The next Director General of WTO

These are unhap­py times for the World Trade Orga­ni­za­tion. Just ten-years after its cre­ation it is strug­gling to main­tain the con­fi­dence of it’s mem­bers while besieged by vio­lent “anti-glob­al­iza­tion” protests and con­sti­pat­ed by its own deci­sion-process­es. The oppor­tu­ni­ty to select a new Direc­tor Gen­er­al in the next few months looks like a chance to attack these prob­lems from a new angle. A major chal­lenge is to bridge wide dif­fer­ences among coun­tries in their under­stand­ing of the WTO Agree­ments and par­tic­i­pa­tion in the trad­ing sys­tem. Despite the evidence—most spec­tac­u­lar in China—that open­ing to the glob­al mar­ket is a proven path to growth and that closed economies stay poor, the reluc­tance of gov­ern­ments in the devel­op­ing coun­try major­i­ty of WTO to open mar­kets in step with the indus­tri­al­ized world, matched with the refusal of rich coun­tries to open their mar­kets to the low cost food, ser­vices and man­u­fac­tures of the devel­op­ing world, has crashed WTO trade nego­ti­a­tions twice in the past four years. There are four can­di­dates for the Direc­tor Gen­er­al’s job. Judged on tech­ni­cal abil­i­ty and expe­ri­ence, Car­los Perez del Castil­lo, the for­mer Uruguayan Ambas­sador to WTO, prob­a­bly has the edge over the oth­ers. He has direct, inside, expe­ri­ence of the man­age­ment of WTO nego­ti­a­tions at the top lev­el over a long peri­od. He is an economist—who trained in the Aus­tralia Bureau of Agri­cul­tur­al Eco­nom­ics at the start of his career—with an excel­lent rep­u­ta­tion as a recent Chair­man of the WTO’s Gen­er­al Coun­cil. He also 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 admin­is­tra­tive expe­ri­ence nec­es­sary to run the Sec­re­tari­at. But the one to beat seems to be Pas­cal Lamy, the wide­ly admired for­mer Trade Com­mis­sion­er for the Euro­pean Com­mis­sion. He has charis­ma, charm, an out­stand­ing record in man­ag­ing the coor­di­na­tion of Euro­pean trade pol­i­cy and, prob­a­bly, the cred­i­bil­i­ty with key gov­ern­ments to take the WTO in new direc­tions. The ques­tion is: do we want to move in the direc­tion in which M Lamy is like­ly to lead? Lamy may well win the sup­port of the USA, which has been cool to the Brazil­ian can­di­date: the out­go­ing US Trade Rep­re­sen­ta­tive Robert Zoel­lick has obvi­ous­ly built a good per­son­al rela­tion­ship with his Euro­pean coun­ter­part (as has the Aus­tralian Trade Min­is­ter, Mark Vaile). He has the sup­port of the EU, too, after being nom­i­nat­ed by France whose con­ser­v­a­tive gov­ern­ment appar­ent­ly did not want to offer the Lamy a posi­tion at home. Also, he may well win the endorse­ments of Japan, Korea, the nordic gov­ern­ments and of those devel­op­ing coun­tries, includ­ing Indone­sia, whose first con­cern may be that the Latin Amer­i­can can­di­dates would be too keen on fur­ther reform of Agri­cul­tur­al mar­kets. It’s unlike­ly that the sub­tle Lamy would defend the ‘old fash­ioned’ agri­cul­tur­al trade bar­ri­ers Europe has main­tained since the 1950s. His boldest—possibly most characteristic—move as Trade Com­mis­sion­er was to seize the ini­tia­tive for re-start­ing the WTO nego­ti­a­tions after the Can­cún dis­as­ter by announc­ing in May 2004 that the EU would agree to elim­i­nate their agri­cul­tur­al export sub­si­dies once the talks resumed, forc­ing some of his Mem­ber gov­ern­ments to scram­ble to catch-up with the news. But his oth­er instincts are more wor­ry­ing. As a Euro­pean social­ist Pas­cal Lamy val­ues the order of reg­u­la­tion and the pro­tec­tion of inchoate ‘com­mu­ni­ty val­ues’ above the ‘dis­rup­tion’ of mar­ket mech­a­nisms and ‘indi­vid­u­al­ism’. When Lamy speaks from the heart—as he did in Sep­tem­ber last year at a con­fer­ence on the future of the mul­ti­lat­er­al trad­ing system—he advo­cates a new class of excep­tions to WTO rules to safe­guard ‘social choic­es’. [A copy of the speech is avail­able at “here”: es/spla242_en.htm] His rec­om­men­da­tions for “impos­ing lim­its on inter­na­tion­al inte­gra­tion to defend the legit­i­ma­cy and diver­si­ty of social choic­es” were deliv­ered in a mea­sured way. But they are only a more sophis­ti­cat­ed ver­sion of an argu­ment against glob­al mar­ket inte­gra­tion pro­mot­ed by anti-trade and anti-glob­al­ist NGOs. It’s a pol­i­cy fraught with ‘moral dan­ger’ since there are no lim­its in prin­ci­ple to the ‘social choic­es’ that such a new class of legit­imized bar­ri­ers would pro­tect and every pro­tec­tion­ist in the world could be expect­ed to claim its shel­ter. There are already ‘excep­tion­al’ pro­vi­sions built into the WTO that acknowl­edge the right of gov­ern­ments to take non-com­pli­ant action, when nec­es­sary, to secure objec­tives such pre­serv­ing scarce resources or nation­al secu­ri­ty or even ‘pub­lic morals’. But in the last few years, the bal­ance between the rules and the excep­tions has been set askew by bar­ri­ers that Europe began to deploy while Lamy was its top trade offi­cial. The EU has dra­mat­i­cal­ly expand­ed its use of WTO excep­tions and ‘val­ues based’ pro­tec­tion under the guise of ‘pre­cau­tion­ary’ safe­ty bans on imports of food prod­ucts; or dressed-up as con­sumer pro­tec­tion in the form of ‘geo­graph­i­cal indi­ca­tions’ of ori­gin for food and bev­er­ages. Europe has invoked ‘com­mu­ni­ty val­ues’ to jus­ti­fy a ban on the sale of meat from hor­mone-treat­ed cat­tle that has no health jus­ti­fi­ca­tion, to lim­it for­eign ser­vices com­pe­ti­tion on the grounds of Europe’s stronger ‘pri­va­cy’ con­cerns about the move­ment of data and to first ban and then restrict the import of phar­ma­ceu­ti­cals and seeds pro­duced with genet­ic tech­nolo­gies of whose use even the Pope approves. Does the WTO, right now, need a Direc­tor-Gen­er­al whose ideas and whose record in office reveal a focus on lim­it­ing the impact of inter­na­tion­al inte­gra­tion when the major­i­ty of WTO mem­bers are only begin­ning to real­ize the oppor­tu­ni­ties and ben­e­fits?  Or does it need a Direc­tor-Gen­er­al who will defend and help repair a world mar­ket sys­tem already show­ing frac­tures cre­at­ed in the name of the dif­fer­ent val­ues and ‘com­mu­ni­ty pref­er­ences’? Cre­at­ing new bar­ri­ers in the name of ‘social choices’—as M Lamy advocated—would be an excur­sion in pre­cise­ly the wrong direction.

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