Republic of Korea

WTO Director-General selection process doesn’t generate immediate consensus

The troika of WTO Chairs (of the General Council, Dispute Settlement Body and Trade Policy Review Body) met with the WTO heads of delegation on October 28 to review the results of the third round of consultations with Members as part of the long process of selecting the next Director-General. The meeting which was scheduled for 3 p.m. Geneva time, started after 3:15 p.m. and resulted in at least temporary challenges.

The two remaining candidates for consideration during the third round were Korea’s Minister for Trade, H.E. Yoo Myung-hee and Nigeria’s Dr. Ngozi Okonjo-Iweala. Both are considered highly qualified though with very different backgrounds — trade for Minister Yoo; development economics and finance for Dr. Okonjo-Iweala. Both candidates received strong support from their host governments in terms of politic outreach.

Amb. David Walker, the Chair of the General Council, announced that Dr. Okonjo-Iweala has emerged from the third round as the candidate most likely to attract consensus among the Members, and it is understood that she received broad support. Press articles have indicated support from WTO Members of the African Union, support from the countries part of the European Union and other support in the Americas and Asia, including China and Japan. Thus, Dr. Okonjo-Iweala may have been the preferred candidate for more than 100 of the 164 WTO Members.

Minister Yoo reportedly had the support of the United States, many countries in Asia and other support from the Americas and elsewhere.

The actual support of each candidate is not released by the WTO as consultations are confidential, though individual governments are, of course, free to identify which candidate they preferred.

Importantly, the Republic of Korea did not withdraw Minister Yoo’s candidacy and the U.S. has indicated it continues to support Minister Yoo, which means that at least for the moment there is not a consensus for Dr. Okonjo-Iweala.

Presumably the troika will continue to consult with Korea and the United States to see if they can get those Members to support the potential consensus behind Dr. Okonjo-Iweala. The procedures adopted by the General Council in late 2002 indicate that the troika should be submitting the name of Dr. Okonjo-Iweala to the General Council recommending her appointment by the General Council:

“At the end of the final stage of the consultative process, the Chair, with the support of the facilitators, shall submit the name of the candidate most likely to attract consensus and recommend his or her appointment by the General Council.”

Procedures for the Appointment of Directors-General, Adopted by the General Council on 10 December 2002, WT/L/509 (20 January 2003), para. 19.

Because of the present positions of Korea and the United States, it is likely that Amb. Walker will delay calling a General Council meeting in the hope of obtaining clearance of the current blockage. At some point, Amb. Walker will presumably call the General Council meeting so Members have to be on the record as opposing consensus. As a last resort, Amb. Walker and his facilitators can have the General Council vote to select the next Director-General. Id, para. 20.

Recourse to voting as a last resort

“20. If, after having carried out all the procedures set out above, it has not been possible for the General Council to take a decision by consensus by the deadline provided for the appointment, Members should consider the possibility of recourse to a vote as a last resort by a procedure to be
determined at that time. Recourse to a vote for the appointment of a Director-General shall be understood to be an exceptional departure from the customary practice of decision-making by consensus, and shall not establish any precedent for such recourse in respect of any future decisions in the WTO.”

The deadline for the appointment under existing procedures, is November 7, 2020. Id, para. 15. It is unclear what the objection is for the United States to Dr. Okonjo-Iweala, although press accounts have indicated that the U.S. has concerns about Dr. Okonjo-Iweala based on her work with U.S. officials with significantly different views on trade policy than the current U.S. Administration. It is also not clear why Korea’s candidate would not follow the agreed procedures for appointment of Directors-General and withdraw in light of the preferences expressed to the troika during the third round.

Conclusion

The WTO has been fortunate to have very strong candidates put forward to be considered as the next Director-General. Minister Yoo is highly qualified and had a strong presentation of views and intended approach for leading the WTO forward.

Dr. Okonjo-Iweala with her service as Minister of Finance twice for Nigeria and twenty-five years experience at the World Bank, background in development economics, and service as Chair of GAVI brings a wealth of experience at high levels of government and multilateral organizations. She is also a candidate from Africa, a continent that has not to date had a Director-General of the WTO. As stated in the General Council’s procedures for appointing Directors-General,

Representativeness of candidates

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

There has been a prior WTO Director-General from Asia, which may have been a consideration for some WTO Members in providing their preference for Dr. Okonjo-Iweala instead of Minister Yoo in the third round.

It is obviously unfortunate that a process that has worked smoothly so far in 2020, has developed the current set of challenges from Korea and the U.S. Hopefully, the challenges will be addressed and a consensus reached in the next nine days. The correct outcome at this point is for Dr. Okonjo-Iweala to be the next Director-General, the first female Director-General and the first African Director-General.

If the unexpected holdup in concluding the selection process can be resolved, Dr. Ngozi Okonjo-Iweala will hopefully be up to the daunting task that awaits the next Director-General. Success will depend on the willingness of Members to find common ground and address the need for reform and updating the rule book — clearly a herculean challenge considering the very different views of major Members and different groups of Members. But the WTO needs a leader who can help Members find the path forward, be an honest broker, help Members restore confidence in the organization and ensure trade issues can be effectively addressed within the organization, help ensure engagement by all, and be able to engage with governments at a political level and with other multilateral organizations to achieve meaningful participation by all. The global trading system needs a strong and relevant WTO. Time will tell if Dr. Okonjo-Iweala will be that leader. Let’s hope that the next Director-General will succeed.

WTO Director-General selection — press reports EU, Japan join those supporting Dr. Ngozi Okonjo-Iweala of Nigeria

With the third round of consultations concluding on Tuesday, October 27, press reports indicate that Japan will be supporting the Nigerian canadidate and the EU, after extended internal debate, has apparently agreed to support Dr. Ngozi Okonjo-Iweala of Nigeria as well. See The Japan Times, October 26, 2020, Japan decides against backing South Korean for WTO chief, https://www.japantimes.co.jp/news/2020/10/26/business/japan-south-korea-nominee-wto/; Politico, October 26, 2020, EU backs Nigerian candidate for WTO top job, https://www.politico.eu/article/eu-backs-nigerian-candidate-for-wto-top-job/.

Dr. Okonjo-Iweala has received the backing of the WTO Members of the African Union and reportedly several dozen other Members from the Americas and Asia. See, e.g., 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.

Some press article have suggested that China is also likely to support the Nigerian candidate, although there has not been formal confirmation to date and some articles have suggested China may have problems with each of the two remaining candidates. See, e.g., South China Morning Post, October 8, 2020, China faces ‘difficult trade-off’ as WTO leadership race heads into final round, https://www.scmp.com/economy/china-economy/article/3104712/china-faces-difficult-trade-wto-leadership-race-heads-final.

The United States has been reported in the press as supporting Minister Yoo Myung-hee from the Republic of Korea. Bloomberg (article in Swissinfo.com), October 21, 2020, Global Trade-Chief Race Slows as U.S., EU Split on Finalists, https://www.swissinfo.ch/eng/bloomberg/global-trade-chief-race-slows-as-u-s—eu-split-on-finalists/46110158.

It is also known that the President of Korea and other senior officials within the Korean government have been actively reaching out to WTO Members to encourage support of Minister Yoo in the third round. See, e.g., Yonhap News Agency, October 20, 2020, Moon requests support from 2 nations for S. Korean candidate’s WTO chief bid, https://en.yna.co.kr/view/AEN20201020009151320; The Korea Times, October 20, 2020, Government goes all out for Yoo’s WTO election, https://en.yna.co.kr/view/AEN20201020009151320.

What do the news articles portend?

Assuming the support for Dr. Ngozi Okonjo-Iweala is as broad and deep as is being reported, the Nigerian should be the candidate who is announced by the troika in the WTO (Chairs of the General Council, Dispute Settlement
Body and Trade Policy Review Body) as the candidate most likely to achieve consensus from the membership at an informal heads of delegation. If there is no opposition from a Member or Members suggesting blockage of consensus, the informal heads of delegation meeting could be set for as early as Thursday, October 29, with a General Council meeting to confirm the selection held that afternoon or on the 30th of October. If one or more Members indicates a likelihood of blockage of consensus, it is likely that the informal heads of delegation meeting would not occur on the 29th to give the troika the opportunity to work with those threatening blockage to attempt to achieve consensus. See October 9, 2020:  October 8th video discussion on WTO Director-General selection process following the announcement of two finalists, https://currentthoughtsontrade.com/2020/10/09/october-8th-video-discussion-on-wto-director-general-selection-process-following-the-announcement-of-two-finalists/ (video from WITA; see comments of Amb. Rufus Yerxa, President of the National Foreign Trade Council).

Under the procedures adopted in late 2002 for the selection of a Director-General if there is a failure to achieve consensus, Members could select the Director-General based on a vote. To date, voting has not been required. Hopefully, the same will be true in this selection as well. If so, it appears that Dr. Ngozi Okonjo-Iweala will be the next Director-General of the WTO.

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.

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: 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.

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.

APEC Trade Ministers’ Virtual Meeting on July 25 — Declaration on Facilitating the Movement of Essential Goods during COVID-19

The Asia-Pacific Economic Cooperation (APEC) has twenty-one members whose territories borders the Pacific Ocean. The twenty-one members include Australia; Brunei Darussalem; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Republic of Korea; Russia; Singapore; Chinese Taipei; Thailand; United States; and Viet Nam. According to a 2019 USTR note on U.S.-APEC Trade Facts, APEC countries account for 38% of the world’s population, 60% of the world’s GDP and 47% of world trade. See https://ustr.gov/trade-agreements/other-initiatives/asia-pacific-economic-cooperation-apec/us-apec-trade-facts#:~:text=APEC%20has%2021%20members%2C%20referred,percent%20of%20the%20world’s%20trade.

In May 2019, APEC Ministers Responsible for Trade (“MRTs”) issued a statement on COVID-19 recognizing both the centrality for all members in halting the spread of the pandemic and the need for members to also focus on remedying the economic challenges flowing from the pandemic. Like the G20 and other groups, APEC MRTs recognized the importance of keeping markets open, of limiting emergency restrictive measures and ensuring such measures are “targeted, proportionate, transparent, temporary and should not create unnecessary barriers to trade, and are consistent with WTO rules.” APEC MRTs encouraged cooperation and the sharing of information and more. See Statement on COVID-19 by APEC Ministers Responsible for Trade, 5 May 2020, WT/GC/213. The May 2019 statement is embedded below.

213

At the July 25, 2020 virtual meeting of MRTs, the ministers issued a joint statement and included as Annex A the Declaration on Facilitating the Movement of Essential Goods. See MRTs joint statement, https://www.apec.org/Meeting-Papers/Sectoral-Ministerial-Meetings/Trade/2020_MRT; Annex A,https://www.apec.org/Meeting-Papers/Sectoral-Ministerial-Meetings/Trade/2020_MRT/Annex-A. Both are embedded below.

Ministers-Responsible-for-Trade-Virtual-Meeting-Joint-Statement-2020

Declaration-on-Facilitating-the-Movement-of-Essential-Goods-by-the-APEC-Ministers-Responsible-for-Trade-MRT

The joint statement reiterates the May 2019 key points and incorporates the Declaration on Facilitating the Movement of Essential Goods “which is a clear indication of the region’s continued support for WTO work.” The MRTs “recognize the need for discussions to reduce non-tariff barriers which restrict trade in essential goods.” There are other supportive statements about the importance of WTO work. “We encourage continued constructive engagement on WTO issues, including in the lead-up to the 12th WTO Ministerial Conference.” At the same time, the MRTs are looking to the development of a “post-2020 Vision” which they are hopeful leaders can launch at the end of 2020. Presumably, such a vision will include trade- related components which may include reforms at the WTO or simply be regional cooperation on certain important topics (supply chain issues on adequacy of supplies, e-commerce, movement of people as region recovers from COVID-19, etc.).

The Declaration on Facilitating the Movement of Essential Goods has ten specific actions that are declared.

The first two deal with export restrictions and prohibitions. The first is that each APEC member will ensure that any emergency trade measures introduced to address COVID-19 are consistent with WTO rules. The second commits APEC members to notify all such measures in accordance with WTO obligations.

The third declared action addresses non-tariff barriers. Specifically APEC members “are encouraged to work together to identify and resolve any unnecessary barriers to trade in essential goods.”

The next five declared actions pertain to trade facilitation — to expedite and facilitate the flow and transit of essential goods; to enhance coordination, efficiency and transparency of border clearance of essential goods; expediting the release of essential goods upon arrival; facilitating the entry, transit and departure of air cargo dealing with essential medical goods; abiding by the International Health Regulations of 2005.

The ninth declared action deals with tariffs and while not committing APEC members to liberalize tariffs for essential medical supplies, notes that some economies have taken such liberalizing actions and notes that the business community supports such action.

The last statement deals with reviewing progress on the APEC initiatives annually until COVID-19 is no longer a public health emergency.

Conclusion

Many countries and customs territories around the world have expressed objectives which are generally not significantly different than those put forward by APEC members.

With the large share of global trade accounted for by APEC members and with similar-type commitments by the G20 (which includes major members of the EU and has the EU participating), one would think it should be possible to obtain WTO commitments along similar lines to the APEC Declaration. The Declaration would need to have added some of the developing country and least developed country needs that have been already presented to the WTO so that the concerns of all are addressed.

While the WTO is doing an excellent job of providing information about the pandemic and trade measures taken by Members (at least those notified), the WTO Members have yet to get behind a set of principles that all Members can sign off on. Perhaps the APEC MRT joint statement and Declaration on Facilitating the Movement of Essential Goods provides a good starting point for the full WTO membership. While some WTO Members have not wanted to address COVID-19 issues during the pandemic, obviously collective action during the pandemic would be most effective. The post-pandemic needs also should be addressed but can await individual and group developments of views.

WTO Director-General Selection Process — this week candidates meet WTO Members in a General Council meeting

As reviewed in a post last week, this Wednesday-Friday (July 15-17) the eight candidates for the Director-General position have their meetings with WTO Members in a General Council meeting. Each candidate has 90 minutes before the General Council and will meet the press immediately afterwards. See WTO Director-General selection process – next steps, https://currentthoughtsontrade.com/2020/07/11/wto-director-general-selection-process-next-steps/. After the meeting with the General Council this week, candidates and their goverments will have until September 8 to do outreach to WTO members in their efforts to get candidates known and build support for the particular candidate.

Not surprisingly, a lot is being written about the candidates. Candidates who were nominated early have already done press interviews or been interviewed on webinars by different organizations. See, e.g., Nikkei Asian Review, Good listener or strong negotiator? WTO candidates make case for top job, https://asia.nikkei.com/Editor-s-Picks/Interview/Good-listener-or-strong-negotiator-WTO-candidates-make-case-for-top-job; Inside U.S. Trade’s World Trade Online, Egyptian DG candidate: WTO approaching point of no return, June 24, 2020, https://insidetrade.com/trade/egyptian-dg-candidate-wto-approaching-point-no-return; Inside U.S. Trade’s World Trade Online, Seade: WTO needs ‘respectful’ but ‘assertive’ leader, July 7, 2020, https://insidetrade.com/daily-news/seade-wto-needs-%E2%80%98respectful%E2%80%99-%E2%80%98assertive%E2%80%99-leader; Yonhap News Agency, Seoul’s trade minister vows to make WTO more responsive if elected head, July 13, 2020, https://en.yna.co.kr/view/AEN20200713001800320. The interest from the media and various trade groups will only grow over the next two months.

Each candidate and his/her nominating government are already doing outreach to other WTO Members seeking to build a base of support for the candidate. Moreover, in the case of Mexico’s Jesus Seade, Mexico has signaled that it will not seek another term for Angel Gurria heading the OECD to bolster the chances of Jesus Seade to head the WTO. Yahoo News, Mexico gives up OECD in campaign to head World Trade Organization, https://news.yahoo.com/mexico-gives-oecd-campaign-head-184513923.html.

And, of course, WTO Members without candidates of their own will be evaluating all candidates against what they perceive to be the best qualities for the next Director-General. Various articles have both described possible characteristics of importance and challenges for candidates from regional rivalries and possible proxy wars. See, e.g., The Wire, In WTO’s Search for its Next Director-General, a Tale of Proxy Wars and Regional Rivalries, July 11, 2020, https://thewire.in/economy/wto-next-director-general; Washington Post, Who Will Lead the WTO and Help It Avoid Collapse?, July 11, https://www.washingtonpost.com/business/who-will-lead-the-wto-and-help-it-avoid-collapse/2020/07/10/c2676476-c2d3-11ea-8908-68a2b9eae9e0_story.html.

The European University Institute recently released a working paper reviewing Stakeholder Preferences and Priorities for the Next WTO Director-General based on a survey of academics, government officials, private sector (companies and business associations), staff of international organizations and NGOs, labor unions, think tanks. https://cadmus.eui.eu//handle/1814/67635. Those who responded to the survey ranked preferred characteristics of the next Director-General with experience in managing organizations receiving the highest ranking followed by political experience, economic training and Experienced WTO negotiator. Of far less significance were whether the candidate was from a developing or developed country, from a region that had not yet had a Director-General and the gender of the candidate, although some of the latter characteristics were more important to those responding from certain areas (e.g., Africa). Id at 2-4. Of course, it is the characteristics of importance to WTO Members that matters, not what academics or others would find of value. While Geneva Missions obviously have input in the process and will be handling this week’s General Council meetings, for many Members, the decision will come from the capital.

As an aid to those monitoring the selection process, I have put together a chart (see below) which presents a number of characteristics that may be relevant to WTO Members.

Dr. Jesus Seade has deep WTO and trade experience, has worked at high levels in all three Bretton Woods organizations, and has working relationship with both the U.S. and China. He is an economist by education and training. North America has never had a Director-General at the WTO, although Mexico is a Latin American country, a group within which Brazil (current Director-General’s country) is part.

Dr. Ngozi Okonjo-Iweala, while not having a trade background has extensive managerial experience from her time at the World Bank and political experience from her time as Minister of Finance in Nigeria. She has a PhD in Economics. She is one of three candidates from Africa, a continent that has never had a candidate selected as Director-General of the WTO.

Mr. Abdel-Hamid Mamdouh has extensive experience with the WTO based on his time within the Secretariat. Egypt is a country in Africa and also part of the Middle East. There has not been a WTO Director-General from either area.

Mr. Tudor Ulianovschi was Moldova’s Ambassador to Switzerland and Lichtenstein and Permanent Representative to the WTO. He has also served as Moldova’s Minister of Foreign Affairs.

Minister Yoo Myung-hee has been very active in trade and other issues for her government in Korea. Asia has had one Director-General (Thailand), though Korea has not had a candidate serve as the Director-General.

Amb. Amina C. Mohamed has a very extensive trade background for Kenya both in Geneva at Kenya’s Mission to the WTO and back in country as Minister of Foreign Affairs and International Trade and chaired the WTO’s 10 Ministerial Conference in Nairobi. She has had other government posts in Kenya and some experience in one of the UN organizations, UNEP. She is the third candidate from Africa.

Mr. Mohammad Maziad Al-Tuwaijri is a candidate from Saudi Arabia and is its current Minister of Economy and Planning. Saudi Arabia is in western Asia but also part of the Middle East. There has never been a Director-General selected from the Middle East, with just one from Asia.

Dr. Liam Fox from the United Kingdom has a long and distinguished political career and has served in a number of high political offices in different UK Administrations including Secretary of State for Defence and Secretary of State for International Trade.

A very important opportunity for all eight candidates will be their 90 minutes before the General Council as each candidate will not only be able to provide an overview of their vision on leading the WTO but also be able to respond to a broad cross-section of questions from Members. For WTO Members, the General Council meetings provide the Geneva Missions with their only opportunity to evaluate candidates against each other in a common setting, even if the candidates meet individually with some or many of the Geneva Missions before or afterwards.

Conclusion

We are six days into the two-month Phase 2 of the WTO Director-General selection process. The next three days are a very important period for each candidate to articulate his or her vision for the WTO going forward and provide information to WTO Members’ Geneva Missions that will help the Missions understand why the particular candidate is the best fit for the Organization for the next four years.

The eight candidates make for an interesting group with differing experiences and presumably different visions for moving the WTO forward. The road from eight candidates to the new Director-General continues tomorrow as the General Council hears from each candidate.

The WTO is in crisis on various fronts. With the current Director-General stepping down in 48 days, who emerges as the next Director-General may have an important role in whether the WTO can regain its importance for global trade. Good luck to all of the candidates.