The next Director-General of WTO

Australia should support Carlos Perez del Castillo for the position of the WTO Director-General. A decision on whom to support for the post of Director-General is not a major issue of trade policy or diplomacy—despite the ridiculous effort spent, five years ago, on the appointment[1]. The first consideration is not about foreign-relations or polticial allegiance, but who is best qualified for the job. The WTO desperately needs a Director-General who is able to lead and who knows what that means in the WTO context. The Director-General’s job is to head the WTO Secretariat; he (they’ve all been male) doesn’t take decisions about the Agreements, he doesn’t decide trade disputes, he doesn’t tell any Member how to run their trade policies. Nor should he. All of those things are the responsibility of the Member governments who must be answerable to their own constituents. TheDirector-General of WTO, however, moderates the collective power of the Organization. This power derives from the commitment of all Member governments to secure a global commons—the open global trading environment—and it is backed by the only compulsory system of multilateral disputes adjudication in existence. The management of this power requires great subtlety: the WTO Agreements allow Member governments to bring peer pressure on each other to comply with best practices in the regulation of trade. At crucial moments, the Director-General can manage and steer those pressures towards a decision (by one member or by the membership at large) that builds a better trading environment by, for example, resolving a dispute or defining a new Agreement. The D-G is a servant of the system and should not be simply a servant of the Members. He must be able to identify (from experience or by talent) the right opportunities for agreement and the most fruitful outcomes. He has to help Members achieve those outcomes without trying to substitute for their responsibility. It’s an almost impossible diplomatic task. The D-G has to work the magic of consensus—now among 150 Members representing the whole UN—without falling into a vicious cycle of agreements cobbled together from narrowing horizons and easy, lowest-common-denominator targets. The D-G must also run the Secretariat; attract and keep the highest quality professionals while managing politically-driven appointment pressures; deliver first class legal, economic and policy analysis on very short deadlines; answer for the quality of the Secretariat’s work and protect it’s independence against powerful Members; run a huge training enterprise for developing country officials; eek out a very modest budget. There are currently three good candidates for the position: two Ambassadors to WTO—Carlos Perez del Castillo (formerly the Ambassador of Uruguay) and Felipe de Seixas Correa (currently Ambassador for Brazil)—and the previous EU Commissioner for Trade, Pascal Lamy. Each of them is highly experienced but—judged on technical ability and experience—Perez del Castillo has the edge over the other candidates.  He has direct, inside, experience of the management of WTO negotiations at the top level over a much longer period than his Brazilan colleague (Lamy has never had WTO responsibilities). He is an economist—who trained in the Australia Bureau of Agricultural Economics at the start of his career—with an excellent reputation as Chairman of the WTO’s General Council. He has a keen sense of how to manage an issue in the WTO (in 1986 he established a coalition of countries including Australia that later became the Cairns Group) and the adminstrative experience necessary to run the Secretariat. As a senior official of a small county he is well-practiced in the business of multilateral decision-making. Pascal Lamy is, however, the candidate to beat. He has powerful claims to the job both for his personal qualities and his potential support base. Superficially, there seems to be no-one better qualified to manage the subtle, difficult, intellectually demanding role of Director-General of the World Trade Organization than a man who so successfully managed a subtle, difficult, intellectually demanding role coordinating the trade policies of the 15 members of the EU. If ever anyone has managed a bag full of such cats better than Lamy, I’d like to know about it. Lamy may well win the support of the USA, which has not supported the Brazilian candidate, as “Ben Muse”: notes in his recent round-up. The US Trade Representative Robert Zoellick has obviously built a good relationship with Lamy, as has the Australian Trade Minister, Mark Vaile: bq. “Mr Lamy and Mr Vaile have a good personal relationship built up over several years in their respective portfolios. The Government is understood to have been deeply impressed by the European’s pro-reform record on vexed issues such as agricultural subsidies. Mr Lamy is also seen as having the necessary political skills to breathe life into the Doha round of trade talks.” (“The Australian”:,5744,11854605%255E2702,00.html) Lamy has “the support of the EU“: (the French government apparently did not want to offer the socialist Lamy a position at home). Also, of course, there’s the African, Carribbean and Pacific [ACP] group of developing countries that have depended for years on preferential access to the European market and who generally act as EU clients in the matter of appointments. Finally, he may well win the endorsements of Japan, Korea, the nordic governments and a host of developing countries (including Indonesia) whose first concern is that the Latin American candidates would be too keen on further reform of Agricultural markets. I suspect, however, that it would be a mistake to count on Lamy being anything quite so predictable as a defender of the agricultural trade protection which has been a hallmark of European trade policy since the 1950s. In fact, his boldest—possibly most characteristic—move in recent years has been to seize the initiative for re-starting the WTO negotiations after the Canc√∫n disaster by “announcing”: in May 2004 that the EU would agree to eliminate their agricultural export subsidies (forcing some of his Member governments to catch-up with the news). So, shouldn’t the Australian government join a potential ground-swell for the “crafty”:, adaptable, charming Pascal? No. I wouldn’t advise this. Lamy is a European socialist: whether in agriculture or in other sectors of the economy he values regulation, control and the protection of inchoate ‘community values’ above market outcomes in a way that will make future world trade more difficult, not more open. When Lamy speaks from the heart—as he did last year on the use of trade protection to secure “collective values”:—he reveals a socialist utopian streak; a hankering after programs of perfectibility and a deep distrust of the ‘disruption’ that markets can cause to the pursuit of these alleged ‘collective values’. There’s nothing necessarily objectionable in this, of course, as a national political platform; it’s a sophisticated version of an argument that might be heard from radicals—including conservative radicals—anywhere (think ‘family values&#8217). But it’s not a prejudice that we can afford in the Director-General of WTO who must defend and promote a world market system whose greatest future challenge will be to minimize the impact of barriers created by the different values and ‘community preferences’ of its 150 Member economies.  The WTO already provides narrowly-defined exceptions to it’s basic rules that permit Member economies to take ‘non-compliant’ action to safeg uard the environment or even ‘public morals’ when no other means can be found to do so. But the fundamental orientation of the WTO, and the root of the ‘best practices’ in trade policy that it promotes, is to allow markets and market prices—the expression of consumer preferences through the indifferent mechanisms of price rather than through ideological conceptions—to allocate production and consumption. The trade protection of incompatible national standards and ‘community’ requirements—to protect animal welfare, or food quality, or environmental conditions of production, or labor practices, or gender roles, or cultural ‘coherence’ etc. etc.—represent the biggest single danger to a more integrated world trading system. Australia’s services and agriculture trade are especially vulnerable to these growing barriers at home (our own excessive quarantine protection) and abroad. Our most important export markets—for food or education services, for example—are more culturally and economically diverse than those served by most other rich countries. Lamy sees himself as a defender of open markets. But I think global trade will face a less certain future if his “stated priorities”: gain ground. Finally, there’s the matter of the short-term. The claim that Lamy could ‘breathe life into the Doha round of trade talks’ is nothing more than media spin. No D-G can inspire progress in the talks: the Member governments have to provide the motor as Lamy did with his subsidies coup last May. The next D-G will, however, have to preside over the implementation of the Agreements to emerge from this round. In that role, we will need an expert technician even more than an inspiring politician. fn1. Then, the squabble among the Geneva diplomats derailed preparations for the 1990 Ministerial meeting at Seattle, contributing to it’s horrible failure.

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