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Wanted: WTO Chief Who Can Give Global Trade Negotiations New Momentum
An unprecedented nine candidates are running to replace Pascal Lamy as head of the World Trade Organization in May. The winner will need to jump-start WTO efforts to expand trade opportunities, which could provide much-needed global growth.
Another election is taking place below the radar of most traders, but it could have a major impact on the global economy. An unprecedented nine candidates are campaigning to take over from Pascal Lamy as director general of the World Trade Organization at the end of May. Its a fair question why anyone would want the job, though.
With much of Europe in recession, the U.S. growing at a subpar rate and many emerging markets having cooled, trade could offer some much-needed stimulus to global growth. The WTO forecasts that world trade will expand by 4.5 to 5.6 percent this year, up from a lackluster pace of 2.5 percent in 2012. But that growth is far from assured, and the WTO itself is part of the reason.
Differences between traditional trading powers such as Europe, Japan and the U.S. and emerging giants like China and India have plagued the WTOs efforts to expand trade. The Doha Round, an ambitious trade liberalization effort launched in the wake of the September 11, 2001, terrorist attacks, has been stalled since talks broke down in 2008. The deadlock has prompted a number of countries to sidestep the WTO and seek to cut bilateral or regional deals. President Barack Obama and European Union leaders took the largest such initiative last month by agreeing to begin talks on a Transatlantic Trade and Investment Partnership.
At a meeting of the WTOs general council in Geneva in late February, some delegates from developing countries expressed concern that an EU-U.S. pact could undermine the WTOs global trading system, which is based on the principle that countries extend equal trading privileges to all partners rather than cutting separate deals.
Even some WTO candidates acknowledge that the organization risks sinking into irrelevance. It has been now almost 20 years since anything has been negotiated in the WTO, Roberto Carvalho de Azevêdo, Brazils ambassador to the WTO, said at a recent Geneva news conference laying out his candidacy. Unless we find a way to move forward, this system will remain paralyzed.
The nine candidates have impressive credentials. Most are serving or have served as trade ministers, and they hail from all corners of the globe: three each from Latin America and Asia, two from Africa and one from the Middle East. Indonesias Mari Elka Pangestu has promised to advocate fair trade as a tool for development. We can see how trade has transformed our economy, she said in Geneva. But Lamys two predecessors were Asian, which could hurt Pangestus chances as well as those of South Koreas Taeho Bark and New Zealands Tim Groser.
The big field indicates that although the WTOs 158 member countries may worry about the organizations effectiveness, they havent given up on it. Countries put forward candidates for a reason because they want to get something done, says Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics in Washington and a former U.S. trade negotiator. But the WTO is far short of a breakthrough. Doha was conceived as a grand bargain whereby advanced countries would help poorer ones by lowering tariffs and agricultural subsidies while developing nations would open up their markets. But the world has changed radically over the past decade, with China which only joined the WTO in 2001 becoming the No. 1 global exporter and a big rival of the traditional trade powers.
Major trading countries havent figured out how to have an ambitious and balanced deal, Schott says.
WTO officials hope to revive the momentum of trade negotiations with a minideal, or Doha down payment, at a ministerial meeting in Bali in December. The likely centerpiece would be trade facilitation: cutting through some of the red tape at borders that can impede trade as much as hefty tariffs. But the WTO will need an effective leader to strike a deal.
The nine candidates will be criss-crossing the globe this month in search of support before the succession contest shifts back to Geneva in April. Many Latin American countries feel its time their region held the top job, but the three Latin contenders Azevêdo, Mexicos Herminio Blanco and Costa Ricas Anabel González could end up canceling one another out. Meantime, candidates face the delicate task of trying to line up U.S. and Chinese support without appearing to be Washingtons or Beijings chosen one. If the U.S. or China comes out in favor of a candidate, that person is dead, says one veteran trade official.