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”:http://www.acsalaska.net/~benmuse/blog/2005_01_01_archive.html#110465471209183559 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”:http://www.theaustralian.news.com.au/common/story_page/0,5744,11854605%255E2702,00.html) Lamy has “the sup­port of the EU”:http://abcnews.go.com/International/wireStory?id=324500 (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”:http://www.inquit.com/article/3/pascal-takes-a-punt 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”:http://www.inquit.com/article/259/between-the-lines, 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”:http://www.inquit.com/article/354/using-trade-barriers-to-safeguard-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”:http://www.inquit.com/article/354/using-trade-barriers-to-safeguard-values 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.

One Comment

  • Philip Mercado wrote:

    Hi Dr. Gallagher…very good piece. Are you able to pro­vide fur­ther advise for mem­bers in the upcom­ing appoint­ment of the new DG (WTO) in May 2013. Your views are cer­tainly welcomed.

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