The new World Trade Organization Director-General and the challenges he faces
Sean Woolfrey, tralac Researcher, discusses the appointment of Brazilian Ambassador Roberto Azevedo as the new head of the WTO and the challenges he faces
Last week Brazilian Ambassador Roberto Azevedo was named as the successful candidate in the race to succeed outgoing World Trade Organization (WTO) Director-General (DG) Pascal Lamy, who steps down from his post at the end of August this year. Azevedo, who has represented Brazil at the WTO since 2008 and was previously Brazil’s chief negotiator at the Doha Round, will become the first WTO head to hail from Latin America, and the first to hail from a member of the BRICS (Brazil, Russia, India China, South Africa) bloc of emerging economies. In the third and final round of the selection process, Azevedo – considered the ‘insider’ candidate due to his time in Geneva – saw off the challenge of Mexico’s Herminio Blanco, reportedly the preferred candidate of the United States.
Azevedo’s confirmation brings to an end a six-month process to whittle down the nine candidates originally nominated to succeed the outgoing DG. Although WTO procedures for choosing a new head are more open and transparent than those of many other international organisations, the recent selection process did not pass entirely without controversy. In particular, some African members were angered by the elimination in the first round of both African candidates, as certain members had apparently deviated from procedural guidelines when indicating their preferences. Nevertheless, the choice of Azevedo should allay any fears regarding the legitimacy of the process, as in the final round he reportedly received the backing of the vast majority of African and developing country WTO members, while, importantly, both the United States and the European Union signalled that they would not be opposed to his selection.
When he succeeds Lamy in September, Azevedo will face a number of daunting challenges in trying to ensure that the WTO remains the premier forum for addressing important issues relating to international trade. The first, and arguably most pressing, challenge he faces is in salvaging something meaningful from the Doha Round of trade negotiations at the Ninth WTO Ministerial Conference to be held in Bali, Indonesia in December, which many consider to be a pivotal moment for the Doha Round and for the future of the WTO itself.
Some observers have argued that the existence of fundamental disagreements between WTO members over a number of issues, including the levels of commitments expected of advanced and emerging economies respectively, means that the Doha Round negotiations are unlikely to yield any meaningful outcomes and should therefore be declared ‘dead’. Azevedo, however, has indicated that he does not believe that burying the Doha Round is a viable option. Instead, he believes a solution to the current impasse at the Round must be found, regardless of how difficult and complex such a task might be. Azevedo has also identified the need to inject trust and confidence into the WTO negotiating system, something which he believes can be achieved through the successful negotiation of a smaller package of issues, such as trade facilitation, on which agreement among members can be found.
A second challenge for Azevedo is to address the perceived need for reform of the WTO and the way the organisation functions. For instance, it has been argued that the WTO’s decision-making rules, principles and procedures, such as the ‘single undertaking’ approach and the organisation’s adherence to ‘decision-by-consensus’, are ill-suited to current realities and have contributed to the lack of substantial progress in recent WTO trade negotiations. Azevedo, himself, has defended the democratic nature of decision-by-consensus, arguing that this approach bolsters the credibility of the WTO and its rules, even if it makes agreement harder to achieve. Azevedo has also stated that plurilateral approaches could conceivably serve to complement the multilateral trading system, and that plurilateral agreements should therefore not simply be dismissed out of hand. He does believe, however, that plurilateral agreements should be non-discriminatory, transparent and open to participation by all WTO members.
A third major challenge facing Azevedo is the need for the WTO to respond and adapt to ‘21st century issues’ such as energy, climate change and food security, all of which have both direct and indirect implications for global trade and multilateral trade regulation. While there have been calls from many quarters for the WTO to develop new rules relating to these and other issues, and for such issues to be addressed under the WTO’s Dispute Settlement Mechanism (DSM), there is a risk that overloading the WTO with issues that could potentially be better addressed by other fora, may threaten the success of the DSM and weaken the WTO itself. Azevedo’s view on the matter seems to reflect a belief that while new rules may be appropriate in some cases, in many others existing WTO disciplines are adequate for regulating new issue areas.
A fourth notable challenge for Azevedo and the WTO is to address the proliferation of preferential trade agreements (PTAs) that has occurred over the past couple of decades, and the fact that many of these PTAs deal with issues that go beyond the scope of WTO provisions. Major trading countries appear to be increasingly using these arrangements, including recent ‘mega-deals’ such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, as substitutes for multilateralism, thereby undermining the WTO’s role as the central forum for global trade negotiations and rule-making. For Azevedo, PTAs and regional agreements are not necessarily harmful for the world trading system, but there is no doubt that energy should be focused on the multilateral front. In this regard, it is vital that ways are found to inject new momentum into multilateral negotiations, to manage the relationship between regional and multilateral approaches and to ensure that these approaches support one another and global trade in general.
In the coming months much attention will be focused on how the new WTO leadership guides the organisation’s efforts to tackle these and other challenges. It should also be interesting, however, to observe what effect – if any – having a leader from the developing world, and from Brazil in particular, has on the WTO and on WTO negotiations. As a number of commentators have pointed out, Brazil has tended to take a very gradual approach to trade liberalisation and the country’s economy remains one of the most protected in Latin America. Brazil’s stance on trade liberalisation is considered to appeal to many developing countries and certainly did not harm Azevedo’s bid to gain support from the developing world for his candidacy. On the other hand, Brazil has been criticised by many developed countries for its ‘obstructionist’ tendencies in global trade talks. One example of this came at the Cancun Ministerial in 2003, where Brazil, along with India, played a prominent role in thwarting a deal proposed by the United States and the European Union.
It is crucial to note, however, that as WTO DG, Azevedo will be representing the WTO and not Brazil, a point he himself has highlighted. While Azevedo’s background and statements suggests he is likely to be sympathetic to the views and concerns of developing countries, this does not mean that the WTO under his leadership will simply become a vehicle for the interests of developing countries. After all, the WTO agenda is determined by its member states, and not by the DG. Nevertheless, it would be highly beneficial if Azevedo could leverage his background to successfully bridge the often divergent positions of developed and developing countries at the WTO, and to convince large emerging economies, in particular, to play a more constructive role in multilateral trade negotiations. In this way, the impending change of leadership at the WTO would represent more than just an opportunity for new ideas and fresh impetus.
Centre for Global Development. 2013. “Interview with WTO Candidate Roberto Azevedo”. Available online at: http://international.cgdev.org/blog/interview-wto-candidate-roberto-azevedo
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International Centre for Trade and Sustainable Development (ICTSD). 2013. “Roberto Azevedo Weighs in on the Future Challenges facing the Multilateral Trade System”.
Miles, T. 2013. “Brazil’s Azevedo becomes first Latin American to head WTO” Global Post, May 11, 2013. Available online at: http://www.globalpost.com/dispatch/news/thomson-reuters/130511/brazils-azevedo-becomes-first-latin-american-head-wto
Soto, A. and Boadle, A. 2013. “Azevedo looks to resurrect WTO with patient diplomacy” Reuters, May 8, 2013. Available online at: http://www.reuters.com/article/2013/05/08/us-wto-azevedo-newsmaker-idUSBRE94610Q20130508
World Trade Organization (WTO). 2013. “Troika recommends Carvalho de Azevêdo to be the next WTO Director-General”. Available online at: http://www.wto.org/english/news_e/news13_e/gc_rpt_08may13_e.htm