Latin America Advisor

A Daily Publication of The Dialogue

Can a New Leader Revitalize the World Trade Organization?

File Photo: WTO. Roberto Azevêdo is stepping down as director general of the World Trade Organization in August, a year before the expiration of his term. // File Photo: WTO.

Brazilian Roberto Azevêdo, who has led the World Trade Organization since 2013, announced that he is stepping down in August, a year before the expiration of his term. Azevêdo cited personal reasons for his resignation, although it comes at a time of heightened global trade tensions and uncertainty over the WTO’s purpose and future. What did Azevêdo bring to the WTO, and how have the organization and its operating environment changed under his tenure? How will his departure affect the organization and its work? What qualities should the WTO’s next secretary general possess?

Kellie Meiman, managing partner at McLarty Associates: “When Roberto Azevêdo took over as director general of the World Trade Organization in 2013, the fissures in the post-World War II trading system were already evident. The WTO Fifth Ministerial Conference 10 years earlier had exposed the schism between developed and developing countries as WTO members attempted to advance the so-called Doha Development Agenda, launched in the emotional months after 9/11. As Azevêdo took the reins of the WTO, it was hoped that his combination of technical expertise, faith in the global trading system, and Brazilian sensibilities and charisma would be enough to move the Doha Round forward. Weeks after the Doha Ministerial, China was admitted to the WTO, in a project driven by American optimism that one of the world’s largest economies could become a rule-follower, a responsible global stakeholder and even a market economy after making commitments linked to China’s WTO succession. Today, one of the most debated questions in Washington is whether the global trading community broke the WTO by letting in an economy that never planned to play by market rules. On the other side of that debate is the factual retort that the WTO would render itself irrelevant with an economy of China’s size left on the sidelines. Meanwhile, Azevêdo toiled to advance free trade in agriculture, as well as to address subsidies and domestic supports, all priorities in Brazil, but also critical to bridging the gap between advanced and developing economies. His efforts on trade facilitation and digital trade were laudable. The global shifts witnessed during Azevêdo’s tenure were unprecedented. He did the best he could in incredibly trying times and served admirably. Unfortunately, the next director general may need to be willing to break china in order to, well, break China into the WTO once and for all.”

Kristen Hopewell, associate professor at the School of Public Policy and Global Affairs at The University of British Columbia: “Azevêdo’s resignation is a blow to the WTO. He has been widely respected during his tenure, seen as a bridge between developed and developing countries. His resignation comes at a perilous moment for the organization. The WTO’s negotiation function has been paralyzed by conflict between the United States and China. Overtly hostile to the rules-based trading system, President Trump has repeatedly threatened to withdraw from the WTO and blatantly violated its rules by arbitrarily imposing tariffs on U.S. trading partners. He has also blocked appointments to the Appellate Body, rendering it unable to function and throwing the WTO’s entire system for resolving trade disputes among states into jeopardy. Azevêdo has resigned in frustration at the sustained assault on the WTO by the Trump administration. There will undoubtedly be a battle over his successor: this process has frequently been contentious in the past, and now, amid the current crisis in the trading system, it is likely to be even more so. The WTO is essential to ensuring stability and prosperity in the global economy, but its future is in grave doubt. At the WTO, the director general is a leader with no real power beyond the power of persuasion. The new director general—whoever that will be—cannot be expected to save the institution. It is up to states to save the WTO, and its future will depend on whether the most powerful states in the trading system—the United States and China—are willing to recommit to the institution and take the necessary steps to save it.”

Gary Hufbauer, senior fellow at the Peterson Institute for International Economics: “Azevêdo’s surprise departure puts the spotlight on inherent tensions in WTO leadership. Will it remain a member-driven organization, or does it now cry out for a strong guiding hand? Should the next director general attempt to revive universal rules of world trade, akin to the Holy Roman Empire of centuries past? Or should the director general accept the realities of fragmentation, with each great power creating its own orbit of followers? Should Azevêdo’s successor be chosen based on regional and gender rotation, or should expertise be paramount? Perhaps the most pressing question is how fast the winnowing process should proceed. Member governments will nominate multiple candidates between June 8 and July 8. On this question, the right answer is delay until after the November U.S. presidential election. As president, Biden would certainly be less hostile to the WTO than Trump. He might even be friendly. And, if re-elected, it is conceivable, though not likely, that Trump would send Navarro back to academia, relocate Lighthizer in the Commerce Department and take a fresh look at the WTO. Hence the winnowing process should be slow-walked. Even if Biden is elected, 2021 will not call for a strong guiding hand at the helm of the WTO. The great powers will not be bullied from Geneva. Instead, the organization needs another competent technocrat like Azevêdo. But unlike Azevêdo, the next director general must accept that the Holy Roman Empire phase of WTO life has passed. Instead, as Azevêdo was late to recognize, the future is plurilateral accords among like-minded members. And as for rotation, my favorite is Arancha González, now Spain’s foreign minister. She is super-competent, drawing from her years as Pascal Lamy’s deputy and head of the International Trade Center. True, she’s not from Africa, but geographic rotation should not be a paramount consideration.”

Richard Eglin, senior trade policy advisor at White & Case: “Each WTO director general inherits a legacy from his predecessor. In Roberto Azevêdo’s case, it was the weakening of U.S./E.U. hegemony over the multilateral trading system as China, India and other developing countries demanded that their voices should be heard. Forging a consensus that the WTO must have in order to move forward became increasingly difficult. As the U.S.-China relationship deteriorated, bilateralism replaced multilateralism, frustration was taken out on the WTO, its dispute settlement system and its negotiating agenda, and we experienced the biggest retreat from multilateralism for the global trading system in 75 years. Azevêdo, as any other WTO director general, can use his personal influence to encourage the membership to create multilateral solutions to trade policy challenges, but he cannot instruct the membership what to do, certainly not its two biggest members. The challenges facing a new WTO director general are spiraling: a drift toward plurilateralism; redefining regionalism as the United Kingdom breaks away from the European Union but each searches for new global trade partnerships; the threat of more protectionism in globalized supply chains after the Covid-19 pandemic; demands to rewrite WTO rules on development, state ownership and subsidies; getting to grips with old problems, in particular agriculture, and creating new rules for e-commerce and other 21st century issues; and re-engineering the WTO, in particular its dispute settlement system. Azevêdo led the WTO to its 25th anniversary. WTO members must now decide what type of trade organization they want for the next 25 years.”

Renata Vargas Amaral, co-director of the certificate program on the WTO and U.S. trade law at American University’s Washington College of Law: “In his resignation speech, Azevêdo justified his early departure with the need to decouple between the selection of the next director general and the biennial Ministerial Conference—originally scheduled for June but delayed until 2021 due to Covid-19. This is sad news for the international trade community, and the announcement came during particularly difficult times for the organization. Azevêdo has been an extremely capable director for the WTO, and his diplomatic skills will be missed, especially in such challenging times for the world because of the pandemic, and especially for the multilateral trading system. Along with the Covid-19 crisis, which is hitting the international trade of goods and services hard, the WTO has been facing strong criticism from its members, particularly the United States, in recent years. It is important for WTO members to quickly agree on strong leadership to replace Azevêdo and continue his work, and also take this opportunity to restore the multilateral trading system. The WTO recently announced that the window for nominations will be between June 8 and July 8 for the current selection process. Candidates seeking to succeed Azevêdo may submit their nomination bids and will have the opportunity to meet with the General Council (which is composed of WTO members), answer questions and present their views. Five names are being rumored: Amina Mohamed of Kenya, Eloi Laourou from Benin, Peter Mandelson of Britain, Yonov Fredrick Agah of Nigeria and Hamid Mamdouh of Egypt.”

Latin America Advisor logo.The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.