Can new leadership fix the World Trade Organization's existential crisis?

(left-right) Among the 8 formally nominated WTO DG candidates; Ngozi Okonjo-Iweala, Abdel-Hamid Mamdouh. Source: Frederick Abbott.

Promising pitches. The race for the leadership of the World Trade Organization (WTO) gained traction this week as eight competing nominees presented their pitches to fill Azevêdo’s role to the WTO General Council, and later to the press and public. The nominees include: Ngozi Okonjo-Iweala, the chair of Gavi, the Vaccine Alliance, and former finance minister of Nigeria; Abdel-Hamid Mamdouh, former director of WTO’s trade in services and investment division; WTO’s founding deputy director-general Jesús Seade Kuri; as well as Kenyan diplomat and cabinet official, Amina C. Mohamed; the United Kingdom’s former trade secretary, Liam Fox; Moldova’s Tudor Ulianovschi; Republic of Korea’s Yoo Myung-hee; and Saudi Arabia’s Mohammad Maziad Al-Tuwaijri.

COVID-19 has triggered the largest slump in trade ever. Source: WTO.

Why the WTO’s race to the top is important. As the Covid-19 pandemic prompts many countries to ban the export of medical supplies, hoard essential healthcare products and conduct backroom negotiations with vaccine developers, it’s becoming clear that WTO’s role as an arbitrator of both intellectual property as well as global trade rules will have immediate repercussions on global health as well as Covid-19 economic recovery. The Organization also faces deeper challenges to ensure multilateralism can survive in global trade agreements, as well as to ensure trade rules don’t undermine climate and sustainability - as per swelling debates over subsidies for fisheries that are accelerating the depletion of ocean fish stocks.

Mamdouh: “The critical importance of trade is now beyond debate, whether for growth, development, job creation, poverty reduction or World Peace.

“And, remember, trade is no more about merchandise crossing borders. It’s also about services and intellectual property.”

A thumbnail of suggested reforms. Despite the looming challenges, the WTO can be reinvigorated, asserted nominees in their speeches. Here’s a thumbnail of a few comments some of the candidates made:

Global Health and intellectual property rules. In mid-May, about 90 countries had introduced export prohibitions or restrictions on health products, according to the United Nations Economic Commission for Africa. Okonjo-Iweala, a Harvard trained development economist, has stood out as one of the most vocal candidates on that issue, pledging to ensure developing countries aren’t left standing in the queue for COVID-19 health technologies - whilst also respecting intellectual property rights:

"The world should be able to come to the point where mechanisms are put in place to make vaccines available. The world trading system should be a facilitator of that and not an impediment."

“It’s critical that everyone has access to live-saving vaccines. If I became WTO’s DG, I would have a very strong collaboration with the [WHO’s ACT] make sure there are no barriers, no restrictions on the availability of these vaccines whilst respecting the intellectual property rights of those who have manufactured the vaccines.

Ngozi Okonjo-Iweala, Nigeria's former finance minister. Source: WTO

In contrast, Mamdouh took an even sharper stance on intellectual property rights, acknowledging there are ‘still issues’ impeding wider uptake of WTO’s Doha Declaration on the TRIPS Agreement and Public Health - which affirmed that member states can temporarily circumvent patent monopolies, to produce or import generic versions of critical health technologies under ‘emergency circumstances’ like a pandemic.

“The reform agenda will no doubt identify additional items for negotiations. The backlog, including Doha issues, is still there”, said Mamdouh, who was involved in the landmark ‘Doha Round’ of 2001 that made the declaration on public health.

“You will recall, in Nairobi [in 2015], Ministers disagreed on the Doha framework as a basis for negotiations [over intellectual property rights], but all agreed on the need to address Doha Issues. “

In late July, WTO will hold a special session of the TRIPS council to discuss these unresolved issues, although there have been attempts to delay the meeting by the United States and Switzerland, ostensibly to postpone this very debate, some critics say.

Restore viability of WTO’s dispute settlement function.  WTO’s troubled dispute settlement mechanism has also ‘failed’ to produce significant results since 1995, said Mamdouh. As just one example, WTO negotiations to end harmful fishing subsidies that support the plundering of ocean fish stocks have dragged on for five years - despite a 2015 pledge by countries to prohibit subsidies that contribute to overfishing by 2020. ‘Political issues remain to be resolved’, said Keith Rockwell, a WTO official who spoke at a panel on the fishing issue last month as well as moderating this week’s candidate’s press conferences.

There’s also a ‘chronic imbalance’ between the WTO’s dispute settlement function and its negotiating function, or the ‘legislative’ and ‘judicial’ functions of the Organization. This ‘unsustainable’ imbalance needs to be urgently restored to avoid repeating mistakes from the past, said Mamdouh.

“In any legal system, there needs to be a balance between the “legislative” and the “judicial” functions. For the WTO, these are the negotiating and the dispute settlement functions.”

“What we have seen over the past 25 years was that the dispute settlement function gained strength...while the other functions [like the negotiating function] have subsided completely, and particularly the negotiating function break-down is causing huge difficulties for the organization.”

Source: WTO.

Rebuild trust in the multilateral trading system. In recent years, trade tensions among WTO members have flared up evermore sharply, “threatening the fundamental architecture” of a multilateral trading system (MTS) that brings shared prosperity and development for everyone. Warns Okonjo-Iweala:

“In recent years, the multilateral trading system (MTS) has been going through difficult and challenging times. But, in my view, the world now needs, more than ever, a reinvigorated WTO [and the MTS].“

“The rules-based MTS is a public good that underpins peace, security, stability and a chance for prosperity in the world. Every effort should therefore be made to safeguard, improve and renew it to enable it effectively address the challenges of the 21st century.”

The role of women in trade. It is “fundamentally wrong” that trade departments around the world are still male-dominated, said British candidate Liam Fox, a medical doctor by training who later became trade and defense secretary of the UK. His plan to upend the status quo:

“I commit to you today that if you give me the honour of becoming the next DG then I will ensure that at least half of the WTO’s most senior leadership team are women.”

Liam Fox, UK's former secretary of state for international trade. Source: WTO.

An existential crisis at WTO. Even before COVID-19, the Organization faced a minefield of much-needed reforms as it struggled to respond to the realities and needs of diverse populations, companies and consumers, said candidates on Wednesday. Mamdouh:

“The international trade landscape has dramatically changed, and the WTO system has been unable to update its rule book. In order to prevent the Organization from becoming obsolete and outdated, it is important that mechanisms be adopted to modernize it.”

A Swiss take on the bottom line. Although there are British, European and Korean candidates who could represent the G-7 economies, none of the big trade players seemed to have publicly picked a favorite nominee yet, including the United States, the European Union  - or Switzerland.

However, one desired quality in the new WTO DG will be ‘political clout’ - the head of the Swiss Permanent Mission to the WTO Didier Chambovey, declared in an interview with Swiss Info. He was referring to rising tensions within the Organization that have slowed down the Organization’s progress. Chambovey:

‘We need a personality with managerial skills who can carry out WTO reform, which is a tall order, and who is able to listen to member states and build a consensus”.