The next global trade chief was supposed to save the World Trade Organization.
Instead, the fractious race to appoint a WTO director general has itself now delivered a further blow to an organization on life support.
On Wednesday, the United States said it could not support Nigeria’s Ngozi Okonjo-Iweala as the next WTO boss even though most member countries supported her.
This was the last thing the WTO needed. In December last year, the organization’s top court for the settlement of global trade disputes effectively ceased to function because the United States was vetoing the appointment of judges. In Washington’s eyes, the WTO was going soft on China and U.S. officials demanded reforms.
The appointment of a new chief was meant to help resolve this rift and set the WTO back on track, but Wednesday’s political bombshell from the Americans now raises big challenges for the organization and its consensus-based approach to selecting a chief.
Okonjo-Iweala is a former World Bank No. 2 and twice acted as her country’s finance minister. She was presented as the consensus candidate to WTO members after a long process of consultations with all members in Geneva.
Washington, however, is throwing its weight behind her opponent, the South Korean candidate Yoo Myung-hee, saying that she has “25 years of trade experience and that she would be able to hit the ground running,” according to a WTO spokesperson.
The decision stunned many in Washington’s trade community, even after four years of the U.S. administration’s disruptive trade policies.Â
“I have to say I’m surprised and disappointed in the U.S. reaction,” said Bill Reinsch, a senior trade adviser at the Center for Strategic and International Studies. “I had hoped [U.S. Trade Representative Robert] Lighthizer would have more respect for the institution than that.”
The organization had been counting on the next global trade chief to forge a solution to the crisis over the Appellate Body, the arbitration court that has fallen into limbo. The world trade group has largely failed to work out new rules since it began in 1995 as its decision-making ability depends on a consensus among 164 countries with very different economic interests. Revealingly, the WTO this summer even failed to agree on an interim chief.
So how does the WTO find its way out of the current crisis?
WTO officials will now hold consultations with member countries, hoping to find a consensus by the meeting of all delegations on November 9. By setting that date, the WTO is already blowing through the deadline it had originally set for the selection process.
If such a consensus cannot be reached, the WTO could theoretically shift to a vote, which would overrule Washington’s veto. At the meeting on Wednesday, no delegation suggested that. In WTO terms, this is a nuclear option which explodes its preference for negotiated settlement. An outvoted United States would also hardly be more likely to have a change of heart and unfreeze the impasse at the Appellate Body.
“The overwhelming preference of our members is to decide by consensus,” the WTO spokesperson said. “Consultations will be held between now and the 9th of November to try and achieve that consensus.”
According to the spokesperson, Okonjo-Iweala had the most preferences across regions by a wide margin, across both developed and developing countries. Many members, including the EU, had previously suggested that it was time for both the first African and the first woman to lead the organization.
“Regrettably, every decision before the WTO membership these days is not easy,” said Wendy Cutler, a former senior U.S. trade official who served in both Democratic and Republican administrations. “There were two well-qualified, impressive women for consideration and the WTO could not have gone wrong with either one.”
Overruling the U.S. by opting for a vote would also make it harder to get Washington on board for any reform plans Okonjo-Iweala might have. U.S. President Donald Trump is a fierce critic of the WTO and has previously threatened the pull the U.S. out. Former WTO Director-General Roberto Azevêdo even saw it as an accomplishment that the U.S. had not quit on his watch.
A possible way out of the impasse is a potential shift in the U.S. position if Democratic candidate Joe Biden wins the U.S. elections on November 3. But even if Biden wins, the new U.S. administration wouldn’t take office until January 20 next year.
Delaying the entire process until then might save the WTO in the longer term, but it’s unclear whether members will have the patience to wait for the the tectonic plates to shift in U.S. politics.
“That’s not good for the organization, but I’m not sure there’s an easier alternative,” Reinsch said. “Some people will want to vote, if only to spite the U.S., but most will want to preserve the consensus model as it protects them in the future. There could be a search for a third candidate. I don’t think the U.S. can force the other 163 to give way.”Â
Jakob Hanke Vela contributed reporting.
