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The WTO Leadership Conundrum

IMD Professor Carlos A. Primo Braga comments

January 28, 2013

Global governance is not a sexy subject. It has, however, attracted a great deal of attention over the last few years as the global financial crisis and the selection of new leaders for key global institutions (e.g., the IMF in 2011 and the World Bank in 2012) raised questions about the quality and the legitimacy of multilateral institutions. Now it is the WTO's turn, as the second term of Pascal Lamy comes to an end. The decision of who will be the next Director General (DG) of the WTO is important not only for the institution, but also for the world economy. After all, trade liberalization and WTO disciplines are key ingredients of a recipe for a healthy world economy!

The good news is that, to the surprise of most observers, there is an "embarrassment of riches" in terms of the number of qualified candidates nominated: nine candidates, a record in the history of the WTO (and of its predecessor the GATT).[1] They come from Latin America (Brazil, Costa Rica, Mexico), Africa (Ghana, Kenya), the Middle East (Jordan) and Asia-Pacific (Indonesia, New Zealand, South Korea). Four of the candidates currently have ministerial rank while three others are ex-trade ministers of their countries. Moreover, all of them have a substantive trade negotiations background either at the multilateral or bilateral levels.

The bad news is that the WTO selection process has often generated acrimonious disputes and the prospects for an easy and quick resolution are not good, if history is taken as a reference. The selection of Renato Ruggiero in 1995, for example, became a heavily politicized process leading to a compromise that limited him to a four-year term and the understanding that his successor would be a non-European. The next selection (1998-99) generated an even more pitted battle and the ensuing conflict could only be resolved by splitting the term of the DG between the two main contenders, with Mike Moore (New Zealand) and Supachai Panitchpakdi (Thailand) being allocated successive three-year terms.

This experience led to significant soul-searching among WTO members and efforts to clarify the rules of the game with respect to the selection process. An attempt was then made to better codify the procedures for the appointment of the DG.[2] These rules governed the next selection that led to the appointment of Lamy (who competed against candidates from Brazil, Mauritius and Uruguay) in 2005. Although this time the process went more smoothly, it would be hard to attribute this to the rules per se. After all, the rules simply codified procedures to foster consensus-building around a candidate. 

This consensus-building exercise differentiates the WTO from the "dominance" model of governance which still prevails in the Bretton Woods (BW) institutions (which although contested in recent selections has always generated a European Managing Director for the IMF and an American President for the World Bank Group).  It is often noted that governance procedures in the BW institutions promote efficiency at the cost of political legitimacy, while governance at the UN generates exactly the opposite results. The WTO procedures occupy an intermediate space. In theory, its consensus-fostering procedures are based on a "no veto, no vote" culture that puts a premium on political legitimacy, while efforts are made to limit UN-style politics. In practice, however, the process provides ample scope for interpretation and the use of political influence. 

The key phase of the process will take place in April-May when the Chair of the WTO General Council, assisted by facilitators (the chairs of the Dispute Settlement Body and the Trade Policy Review Body), conduct "confessionals" with the Ambassadors representing the 158 members.  In these confessionals, diplomats are typically asked to express their preferences. These preferences are conveyed either explicitly or in a coded style that needs to be interpreted by the troika (i.e., the 3 chairs). Criteria such as strength of support in terms of first and second preferences and the extent of geographical spread of each candidate's support were used in the past by the troika. Successive rounds of consultations take place until the consensus candidate is identified. In short, the system relies on trust (for example, the troika is not required to disclose the exact support numbers associated with each candidate as the process evolves).

The international community is looking for a candidate who will be able to not only exercise intellectual leadership and diplomatic skills in advancing the multilateral trade agenda, but who is also a good communicator with strong managerial skills. The challenges ahead include bringing to closure the Doha round, disciplining the evolving wave of preferential agreements, and rekindling the interest of the private sector in the WTO. Time is short, since it is important to complete the process by May 31st (and the track record of the WTO in respecting its own deadlines is not good…) so that the new DG can begin to help prepare the 9th WTO Ministerial Conference in Bali in December 2013.

As previously mentioned, there are many strong candidates. However, if the selection process is not handled with care, we can relive past battles – and in view of the large number of candidates – contaminate the whole system in a negative fashion. As an astute observer of the WTO system noted in 1999: "… there must be a better and easier way to pick the man (emphasis added). Experience has shown how difficult the consensus-building process has become." One can only hope that all parties involved will reflect upon past experiences and will strive to avoid a deadlock. There is, however, a silver lining in all of this. Progress can be inferred from the simple fact that the above comment is outdated. After all there are three female candidates among the nine suitors… May the best person win.

Dr. Carlos A. Primo Braga is Professor of International Political Economy at IMD and Director of the Evian Group@IMD

[1] For the bios of the candidates see http://www.wto.org/english/news_e/news13_e/dgsel_03jan13_e.htm

[2] See WTO (2003) « Procedures for the Appointment of the Director-General, » WT/L/509.



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