The World Trade Organization sits in a tight bind as it looks for a new leader to revive the long dormant Doha round of talks on international trade and maintain global relevance in the face of a surge in regional trade groups.
With only five candidates left in running, two of them hail from Latin America’s largest economies: Roberto Azevêdo of Brazil – deemed by some insiders to be the frontrunner – and Mexico’s Herminio Blanco, a seasoned trade minister who was part of the negotiations that led to the creation of the WTO.
Along with the two Latin American candidates, South Korea’s trade minister Taeho Bark, New Zealand’s Tim Groser and Mari Pangestu of Indonesia are all vying to replace outgoing WTO director general Pascal Lamy, whose term ends in August.
Experts argue that whoever takes the helm of the global trade organization will have to swing the tide away from nations forming their own trade agreements and bring in some reforms that would refresh the group.
Imagine if you had to get a consensus in the U.S. Senate and that’s just between 100 people, not 159...The next general director can’t get things done unilaterally so he or she will need to work with the member nations to get things done.
- Michael Moore, a professor of economics and international affairs at George Washington University’s Elliott School
“Trying to get the energy back into the organization is going to be easier said than done,” Michael Moore, a professor of economics and international affairs at George Washington University’s Elliott School, told Fox News Latino. “The director general will need to try to change how decisions are made at the WTO.”
Founded in 1995 to replace the aging General Agreement on Tariffs and Trade (GATT), the WTO’s main tasks are regulating trade between participating countries, providing a framework for negotiating and formalizing trade agreements, and acting as a mediator in the dispute resolution processes between nations. While the WTO has been successful in its role as a mediator, the organization has stalled in delivering a positive outcome in the Doha Development talks.
The Doha Development Round, also called Doha Development Agenda, is the current trade-negotiation round of the WTO which commenced in November 2001 aimed at lowering trade barriers around the world.
Progress has failed in the Doha talks mainly because of the difference between developed nations such as the United States and the European Union countries and those in the developing world, notably Brazil, India and China. Their lack of advancement in the talks has led to the formation of a number of trade agreements between varying nations - particularly the Trans-Pacific Strategic Economic Partnership Agreement (TPP), that includes both the U.S. and Mexico along with a number of Latin American and Asian nations – as well as to the threat of the WTO being “in danger of becoming irrelevant,” according to New Zealand’s Groser.
Mexico’s Blanco echoed Groser’s sentiments in a recent interview with The Wall Street Journal, claiming that the WTO risks turning into a simple referee thanks in large part to its outdated rules on global trade.
“The rules of the WTO were drafted 20 years ago, and a lot has changed in the sophistication of countries that decrease tariffs but create new very sophisticated barriers," Blanco said. "To remain relevant, it must remain competitive vis-à-vis these mega agreements, not only in terms of size but in terms of rules."
One of the rules that experts see as something that could be changed is the organization’s decision making process. Currently, all 159 member nations must reach a consensus for a decision to be made.
“Imagine if you had to get a consensus in the U.S. Senate and that’s just between 100 people, not 159,” Moore said. “The next general director can’t get things done unilaterally so he or she will need to work with the member nations to get things done.”
To many observers, Blanco is seen at the outsider candidate for the general director post. Despite his time spent as Mexico’s finance minster from 1994 to 2000 – during which he was the country’s lead negotiator in both the North American Free Trade Agreement (NAFTA) and the Uruguay Round that led to the WTO – he has been working in the private sector for the last 13 years and has many people wondering if he has the current technical knowledge to deal with the Doha talks.
Mexico’s emergence as a global economic power, however, has thrust Blanco into his current spot in the running. The country’s involvement in the TPP, its want to be involved with a joint trade agreement with the U.S., Canada and the EU and its rapidly expanding economy all shed light on the country’s importance in international trade.
“Hermino has some good experience,” said Eric Farnsworth, the vice president of the Council of the Americas and Americas Society. “And Mexico as a country has made a practice of expanding its trade beyond North America.”
Blanco will be competing for with Brazil’s Azevêdo for the WTO’s Latin American delegates, which could be the Mexican’s demise.
Azevêdo is seen as the frontrunner in a tightly guarded vote and is a popular figure around the WTO’s Geneva headquarters, where he has been the South American powerhouse’s ambassador since 2008.
While Azevêdo is less well known in other diplomatic circles and is the only candidate for the post not to have served as a finance minister, Brazil’s status as one of the leaders of the world’s developing nations has placed him in the position to lead the WTO.
“I think the larger economies are very sensitive to the least developed economies, and they have been acting in a way which tries to push an agenda that helps the least developed countries,” he told the Center for Global Development. “What we have today is a WTO with almost 160 countries of various shapes, sizes, and levels of development. What we have to do is find a dynamic of negotiations that accommodates all of them. We need to figure out how to have everyone interact in a positive and constructive way.”
As a developing nation, Brazil’s global trade practices are different from those of nations like the U.S. and the EU, experts claim. The country’s policies could be enticing to other global leaders such as China and India.
“Brazil has a very interesting desire in terms of global trade,” Farnsworth said. “Brazil is more protectionist and more aggressive when it comes to dispute resolution.”
While speculation among experts and in diplomatic circles has Azevêdo leading the final pack of contenders for director general, analysts warn that once the doors are closed the decision making process very much resembles the Papal election process: back room deals with any type of outcome.
“It’s hard to handicap because once the doors are closed there’s a lot of horse trading going around,” Farnsworth said. “It’s very hard to predict the outcome.”
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