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Wednesday, 12 August 2020

An African director-general for the WTO?

With the multilateral trading system facing critical challenges, now could be the time for an African to be the next director-general of the World Trade Organisation

Sayed Attia Moawad , Thursday 23 Jul 2020
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On 14 May, World Trade Organisation (WTO) Director-General Robert Azevêdo announced that he would step down on 31 August, cutting short his second term in office by exactly one year. The organisation then opened the door for respective governments to nominate their candidates between 20 June and 8 July for its new director-general.

Eight candidates have been nominated for the position. The list covers most continents of the world, Africa having three candidates (Egyptian, Kenyan and Nigerian nationals), Asia two (Saudi Arabian and South Korean), Europe two (British and Moldavian) and North America one (Mexican). 

While commentators continue to have high expectations of the WTO as a negotiating forum, there are some shortcomings that affect its position as the sole guarantor of the multilateral rules-based trading system. These shortcomings include, inter alia, (1) the increase in regional and bilateral trading agreements and the continued erosion of the rules underpinning the multilateral trading system, an indication of frustration with the WTO; (2) the slow progress of the Doha Round of trade negotiations to the extent that some consider them to be a failure; (3) the standstill of the Dispute Settlement Mechanism and (4) the trade war between the US and China, which no one knows the legal basis of at the moment.

All these shortcomings indicate that there is a lack of adequate capacity to respond to such challenges. The global economic system is also facing critical challenges as a result of the outbreak of the Covid-19 pandemic, and Josh Lipsky, director of the global business and economics programme at the Atlantic Council in the US, has stated that “there is a broken global trading system, and it needs leadership to fix it.”

The Global Governance Programme at the Robert Schuman Centre for Advanced Studies at the European University Institute in Italy has conducted a survey on “Stakeholders Preferences and Priorities for the next WTO Director-General” to specify the criteria required for the next director-general of the WTO and areas urgently needing reform. 

The respondents gave the greatest weight to four desirable attributes in the organisation’s next director-general, including (i) management experience; (ii) political experience; (iii) economics training and (iv) experience as a WTO negotiator. Furthermore, the survey concluded that a potential director-general of the WTO should have personal connections and recent professional experience with three types of players, namely (1) international organisations; (2) the capitals of the largest trading powers (Beijing, Berlin, Brussels (EU) and Washington) and (3) international business. 

As for areas of reform, the survey indicated that the Dispute Settlement Mechanism is the highest priority issue facing the next director-general of the WTO. There are calls for reforming the settlement of disputes and making the relevant Appellate Body operational again and revisiting the role of appellate review. Improving compliance with notification obligations, resolving differences on special and differential treatment for developing and least-developed countries, and strengthening the trade-policy monitoring process are also areas of concern.  

The conclusions reached by the Global Governance Programme are in line with some of the areas of reform called for at a meeting of the full WTO membership on 19 July 2019, in which Azevêdo reported that reforms should focus on the three areas of (i) the Dispute Settlement Mechanism, including the impasse in appointments to the Appellate Body; (ii) strengthening the work of the WTO’s regular bodies and (iii) improving the WTO’s negotiating work. 

The outbreak of the Covid-19 pandemic has drawn attention to the importance of digital trade or e-commerce, particularly after supply chains and trade logistics suffered paralysis as a result of the lockdowns introduced to slow the spread of the virus nationally and internationally. 

Digital trade is one of the most important areas the next WTO director-general should give priority to, in coordination with the organisation’s member states, particularly as there are agreements that necessitate the use of electronic communications such as the Trade Facilitation Agreement (TFA). This makes available, through the Internet, descriptions of procedures on importation, exportation and transit, the advance lodging of documents in electronic format for pre-arrival processing, and electronic payments of duties, taxes, fees and charges collected by customs and incurred on imports and exports. 

To come back to the key question posed above – will the WTO’s next director-general be an African?

Why is Africa’s chance of winning this position high? There are many reasons that make Africa’s chance a good one, among them that Africa has not occupied this post since 1948, and it has the second-largest free-trade area in terms of the number of participating countries after the WTO itself in the shape of the African Continental Free Trade Area (AfCFTA). Moreover, most least-developed countries (LDCs) are located in Africa, meaning that an African candidate would help to make their voices heard, and the three African candidates (Egyptian, Kenyan and Nigerian nationals) are highly competent and have vast experience. 

In short, the multilateral trading system is facing a critical moment that needs two key issues to be addressed, first, the appointment of a new and very highly qualified director-general of the WTO, and second, the reform of the current Dispute Settlement Mechanism and the introduction of new agreements, such as a Digital Trade Agreement as a response to recent developments associated with the Covid-19 pandemic that have harmed the global economic system. 

An active and efficient World Trade Organisation is in the interests of all.


The writer is an expert on international trade.

 

 

*A version of this article appears in print in the 23 July, 2020 edition of Al-Ahram Weekly

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