WTO: Elections at Olympus

Umberto Mazzei

24/10/2012

Opinión

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The post of Director General of the WTO is open to succession and this time it is Latin America and the Caribbean’s turn. According to the regulations, the process for appointing DGs begins nine months before the expiration of the incumbent’s mandate, in this case, Pascal Lamy. The election process starts December 1^st 2012, and the new Director General shall take office on September 1^st 2013.

The formal predecessors to M. Lamy have been four, but actually the most influential person in leading the GATT into the WTO was the Swiss Arthur Dunkel, whose team drafted the famous Dunkel text, which is the template for the WTO. The text raised many hopes among those who did not read it with malice and imagined that equity in trade could be the work of those who had created the opposite.

The first formal Director General, was Peter Sutherland (1993 - 1995), an Irish lawyer and banker, who was the last director of the GATT and DG for several months at the WTO. He was succeeded by Renato Ruggiero (1995 - 1999), an Italian financial bureaucrat, who came from being director at FIAT and at the Kissinger Cabinet. All Europeans.

In 1998, the principle of regional alternation in office, practiced at the UN, was applied. It was decided to start with Asia. Then there was a conflict among developed and developing countries over who should be in charge. The developed countries candidate was Mike Moore, a prestigious New Zealand Labour politician and expert on trade issues, the candidate of the latter was the Thai Supachai Panitchpakdi, economist and politician with long experience as a banker. In the end they agreed to share the period. Against expectations, Moore (1999 - 2002) led WTO with friendly criteria on development concerns; Supachai (2002 - 2005), instead, put his banker’s vision before development, which we assume was merit enough to entrust him with UNCTAD.

The Director General of the WTO for the period 2005 - 2009 should have been from Africa or the Latin American and Caribbean Group (GRULAC). There were four candidates: for Latin America, the Brazilian Luis Felipe Seixas Correia and Uruguayan Carlos Perez del Castillo; for Africa, Mauricius’s Jayakrishna Cuttareey. In a manner inconsistent with regional alternation, Pascal Lamy, a former European Trade Commissioner, was nominated.

Latin America was divided using the well known trick of launching in advance a weak candidate to divide the constituency before there was a natural candidate. So in place of Mr. Seixas, M. Lamy was elected and became the third European at the helm of the WTO ... and also the fourth, because he was re-elected in 2009. It is not that M. Lamy was re-elected because of merits or with a standing ovation, but on the contrary, negotiations had become so entangled and so discredited, that no one wanted to clean up the mess.

The DG Election

Countries have from December the 1^st to December the 31^st to nominate candidates. Certainly not the best time to negotiate and contact people, but Lamy’s WTO seems to find it suitable to decide matters in December. So far, Reuter, a news agency where M. Lamy is at the board of directors, has mentioned possible candidates, but to discredit them. Brazilian Ambassador Roberto Acevedo could have more rank if he had been a Minister, like M. Lamy; South African Minister Rob Davis would be too extreme ... and probably will run for Director General at UNCTAD.

Always with Reuters, in a dispatch from Tokyo (10/13/2012), M. Lamy makes a headline by telling us that "geography should not matter to select the head of the WTO." It happens that geographic alternation is a big obstacle to repeat, once again, for M. Lamy and his Deputy Directors: Chilean Alejandro Jara, for Latin America, the Rwandan Valentine Rugwabiza Sendanyoye for Africa, Indian Harsha Vardhana Singh, for Asia; Rufus H. Yerxa, for the U.S. All that geography accompanied M. Lamy at the WTO since 2005 …et alors?

According to M. Lamy the only thing that should count, is talent. “The election should not be a diplomatic game, but a headhunting game” he said. If talent is the measure, it would be an even more serious obstacle for another re-election, because during the eight years that we had M. Lamy and his deputies, all remained stagnant, but for the size of WTO’s building. The big news now is changing trade rules to reflect "value chain", which is the production focus of transnational corporations. Indeed, it is good time to bring new heads and would be even better if it respects the balance on regional distribution of appointments. There is talent everywhere, what is lacking is good political orientation.

So far, there are two formal candidates: the Ghanaian Minister Alan Kyeremate and New Zealand’s Minister Tim Grosser. In terms of regional distribution both would be misplaced. Mr. Kveremate, because Africa already has an African representative - South Africa - who would probably chair the UNCTAD. Mr. Grosser – an amusing rocker and biker - because New Zealand has had more than its fair share of positions at WTO; it not only had a DG, but has chaired the Committee on Agriculture for 9 consecutive years, since 2003, with ambassadors succeeding each other like in a hereditary fief.

Candidates from Latin America and the Caribbean – the region that should appoint the next Director General- are yet to be launched. It is rumored that Costa Rica’s Anabel Gonzalez will run, perhaps to divide Latin American countries, because her extreme commitment to the value chains focus, to the free trade agreements agenda and to the inclusion of the same in the multilateral level, which are unacceptable to Mercosur and ALBA. It is logical to assume that candidates from the political "establishment", who signed FTAs with the United States or Europe, do not inspire confidence to chair WTO. They surrendered on all the issues that at WTO find solid opposition from developing countries or are still disputed.

If Mercosur, Caricom or ALBA, have a candidate, it's time to take the initiative and negotiate it. The recurrence of the sorry spectacle of 2005 should be prevented; then, an early and sterile bid divided GRULAC support and the best and rightful candidate lost.

The relevance of appointment distribution

In all international organizations an equitable distribution of responsibility positions is very important for good performance. At the WTO such a criteria is of the utmost importance, because they lead an organization where something as concrete as the future of the global real economy is being negotiated. However, the present distribution of positions is concentrated in favor of developed countries.

WTO has 157 members (08/2012), of which only 21% are developed countries. However, all DGs have come from developed members, with the brief 3 year exception of Supachai, who is Thai, but a banker. The total number of appointments at the WTO is distributed among regional groups according to Figure 1.

The total of appointment distribution shows a hint of equity between developed and developing countries, with a disadvantage for Africa.

But we must take into account that a division between developed and developing countries grouped by geographical area is not net. Transnational corporations do not only speak through developed countries, they have also other voices. They speak from those developing countries which are controlled by elites who take orders from abroad or who are associated with international corporations in their own countries.

The distribution of appointments that lead work on main operating organs at the WTO already contain inequities, even according to the simple categories of developed and developing countries. We will calculate from low to high acuity.

GRULAC has more visibility in the Trade Negotiations Committee and its subsidiary groups, places where there is much talk. There, developed countries have 33% and among developing countries, GRULAC has 34%, Asia has 26% and Africa 7%.

At the Main Organs (16 organs, including the General Council) we find that 39% is in the hands of officials of developed countries; for developing countries the share is 22% for Asia, 20% for the GRULAC and 19% for Africa.

The distribution becomes more unfair as we enter more specific interests. In the area of Trade on Goods and its subsidiary groups, developed countries have 45% of appointments. The remains are shared as follows: 20% for Asia, 19% for GRULAC and 16% for Africa.

The area of Services is an extreme case. There, developed countries have 52% of the appointments, while developing countries get the rest: 27% to Asia, 17% to GRULAC and 4% to Africa. Services are the activities that include the financial area.

Conclusion

M. Lamy wrote something[1] about that ugly word "governance" on global scale, but what he describes there and those value chains that he now hoists are not new ideas. Both are the old story about global governance over resources in favor of a few, only on a bigger scale and for a band of privileged bankers.

With so many clever people around in the world, such a story can not and shall not continue.

Geneva, 10/23/2012

- Umberto Mazzei has a PhD in political science from the University of Florence. He has taught international economics at universities in Colombia, Venezuela and Guatemala. He is Director of the Institute of International Economic Relations in Geneva.

www.ventanaglobal.info

[1] La démocratie monde: pour une autre gouvernance globale (Seuil, 2004).

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