WTO faces a nine-way slugfest

For eight years, Pascal Lamy has kept a staid, European hand on the World Trade Organization, guiding it beyond the convulsive era of anti-globalization protests even if he was unable to make much headway on the stalled Doha round of global trade talks.

But the impending end of the Frenchman’s tenure has touched off a worldwide scramble to replace him, threatening to stress an institution that thrives on consensus and pitting the interests of the United States and other developed countries against those of the developing world.

The WTO director general doesn’t have the influence over loans and investments that the president of the World Bank enjoys, or the financial clout of the International Monetary Fund’s managing director.

But neither does the role have any “gentleman’s agreement” that doles out the position to a European or an American. Among the WTO’s 157 members, it is a one-nation, one-vote free-for-all, and with the growing influence of countries like Brazil and China in the global economy, the lobbying for the job is expected to be intense.

Nine nations nominated candidates before the Dec. 31 deadline — more than twice the number in competition when Lamy took over in 2005. Seven are from developing countries — trade ministers, ambassadors and current and former officials — one is from South Korea, and another is from New Zealand. That guarantees the new WTO head won’t come from the Western developed world.

But beyond that, all bets are off.

All the candidates “know this place, and none towers above the field,” said a Geneva-based trade official who discussed the race on condition of anonymity.

Much is at stake. The Doha talks have been at the center of the WTO’s agenda for a decade. But the acknowledgment of a stalemate is now widespread — a sign itself of tension between the developed and developing world over basic policy questions — and the number of alternate trade and economic debates within the organization is growing.

The United States and a group of 19 nations are trying to negotiate a broad agreement to open their service sectors — a key interest of U.S. businesses. China’s rapid economic rise has triggered important discussions about how to classify a country as “developing” or an economy as “market-based.” Both definitions have real-world implications: Developing nations get more leeway under WTO rules to protect their local economy; China is fighting to shed its “non-market economy” designation so it is not so easily slapped with anti-dumping penalties.

Other countries have pushed the organization in new directions — in Brazil’s case, arguing that WTO-sanctioned penalties should be used to punish nations that distort exchange rates to gain a trade advantage.

The proposal grew out of Brazil’s worry about China as well as its anger over U.S. Federal Reserve policies that Brazilian officials say cheapened the dollar at the expense of other currencies.

Brazil has nominated its current WTO ambassador, Roberto Carvalho de Azevedo, to lead the organization. In a news conference Thursday, he said he wants the organization to look for ways to confront the trade effects of national exchange-rate policies.

Azevedo said he thought the issue could be confronted at the WTO “without a bloodbath,” but he was adamant that the trade organization had a role in determining ways to counter the effects of misaligned exchange rates.

The candidates’ positions on this and other issues will be spelled out in a series of formal interviews and press appearances at the end of this month.

The process is somewhat opaque. The three chairs of the WTO’s main membership committees conduct a series of private straw polls and use the results to gradually winnow the field — pressuring the least-favorite candidates to withdraw until a consensus favorite emerges by May.

Hopefully.

In 1999, two finalists refused to back down — New Zealander Mike Moore and Thailand’s Supachai Panitchpakdi. They ended up sharing what was then a six-year appointment, with three years each — the first time the WTO head came from outside western Europe.

That process left the organization leaderless ahead of the tumultuous “Battle in Seattle,” the ministerial meetings that were overshadowed by massive anti-globalization protests.

Things have run more smoothly since — Lamy was unopposed for a second four-year term in 2009 — but the crowded field and dispersion of economic power around the world could make this race more complicated.

Azevedo, for example, is one of three Latin American candidates, alongside nominees from Mexico and Costa Rica. Although Brazil has a strong voice among developing countries, Mexico is a close economic partner of the United States, and Brazil has been criticized as a suddenly erratic actor on trade issues because of new tariffs and import rules imposed to help its manufacturers.

South Korea, a close U.S. ally on many trade and political issues, has nominated its trade minister, as has New Zealand — the only two candidates from developed countries. Indonesia, where the United States is trying to deepen trade ties, has also nominated its trade minister. Ghana and Kenya have offered nominees from Africa, a continent that tried to break the U.S. hold on the World Bank presidency with a candidate for that job last spring. Jordan, a close U.S. ally in the Arab Middle East, has put forward a former trade official.

The United States has not endorsed a candidate, and unlike the top jobs at the IMF and World Bank, where the country has a heavy voting share in one case and a predetermined hold on the job in the other, it has no influence beyond its ability to lobby and cajole.

In his news conference, Azevedo said he’d appeal to fairness in his campaign. The West has had plenty of turns running the WTO and its predecessor trade group. Asia had a short stint as well.

That leaves Africa and Latin America.

“It is important to have this alternation and turnover so we can have greater credibility, so everybody knows it will have a chance to lead,” he said.

January 11, 2013

Source: Washington Post