

Immediate priorities for the next Director-General include eight items, the first four of which are getting the Appellate Body reactivated, achieving resolution to the fisheries subsidies negotiations, addressing joint initiative issue (e-commerce, investment facilitation for development, domestic services regulations, MSMEs), and facilitating dialogue on other ongoing issues.

Mr.Ulianovschi provided separate discussions on dispute settlement and on COVID-19. On the latter issue, transparency of government action is crucial for traders. Members should limit export restraints and remove as soon as the situation permits. The WTO needs to continue working with other international organizations to analyze the effect of COVID-19 on agricultural supplies, supply chains as well as how to help economic recovery, particularly for developing and least developed countries.

During the press conference, Mr. Ulianovschi provided a short introductory statement and then responded to a variety of questions. His short statement reviewed his presentation to the General Council. He believes that the WTO must show its relevance, and that the WTO needs reform to restore relevance. The WTO’s negotiating function is key to achieving this and helping restore the negotiating function would be his top priority as Director-General. The second priority is to reactive the Appellate Body. Third, is improving transparency and the monitoring function of the WTO. Mr. Ulianovschi brings to the table as a candidate his experience as a former Ambassador to the WTO and as a former Minister.

On the question of how he would use the role of Director-General to ease tensions between U.S. and China, Mr. Ulianovschi responded that this topic had been discussed with Members during his meeting with the General Council. In his view, the role of the Director-General is to be an honest broker between WTO Members. The Director-General must be able to listen to concerns with a view to using his offices to engage Members involved in a dialogue process. At same time, the Director-General is not there to impose solution but to listen and raise awareness of the impact of actions on the larger organization and to mitigate harm to others. The next Director-General needs to engage in talks both in Geneva and in capitals and see that any outreach is transparent and inclusive.

There were several questions on the Appellate Body including how Mr. Ulianovschi would reactivate the Appellate Body and whether reform of the dispute settlement system should be broader than getting the Appellate Body back functioning. Mr. Ulianovschi indicated that on the provisions of the Dispute Settlement Understanding, all Members agree on the provisions as written. With the application of the DSU by the AB, there are concerns raised by the U.S. and others. The Director-General can provide a process to help Member’s discuss. Solutions to the concerns raised need to be found, but the parameters of the solutions need to be found by members themselves. In his view, the Director-General’s role is to help Members identify how to move forward on the Appellate Body impasse with resolution by the next Ministerial Conference. On the question of breadth of action on the dispute settlement system, Mr. Ulianovschi stated that Members are not looking for a complete redrafting of the Dispute Settlement Understanding. What is needed is a targeted approach to address issues raised by certain members on the operation of the Appellate Body.

Mr. Ulianovschi was asked a question of how he, if selected as the next Director-General, would withstand the political pressure being young and from a very small country. Mr. Ulianovschi noted that as a candidate he speaks in his individual capacity not in his country’s capacity. Key criteria should be competence, experience and political profile, not age or size of country the candidate is from. He has the relevant experiences to be the next Director-General. The WTO needs a person who understands the issues but also has the political experience and networking to help members to get things done. As to age, Mr. Ulianovschi has plenty of experience negotiating agreements. He has the right resilience, tenacity, ability to listen and political will to get things done.

A question was asked of what sets Mr. Ulianovschi apart from other candidates. His response was that at the end of the day, it is for Members to decide which candidate best meets their needs. All of the eight candidates have extensive backgrounds. Believes he has a good 3-D approach which will benefit members.

On the COVID-19 crisis, Mr. Ulianovschi was asked how the pandemic will impact the WTO. His response was that COVID-19 is a wakeup call to WTO and its Members. The pandemic is having major negative effects on trade and economic growth around the world. Some WTO Members have imposed export restraints and pursuant to WTO requirements have generally notified such restraints. While all Members are affected by the pandemic, there have been significant effects on those least able to handle the negative effects, particularly LDCs. There is a need to expand capacity to help such Members. As Director-General he would work with other organizations to have a unified approach on how to address COVID-19 challenges through trade to the benefit of all people.

Mr. Ulianovschi was asked whether considering that Moldova was a small country that is not a powerhouse in trade, there were experiences from his country in post-Soviet times that would inform his handling the role of Director-General. Mr. Ulianovschi answered that when Moldova joined the WTO in 2001, it joined as a developed country and made the commitments expected of a developed member. Trade is important for Moldova and is for all WTO Members. Moldova has had a neutral role in many of the issues at the WTO. Thus, coming from Moldova enhances Mr. Ulianovschi’s background for being an honest broker if selected as the next Director-General. On size of country, Members should be evaluating the experience of the candidate versus the size of the country.

A question was asked whether the consensus rule at the WTO should be changed to reduce the paralysis. Mr. Ulianovschi responded that the consensus rule was decided by Members. Consensus decision making is one of the elements of the WTO that helps members remember the greater goods and need to consider partners’ needs. Process doesn’t work well all the time. The Director-General can help facilitate Members moving forward and achieving consensus. While there are different formats at the WTO (multilateral and plurilateral), at the end, it is important that basic principles are respected. Consensus is a cornerstone of the WTO.

The last question asked was about getting the WTO out of crisis; in particular, what is the core factor causing the crisis and how would Mr. Ulianovschi address the factor if he was selected as Director-General. Mr. Ulianovschi answered that this is an existential question for the WTO. First priority, in his view, to get out of the crisis is for there to be trust among Members. The role of the Director-General is to enhance feeling of trust through confidence building steps. Many issues which have been unresolved for a long time have undermined trust. Joint initiative statement issues are advancing and give hope that the organization is relevant and can deliver. This is a good sign that there is a common purpose among the Members.

H.E. Yoo Myung-hee (Republic of Korea)

The Korean candidate has spent twenty-five years in international trade and presently serves as Korea’s Minister for Trade.

“My 25 year career in international trade has taught me that solid ground- work is the basis of an agreement, and political will is what closes the deal. I have dealt with both the technical details of agreements, as well as engaged in finalizing major trade agreements as Trade Minister. I believe my extensive experience and expertise will enable me to offer insights and creative solutions to restore and revitalize the WTO.” Page 1

Minister Yoo reviewed the nature of the challenges facing the WTO at the present time:

“We are now witnessing the threat of growing protectionism, and heightened trade tensions. Technological advances are transforming the way we produce, deliver, and consume goods and services in ways never imagined when the WTO was created. The global crisis induced by the pandemic is challenging the WTO’s purpose of ensuring the smooth flow of goods and services.

“The WTO, which was intended to provide predictability and stability in these times of turbulence, is now facing a trust deficit with all three pillars under stress.

“Despite much good will and hard work, the record of negotiations in the WTO leaves much room to be desired. There has been progress, such as the adoption of the Bali and the Nairobi packages including the Trade Facilitation Agreement, but we need to do much more to meet the challenges and realities of the 21st century. The stagnant negotiations have had negative consequences for all of the WTO’s functions, and, to some extent, contributed to the current problems facing the dispute settlement system.” (page 2)

Minister Yoo’s vision for the WTO “is to make the WTO more relevant, resilient and responsive.” (Page 2)

“The WTO needs to keep evolving to become more relevant to changing economic circumstance and realities. The WTO needs to enhance sustainability and inclusiveness to remain resilient as a champion of open trade for the next 25 years and beyond. And the WTO needs to be more responsive to global challenges and contingencies for the benefit of all of its Members.” (Page 2)

In terms of tasks should she become the next Director-General, Minister Yoo lists the first priority as the next Ministerial Conference (MC12). The second priority is WTO reform and the third is inclusive trade and sustainable development.

For the MC12, achieving an agreement on fisheries subsidies by the conference is critical. Significant progress towards a plurilateral electronic commerce agreement is another achievable objective by MC12. Progress on development issues is also critical, particularly on issues important to developing and least developed countries to help survive and come back from the COVID-19 pandemic.

On the issue of WTO reform, Minister Yoo separates the topic into three areas – updating “the rule-books and delivering agreements with real economic impact”; “restoring the dispute settlement system”; and “implementation of agreements and increased transparency.” (Page 3)

The third area, inclusive trade and sustainable development is described as follows by Minister Yoo:

“WTO reform should not be a goal in and of itself, but an instrument to promote economic prosperity and better living standards for all of its Members. To this end, the WTO should pursue inclusive trade initiatives encompassing overall development issues, as well as specific, cross-cutting issues such as MSMEs, women’s economic empowerment, and environment.

“Among others, we should deepen our efforts to help developing countries, especially LDCs, secure a larger share in the growth in international trade. We should fully implement what has been agreed for LDCs and strengthen our technical assistance and capacity building programs. Further, while maintaining a central role for the WTO in seeking these important values, I will support cooperation with other international organizations in a proactive and forthcoming manner. This will help broaden the available resources and multilateral commitment to achieving Members’ goals.” (pages 3-4)

Minister Yoo’s prepared statement to the General Council concludes with a section on how she sees the role of the Director-General — bringing optimism, having a vision based on realism, helping rebuild trust in the Organization. “[T]he Director-General has to be an effective, trusted, and informed facilitator and a person who knows how and when to act to help achieve consensus and agreement.” (Page 4)

At the press conference, Minister Yoo provided a short statement which was followed by a range of questions. In her short statement, Minister Yoo stated that the WTO is at a crossroads. Her vision is to make the WTO more relevant, resilient and responsive (as reviewed in her prepared statement). She brings her 25 years experience to the job.

The first question asked that since Korea was one of the countries who agreed to export limits to avoid steel and aluminum tariffs imposed by the U.S., what thoughts did Minister Yoo have on voluntary export restraints (VERs) under the WTO. Minister Yoo responded that VERs are banned by the WTO. But the current situation is different as US has taken action pursuant to national security provisions, and Korea was addressing intended actions by U.S. under that law. Cases are before panels challenging U.S. national security action as inconsistent with WTO, so Minister Yoo would not comment on the merits of the cases at this time. While aware of different views on whether national security issues can be challenged at the WTO, since the issue is in front of panels, she would not comment further.

On the issue of The Appellate Bidy impasse, Minister Yoo was asked how she would solve the impasse. She indicated that Members have very divergent views on the role of the Appellate Body. All members understand the need for a two-tier dispute settlement system. If selected as the next Director-General, Minister Yoo would accelerate members’ consultations to resolve the issue.

Minister Yoo was asked how hard it would be to move from Korea’s Minister for Trade to the WTO’s Director-General and whether she would have problems living in Geneva or working for an international organization. Minister Yoo indicated that she believes she is in best position to understand all Members views at the WTO. During her lifetime, Korea has gone through many stages of development, and she has seen trade issues through her country’s experience at different levels of economic development. Because of her diverse experiences at Korea’s different stages of developments, she is in a good position to understand concerns of all countries if selected as the next Director-General. As for living abroad, Minister Yoo was stationed Beijing for 3 years and Singapore for 3 1/2 years. She would have no problem living abroad or working for an international organization.

On the interim arbitration mechanism adopted by the EU, China and about 20 other Members, Korea is not a party. Does Minister Yoo have any concerns that the interim arrangement (MPIA) might become permanent? Minister Yoo responded that the MPIA was being used by some Members to overcome the current vacuum with the Appellate Bid shut down. The key for the WTO is to focus on finding a permanent solution, and she would do that if selected as the next Director-General.

A question was asked how Minister Yoo viewed the question of the status of Members as developed or developing countries particularly in light of Korea viewing itself as a developing country in the WTO although Korea has indicated it will not seek additional special and differential treatment under future WTO Agreements. Minister Yoo started her response by noting that the Marrakesh Agreement requires that the WTO work to help developing and least developed countries LDC countries secure their fair share of trade. There are competing issues at the WTO. Should the WTO make special and differential treatment provisions more operational in existing Agreements is one issue. Should the WTO change the classification status of some countries based on economic development is the other issue. For Korea, the. world has changed, and countries have changed in terms of their stage of economic development. Korea decided to take on more responsibility based on its changing level of economic development. But many countries continue to need special and differential treatment. It would be ideal for developing countries to take on more responsibilities as they are able. But this a sensitive issue on which there is no consensus as yet.

A question was asked as to how Minister Yoo would restore trust if selected as the next Director-General. Minister Yoo noted her experience in negotiating trade deals with all level of countries around the world. She knows what it takes to negotiate and what it takes to bring negotiations to a close. She is confident that she can earn confidence from Members and achieve tangible outcomes. The key is to obtain even a small success at the MC12 (e.g., fisheries subsidies agreement by then) which would help build trust and convince world that progress can happen at the WTO.

Minister Yoo was asked if in a consensus system, she could gain the support of Japan for her candidacy considering she had led Korea’s dispute with Japan on semiconductor materials. Minister Yoo remarked that she is here as a candidate in her own capacity and not as part of the Korean government. She would not comment on the ongoing dispute between Japan and Korea. She did note that Japan and Korea work closely on many issues at the WTO, and both are strong supporters of the multilateral trading system. Therefore, she is confident that Japan will look at all candidates and decide which has the best qualifications to move the WTO forward.

One questionner indicated he had heard from an analyst that there is some concern that China might block Korea’s candidacy as China might otherwise have to give up its Deputy Director-General slot. Minister Yoo was also asked if it was time for a woman to lead the WTO. Minister Yoo felt it would be inappropriate to comment on the position of other countries, each of whom must make their own decision as to whom to support for the next Director-General. She hadn’t heard about the rumor mentioned. She added that China and Korea have worked closely on many matters. She was in China for three years and has negotiated with China. She would be doing outreach to China and other Members to see how she could work with them if selected as the next Director-General. On gender, for the last 25 years, she has been a pioneer in the Korean government, the first woman to hold her position in trade. Promotion has been based on merit not on gender. The WTO Members should pick the right person to help WTO move forward. All of the women candidates are well qualified. She knows she is well qualified based on her experience.

What does it mean for the WTO to be relevant, and how would you bring on major members who may not agree with the issue being considered? Minister Yoo stated that the WTO needs to revitalize its negotiating function and must be able to enforce its rules (restore AB). Given 21st century realities, WTO needs to update its rule book and to achieve things that can have real global effect such as joint initiative efforts on e-commerce, MSMEs, investments, and other issues. That said, there are open issues from The Doha Development Agenda that are not moving because there are different views on how to move forward. In terms of how you bring members to the negotiating table, part of the answer is to obtain small successes to build trust and momentum.

Amb. Amina C. Mohamed (Republic of Kenya)

Ministrr Mohamed was the last candidate who met with the General Council on Thursday, July 16. She started by outlining what she referred to as “the three main themes of my vision for the WTO: Reform, Recover, Renewal.”

“The WTO needs urgent reforms so it can once again play its full part as an engine of growth, development and stability. Reform is all the more urgent because an effective WTO is needed to help create the conditions for a sustainable recovery from the economic fallout of the COVID-19 pandemic. And looking further ahead, the WTO needs to renew its capacity to negotiate and to develop new trade rules and disciplines for the challenges of the very near future.” (Pages 2-3)

Minister Mohamed reviewed that the WTO was challenged before COVId-19 with few new agreements since its creation, with increased trade tensions, and with a dispute settlement system that has lost at least temporarily its Appellate Body. The COVID-19 adds huge complications being the largest economic contraction since the Great Depression. Recovery will be a challenge, and there is an urgent need to update the trading system to address the issues of today including “climate change, the digital revolution, poverty and sustainable development.” (page 5)

On the topic of renewal, Minister Mohamed noted that

“Renewal has to start with facing up to the defects that have weakened the system in recent years: the inability to update rules to reflect the changing realities of how trade is conducted; the sterility of ideological standoffs; the retreat into defensiveness; and the sense of the benefits of trade not being equitably shared.” (Page 7)

“Renewal should also build upon the WTO’s core values and achievements. Trade has been transformational. It has helped to lift close to 1 billion people out of poverty and facilitated the attainment of higher living standards in countries at all levels of development. These successes were possible because Members did not see trade as a zero-sum game. They understood that trade-offs were needed to produce outcomes. All Members should contribute to trade opening and facilitation efforts, especially those most in a position to do so.” (Page 7)

While supporting bilateral and regional trade agreements, Minister Mohamed, noted that such agreements are not a substitute for multilateral agreements.

She reviewed the importance of dispute settlement to the system and the need to resolve the existing impasse on the Appellate Body.

“The WTO should give effect to its development objectives in a practical and enabling way, not forgetting its special responsibility towards its most vulnerable Members, particularly least-developed countries. It also needs to play its part in the important task of advancing the economic empower- ment of women through trade.”

Minister Mohamed ended her prepared statement to the General Council by reviewing her qualifications for the job, including her time in Geneva as Ambassador from Kenya, her chairing the top WTO bodies (General Council, Dispute Settlement Body, Trade Policy Review Body), her time as Minister of Foreign Affairs and International Trade and heading the 10th Ministerial Conference and her role as a facilitator in helping Members achieve agreements on “the TRIPS amendment, the Expanded Information Technology Agreement and the Nairobi Decision on Export Competition”. (Page 12)

At the press conference, Minister Mohamed made a brief opening statement and was followed by questions. In her opening statement, Minister Mohamed stated that the WTO is being challenged like never before referring to the changing world trade order, limited negotiating success, and breakdown of the appellate body, and the outbreak of the COVID-19 pandemic. She then reviewed her vision, the three “r’s” — reform, recovery and renewal. She concluded by reviewing her qualifications for the Director-General.

The first questioner asked what lessons Minister Mohamed had learned from her 2013 run and why she thought that countries that hadn’t supported her then would do so now. Minister Mohamed responded that 2020 is a different time with a different group of candidates. Since 2013, she has had many additional experiences that add to her qualifications and hence help her candidacy. She mentioned in particular her role in chairing the 10th Ministerial and the successes that were achieved including the agriculture export subsidy agreement, expansion of the Information Technology Agreement and amending the TRIPS Agreement. So 2020 is the right time for her candidacy.

One questioner asserted that the agreement on export subsidies was negotiated with a small group and given to the full membership on a take it or leave it basis and asked if this was a correct way to conduct inclusive negotiations. Minister Mohamed stated that the questioner was incorrect in the process used. Negotiations were conducted in different configurations but always went back to the full Membership. If anyone felt left out, they had the ability to block the agreement. That didn’t happen. Nairobi worked extremely well, and is an example of how the negotiations should proceed.

One questioner inquired whether the ongoing FTA negotiations between the US and Kenya was an advantage or disadvantage in her candidacy. Minister Mohamed responded that she didn’t consider it relevant. Obviously, the FTA negotiations are just one of many happening around the world. She is hopeful that the negotiations and eventual agreement will be a model for her region and open to other countries. It should be viewed as very positive.

What would you do differently if you become the next DG? Minister Mohamed responded that she would do a lot differently. She indicated that her experiences are different and her skills are different. With the WTO at a crossroads, there is a great need for an experienced negotiator to come in and lead. The agenda would be established through consultations with Members. She would also hope to focus on the gender issue.

if selected as DG, will you be more engaged in resolving trade tensions between major players? If yes, what tactics would you use? Minister Mohamed reviewed the types of powers that a Director-General has to work with Members. For example, the Director-General has engagement powers and can encourage members to consult, use of good offices of the Director-General. So while the Director-General has only limited powers, they can be used effectively to help members to use the system to resolve differences.

The next questioner inquired as to what the Minister’s views were on whether it is time for an African or a woman to lead WTO. The Minister was also asked about the reform proposal from the U.S. to clarify who qualified as a developing country (versus current system where developing country status is a matter of self-selection). On the issue of gender or regional preferences to become the next Director-General, Minister Mohamed believed that the key consideration is whether a particular candidate is best qualified to handle the job. If a female has the qualities, obviously great. Members shouldn’t select a woman just to have a woman; they should pick the best candidate. On the issue of development, this is an issue for the members. Only category of members defined in the WTO is least developed countries where the United Nations listing is used. For all other Members, there are no definitions. It will be up to Members to decide if the issue is ripe for discussion.

One questioner wanted to know if Minister Mohamed has had solutions for the WTO reform needs why she hadn’t pursued them before now. Minister Mohamed indicated that it was up to Members to decide what issues to pursue. WTO is at a crossroads. Membership needs to agree on what to consider in any reform effort, what sequence of issues may make sense and so on. Questions of reform have been floated here in Geneva for many years. When she was Kenyan Ambassador to the WTO, the WTO was beehive of activity. In her prior roles both as Anbassador and as Minister and chair of the 10th Ministerial, she had in fact achieved with the membership significant reforms including managing to amend the TRIPS Agreement, achieving an agreement in agricultural export subsidies and more.

When asked what her approach would be to deal with trade tensions between US and China, Minister Mohamed stated that she would encourage all members to resolve their trade differences within the WTO rules.

On the issue of how to remove the impasse on the Appellate Body, Minister Mohamed indicated that Members need to consult and negotiate. The WTO needs members to find solutions to permit the second-tier of dispute settlement to be restored. A Director-General DG can offer technical assistance and process to help Members find the solutions.

A series of questions on reform were asked by a questioner – what would Minister Mohamed do to move reform forward? Should reform be incremental or broader based? How does MC12 factor into this? Minister Mohamed indicated that she would help members identify what they want and encourage dialogue. By the time of the next ministerial in 2021, she hoped there would be some clarity as to types of reforms needed and supported —restoring the Dispute Settlement system, updating rule book. There are lots of potential issues, but it is up to the Membership on what gets examined.

Is it Africa’s turn to lead? Why couldn’t Africa come together around one candidate? Minister Mohamed responded that Africa takes the WTO very seriously. That’s why there are three candidates. There is no reason to penalize Africa for having three candidates. Each of the three candidates is very accomplished. Africa should be commended for putting them forward.

H.E. Mohammad Mazaid Al-Tuwaijri (Kingdom of Saudi Arabia)

Minister Al-Tuwaijri was the first candidate to meet with the General Council on Friday, July 17. His background is largely in business with the last four years serving Saudi Arabia as the Minister of the Economy and Planing. He started his prepared comments by expressing support all those affected by COVID-19, and noted his involvement for Saudi Arabia in addressing the pandemic in his country and the important role the WTO plays in keeping trade flowing.

Minister Al-Tuwaijri stated that his family had a long history of trading which involved traveling and following the North star. Like his family, the WTO Members must establish goals, set a course (their North star) to follow to accomplish the goals. The role of the Director-General is like a compass to help Members stay on the course towards achieving their goals. The WTO’s “challenging situation has become even more difficult with the pandemic; it will likely get worse; and, we know that trade policy is an essential part of the response to the pandemic itself, and will be key to our collective recovery.” (Pages 1-2)

Minister Al-Tuwaijri identified three questions to consider:

“First, what opportunities and solutions will emerge from current challenges?

“Second, how can Members work together to leverage new ideas, new rules and new technologies to solve the emerging problems that we face today, and the issues that will arise tomorrow?

“And, third, * * *, what kind of leadership is required to ensure that the
multilateral trading system delivers on the vision and objectives set by Members?” (Page 2)

Minister Al-Tuwaijri then indicates that the Membership needs to ensure “steady progress is made on delivering the goals and objectives set by Members.” (Page 2) Because the WTO is not performing, there is a need for a performance assessment to determine why. Based on his business background and government experience, if Minister Al-Tuwaijri is selected as the next Director-General, he would implement critical success factors from the goals and objectives of the Members, establish key performance indicators, and collect evidence and data to determine progress in meeting objectives.

“As part of this effort, feedback loops of constructive suggestions will be encouraged to deliver continuous improvement.

“If we do not respond to shortcomings, the system will not run smoothly,
stakeholders will become dissatisfied, and alternative means will be found outside the WTO to achieve your goals and objectives.” (page 4)

Minister Al-Tuwaijri noted that in its first twenty-five years, the WTO had maintained the status quo, but hadn’t adapted to the changing trade environment.

“Concerning working together through negotiations, I believe that Members will participate in negotiations when they are convinced that the agenda includes an incentive for them to participate. Therefore, in order to have a successful multilateral negotiation, the agenda needs to be balanced – it needs to include something for everyone. I support plurilateral negotiations as long as they are open to all Members, their outcome is applied to all on a most-favored nation basis, and they do not create rules that prejudice the interests of non-participants.” (PAGE 5) Minister Al-Tuwaijri indicated that the work of Members could be bolstered by WTO Secretariat research and interaction with the business communities of Members.

On the issue of opportunities from the current challenges, Minister Al-Tuwaijri expressed that the delay in the next Ministerial Conference (MC12) should permit completing of the fisheries subsidies negotiations and the plurilateral talks on e-commerce both important “issues in the public good”. (Page 6). He also suggested increasing the frequency of Ministerial meetings to annually. On the issue of special and differential treatment, “without negotiations that include incentives for everyone to participate actively, I do not think it will be possible for Members to address the issue of SDT.” (Page 6)

During the press conference, Minister Al-Tuwaijri provided a short opening statement and then answered questions. In his opening statement, Minister Al-Tuwaijri reviewed the current situation facing the WTO and the need for the next Director-General to have a strong reform agenda. COVID-19 will make the global trade situation more uncertain.

The first questioner asked how Minister Al-Tuwaijri could obtain regional support with the current conflict between Saudi Arabia and Qatar. Minister Al-Tuwaijri indicated that he would not comment on the dispute between Members. He noted that Qatar is a member of the WTO and believed the next Director-General should focus on what the goals of members are, how to achieve the goals and address the uncertainty created by the pandemic.

What is the greatest problem facing the WTO, and what is your plan to fix it? Minister Al-Tuwaijri noted that in the first twenty-five years of the WTO history, there have been some successes in terms of new agreements. However, the world has changed significantly in terms of trade. He sees the biggest issue facing the WTO as being the process of negotiations. In Minister Al-Tuwaijri’s view there is no process for negotiations. This results in countries going outside of WTO to find solutions in some circumstances. Thus, in his view, process enhancement is needed. Minister Al-Tuwaijri’s strengths are in management and leadership. These two characteristics are key to leading the WTO forward. The next Director-General should focus on process enhancement, design metrics so members can see progress. Moreover, whenever there is a dispute, the WTO should be looking for the root cause as well as resolving the particular dispute. If don’t get to root causes, disputes will recur. Minister Al-Tuwaijri approaches the challenges facing the WTO from a management perspective.

The next question reviewed interest by some Members in having a Director-General from an African country but noted that there has never been a Diirector-General from an Arab country either and sought the Minister’s comments. Minster Al-Tuwaijri noted that WTO Members need to think about what they need in the next Director-General . If management and leadership are the important characteristics that the next Director-General should have (which is the Minister’s view), he has those characteristics. First, he has twenty-five years management experience in the private sector where trade was important and multifaceted (trade finance, logistics, insurance, manufacturing, energy). He would bring that experience to the WTO Director-General position. Secondly, he has been the Minister of Economy and Planning, involved in major transformation (diversification) for the last four years, including policy making. He developed a delivery unit which measures performance and helps fill gaps. He would bring that experience to the WTO Director-General position as well.

On the issue of WTO reform, Minister AlTuwaijri recognized that the WTO is a member driven organization. Second, the Director-General has a function to facilitate and to assess, but there is also room to improve the Director-General’s role. For example, the next ministerial (MC12) has been delayed til 2021. The delay provides an opportunity to improve the discussion at MC 12 and the outcomes that are possible. Bringing management and leadership skills to the Director-General position will permit setting goals, metrics for measuring progress in achieving those goals and providing a feedback loop on gaps that need to be addressed. Certain current issues should be achievable, such as fisheries subsidies and e-commerce. In the Minister’s view, COVID-19 and postpandemic recovery provide the WTO an opportunity to address core needs of Members by doing a performance assessment. Where are the gaps in performance; why did those gaps develop; how to proceed? From his business and government experience, Minister Al-Tuwaijri knows that this type of transformation for the WTO to a more goal-oriented organization is possible.

Is it time for a woman to lead the WTO and what sets you apart from the other candidates. Minister Al-Tuwaijri stated that on women empowerment, he has a good track record in terms of working on woman empowerment in business and government As to what distinguishes him from other candidate, Minister Al-Tuwaijri reflected on his long business career and the need for specific goals and targets. He also reviewed his experience as a minister involved in the transformation of Saudi Arabia which is getting results. He brings those experiences to the WTO.

Why don’t Arab countries unite around one candidate where there are two candidates and does that hurt your chances? Minister Al-Tuwaijri remarked that the WTO is a member driven organization. Hence all WTO members can nominate candidates. All candidates have different experiences which provides much for Members to consider and choose from. For himself, the Minister noted that Saudi Arabia is presently president of G20 and has initiated its own reform program a few years back. Thus, Saudi Arabia has had the political will for reform. Coming from that culture can be useful to his candidacy.

Longterm observers view issues as revolving around political will versus being caused by a lack of management skills. Minister Al-Tuwaijri stated that while both technical and political elements exist, he believes that management and leadership would permit improvements in the process of negotiations which in turn would permit both the technical and political elements to have a better chance to work. How to improve the negotiation process is a management issue. Of course, there are political elements, and he has political background and strengths as well.

On the question about the future of the WTO, Minister Al-Tuwaijri noted that the future of the WTO is a member choice — the WTO is about their goals, their choices. The Director-General is a facilitator. But the organization is drifting away from its core objectives. Thus, there is a need to review root causes of this drift. He believes the WTO can create key performance indicators to prevent future drift and monitor early warning signs to catch major disputes early. The Minister wants the debate to shift from political will to how the Members can go back to the organization’s original goals and deliver on them.

On the Appellate Body, what is your plan to addressing U.S. concerns and do you plan to get it back functioning? Minister Al-Tuwaijri’s approach is the same as reviewed elsewhere. Determine what is root cause of AB not functioning. He believes it is because negotiations are not functioning well. Therefore, he wants to get the negotiating process to improve and to gain data to improve the system. For example, he believes it is important to be able to quantify the effect of delay of even one month in resolution of disputes.

Dr. Liam Fox (United Kingdom)

Dr. Fox was the last candidate to meet with the General Council. He has served in Parliament for many years and was Secretary of State for Defence and Secretary of State for International Trade under different UK administrations.

Dr. Fox started his prepared statement “by acknowledging the scale of the challenge the world currently faces in the COVID pandemic.” (Page 1). He commented that the WTO was facing problems before the pandemic., meaning to progress, it cannot be business as usual.

“But I know from talking to many of you, including in this last week, that
there is a widespread feeling that things are not as they should be. Yes,
there are technical issues to be overcome but the real problems of the
WTO are not technical. Our problem is the lack of political momentum.
There is too little political will to make the compromises needed for the
multilateral trading system to evolve and too little vision to make those
compromises easier. We must rediscover that political will and find the
right language to express our vision about the opportunities that trade
can bring to a new generation.” (Pages 2-3)

On the question of what qualifications the next Director-General should have, Dr. Fox stated that “it is not where the new DG comes from that matters but the skills and experience, especially the political experience, that they are able to bring to the organisation for the benefit of each and every one of our members. I believe that my 28 years in politics, and my years serving in senior cabinet posts such as trade and representing the UK at the top table on global issues give me the right experience to bring the renewed momentum, commitment and compromise, which will allow us to return this institution to greater global relevance.” (Page 3)

Dr. Fox expressed his strong support for open trade in a rules-based international trade system. He expressed concern for the trading system under current conditions and urged Members to recommit to the core principles of most-favoured nation, national treatment and transparency of commitments.

On the issue of challenges ahead for the new Director-General, Dr. Fox indicated that one of the first tasks would be to help Members achieve a successful Ministerial Conference (MC12 ) in 2021. A fisheries subsidies agreement needs to be completed as quickly as possible. Similarly progress on Joint Initiative issues like “e-commerce, services, MSMEs and investment” would be a priority. (Page 7) Outstanding issues on agriculture (subsidies, public stockholding for food security, cotton, and others) and WTO reform are other important issues to be addressed.

Dr. Fox reviewed concerns about increasing trade restrictive measures in the last decade and flowing from the pandemic and how they undermine other activities such as Aid for Trade.

On the topic of women and trade, Dr. Fox reviewed the importance of the issue and his own history of working to improve business opportunities for women and roles in government including the U.K. trade ministry. Dr. Fox committed that if he was selected as the next Director-General, he would “ensure that at least half of the WTO’s most senior leadership team are women.” (Page 9)

“[T]rade is not an end in itself. It is a means to an end. It is a
means by which we create and share prosperity. That prosperity
underpins social cohesion and that social cohesion in turn underpins
political stability. That political stability is the bedrock of our collective
security.

“And I say this because we must understand protectionism does not
come without a price tag. If we deny people access to prosperity and
opportunity through trade then we should not be surprised if the
outcomes, whether mass migration, political radicalisation or failing
states, come back to bite us.

“As an organisation we all need to recapture that optimism that comes
from committing to shared values. Yes, we’ve taken a billion people out
of extreme poverty but that cannot remotely be the end of our ambitions.

“We need the political momentum to take us forward. It is only with vision,
and shared purpose, that we can find the compromises required to meet
the challenges I’ve set out — reversing the rise in trade restrictive measures, recommitting ourselves to the founding principles to which we have all
agreed, while updating and strengthening this institution so it’s fit to tackle the challenges of the 21st Century.

“I believe I have the skills and experience to deliver that political
momentum.” (pages 10-11)

During the press conference, Dr. Fox provided a short opening statement which was followed by press questions. Dr. Fox’s opening statement reviewed some key points. This is not going to be business as usual. COVID-19 will affect the global economy and world trade. WTO is a great organization that has helped move 1 billion people out of poverty. There is a feeling in Geneva that the WTO has lost some of the political momentum. Negotiators can’t make compromises if don’t have common goals. The WTO can’t just focus on legacy issues (agriculture) but must address the changed trading environment and also recommit to the principles of a multilateral trading system. Negative consequences of alternative outcome are too dark.

Why is the multilateral trading system important to the large parties? Dr. Fox indicated that he viewed the Director-General position to not be one of taking sides in bilateral disputes but to maintain the international trading system. If Members don’t enforce what currently exists, what is the credibility of new rules signed onto later? He stated that all Members have benefited from the multilateral trading system. The alternative to a rules- based system is not acceptable. That is true for most countries, not just smaller countries. He used the examples of the 4th and 5th largest economies, Germany and UK, for whom global trade is a major component of their economies.

On Brexit, is it an advantage or disadvantage for Dr. Fox’s candidacy with the EU? Dr. Fox stated that it was good that not everyone in the world sees all issues through the Brexit prism. If he becomes the next Director-General, he would be available to all Members on the same basis. While not directly relevant to the Director-General selection process, he hopes the UK and EU will reach a good trade agreement and believes it will be important for COVID recovery. On who the EU chooses, Dr. Fox believes the EU will likely pick a candidate who is most in line with their views on the characteristics and experiences needed for the job.

Is there a British perspective? Dr. Fox noted that he believes so in how he sees the role of the Director-General, which he analogizes to that of the British Prime Minister. In Britain, the Prime Minister is first among equals. Dr. Fox envisions the same concept applying to the WTO’s Director-General. On the question of whether Britain has a strong commitment to free trade, Dr. Fox noted that Britain has a very strong commitment to free trade. He is worried about threats to free trade today. He was surprised that in the General Council meeting he received very few questions about what free trade brings to consumers. Most of the questions were from a producer perspective. Trade liberalization is obviously very important to consumers. He would like to see the WTO unleash consumer interests more.

Dr. Fox received a question on whether it was premature for the U.K. to put forward a candidate since it has only recently obtained trade policy freedom from the EU. Dr. Fox’s answer was it was not too early. He noted the U.K.’s long history of promoting free trade. Currently besides negotiations with the EU, they are engaged in various other FTA negotiations and looking to adopt or further liberalize their participation in various FTAs between the EU and other countries.

There was a question on geographical diversity and his being European when most prior Director-Generals have been European. Dr. Fox stated that he understands the idea of diversity in personnel which he generally supports. What he is hearing from Members is that this organization has great personnel, but the organization is not where it should be. In Dr. Fox’s view, problems at the WTO are not technical but rather political. Whoever is the next Director-General will have to have difficult conversations with major members. He has met those leaders. Key is what the Director-General brings to the organization in skills and experience. Other aspect mentioned by some is gender diversity. Dr. Fox has been committed to gender diversity in his positions in the U.K. He has committed to having at least half of senior WTO officials be women if he is selected as the next Director-General.

One questioner asked if Dr. Fox had any Member is mind when he raised the need to support a rules-based system. Dr. Fox replied that he did not. He stated that at the end of World War II, nations set out principles in the GATT that have stood the test of time. Problem today is that various members have taken exception to particular rules. While exceptions or waivers are needed for some developing and least developed countries, it was not possible to have Members decide which rules applied to them. If Members don’t comply with existing agreements, what value do future agreements have? Countries at different stages of development access benefits of free trade under the current system by committing to basic principles.

A question was asked about the deficit of trust among Members of the WTO, and why Dr. Fox would be the right person to lead the organization and restore trust. Dr. Fox noted that a similar question had been asked during the General Council meeting. Important to know what is meat by trust. On the issue of how do parties get to trust, it is by the experience of behavior over time. Transparency and the sharing of information are big elements to enabling trust. In the current environment, the next Director-General will need a willingness to have conversations that are uncomfortable but necessary. The role of a Director-General is not to take sides but to understand both sides of a dispute between Members. In Dr. Fox’s view a political figure is better able to bring qualities to the role of the Director-General needed to build confidence. Separately, Dr. Fox stressed the importance in the present circumstances of being optimistic but also realistic. He believes that it would be a mistake for the Director-General to overpromise likely outcomes in the current circumstances.

As the only candidate from a developed country, does this give you an advantage? Dr. Fox noted that each candidate has different background and so could be viewed by some as advantaged or disadvantaged on the basis of geographic origin, gender and other factors. Dr. Fox does believe coming from a G20 country may be an advantage in the current cirumstances because of the substantial contraction in openness amongst G20 countries. He stated that the world is in a more difficult position re trade now than we were during the financial crisis. In 2009 only 0.7% of G20 import trade was covered by restrictive measures. By 2019 fully 10.3% of G20 imports were covered by restrictive measures. To come out of the economic challenges presented by the pandemic, all WTO Members have to abide by WTO commitments. That message may be easier to be delivered by a G20 country Director-General. Dr. Fox indicated he would have no problem delivering the message.

A question was asked of how Dr. Fox would address the broad concerns of U.S. with the WTO. Dr. Fox noted that the U.S. has some very specific concerns with the WTO, particularly with regards to the Appellate Body. Dr. Fox stated that the WTO has the Appellate Body because countries felt panels in GATT disputes went too wide. The Appellate Body was set up with a limited mandate. He is aware that there are different views of the role of Appellate Body and whether it has engaged in mission creep or handled incomplete texts by filling them out. If WTO Members are able to get back to a more narrow definition of the function of the Appellate Body, there may be some concept of precedent being set. Dr. Fox asks the question, does everyone want the AB to be functioning properly or not. If not, the multilateral trading system is under threat as obligations can’t be enforced. Believe there is room for compromise.

The last question inquired into what reform is needed. Dr. Fox articulated that reform should be viewed in three buckets. The first is conceptual reform. By this he means, Members recommitting to the basic principles of the WTO (most favoured nation, national treatment and transparency of commitments). He believes this is what MC 12 needs to focus on. The second is organizational reform. By this Dr. Fox means what does the team look like, the Director-General being first among equals; selecting Secretariat staff that are the most talented and challenging group. The third is policy reform. By that, Dr. Fox means what issues will be addressed — legacy issues and issues to update organization such as fisheries subsidies; resolution of the Appellate Body impasse. Dr. Fox concluded by saying that the Director-General position is a job for a politician not for a technocrat at this time.