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WTO Reform: What can Azevêdo achieve in Washington?

At Davos in January 2020, US President Donald Trump announced that he and the WTO Director-General Roberto Azevêdo would meet to discuss the reform of the world trade institution. Credit: White House.President Trump announced at Davos last month that he and Director-General Roberto Azevêdo were deep in talks about reforming the World Trade Organization. He added they were discussing “a whole new structure for the deal” and something “very dramatic,” talks on which would continue when Azevêdo joined the President in Washington this week.  What to expect for this visit?

Are they going to fix the WTO?

No.

Even if President Trump brings to the table his unimpeachable record on international institutional reform and well known affection for the organization, the Director-General is simply not empowered to make any significant changes.

But he’s the Director-General..?

Yes, of a Member driven organization. The Director-General’s authority is severely limited and primarily concerns the day to day functioning of the organization’s secretariat.

In practice he is not empowered to (list non-exhaustive):

  • Change trade law;
  • Change how trade law is interpreted or implemented;
  • Appoint or remove panelists on the now mostly empty WTO Appellate Body;
  • Intervene in WTO Dispute Settlement proceedings;
  • Enforce compliance with WTO rules;
  • Punish Members who fail to meet their transparency obligations; or
  • Re-designate Members between the ‘developing’ and ‘developed’ categories.

Even the budget of the WTO is determined not by the Director-General but by a Committee, which must unanimously approve it every biennium.

There must be something he can do?

Like the Secretary General of the United Nations, the WTO Director-General’s primary function is a diplomatic one. He can bring different countries together, provide neutral “good offices” for negotiations and use the public communications power of his office to highlight issues and encourage progress.

There are also some very limited areas in which he could address some US concerns. For example there are persistent rumors the US takes issue with Werner Zdouc, the WTO Secretariat’s head of the Appellate Body Division. Removing Mr Zdouc is within the Director-General’s power (the WTO’s generous employment protections not withstanding), but it seems unlikely he would.

Not only has he expressed full confidence in Mr Zdouc, but the precedent of removing a senior member of staff under pressure from a Member would be dire.

The Director-General could also look into addressing some US concerns in areas like the pay scale of Appellate Body Members, but as there was movement on this issue already as part of resolving 2020 budget crisis, there seems little to be done there either.

Let’s say he did move on those two issues, would it help resolve US concerns?

Only very marginally. Any US concerns about Mr Zdouc and the pay of Appellate Body Members are the symptoms of a much larger beef with how the organization has been performing its role. Moreover, the US has been clear it won’t engage in discussions on a solution until all WTO Members acknowledge the ‘brokeness’ of the Appellate Body system, which most seem unprepared to do.

The WTO’s challenges also run a lot deeper than just the Appellate Body crisis. Negotiations are stalled in most areas, compliance with existing rules is wavering and transparency is nowhere near where it needs to be. These problems are huge, systemic challenges well beyond the office of the Director-General, even in partnership with the US President, to fix unilaterally.

So is Roberto just flying over there to catch up on in-flight movies?

No, and he should fight the temptation to see 1917 in-flight. It’s worth seeing on the big screen.

As I mentioned earlier, the Director-General’s primary function is a diplomatic and ambassadorial one. Keeping the US engaged, however minimally, coldly and distantly with the organization is critical, as is demonstrating that the institution itself (as embodied in its Secretariat) is not inherently opposed to change and reform.

The Trump Administration probably isn’t anyone’s idealized vision of a reform partner for a complex international institution, but it has unquestionably energized the debate and the ongoing buy-in of the United States will be critical to any outcome.

Maintaining engagement and keeping channels of communication open is a worthy task, even if not one likely to produce an immediate miracle.

In his exclusive Borderlex blog series, ExplainTrade founder Dmitry Grozoubinski (@DmitryOpines) takes a relentlessly pragmatic look at the World Trade Organization with one question in mind: “You’re busy, what do you need to know?”

3 Comments

  1. Howard Davies

    Worth mentioning that Azevedo was not the preferred candidate for D-G when the post becamc available in 2012. US and EU wanted the Mexican Herminio Blanco, but thanks to lobbying by Lula (acc. to his own testimony) President Dilma’s nominee was successful.

  2. roderick.abbott@ecipe.org

    Dmitry please do not mention panelists in the same sentence as the Appellate Body. Just confuses those who do not know the difference.
    However you give a good list of things Azevedo cannot do – therefore it is the fault of members that WTO has not been reformed long ago. Absolutely..

  3. roderick.abbott@ecipe.org

    You rightly go on to say that there are limits on what he can do. At the risk of offending his host – very easy to do – I would urge him to point out that neither China nor the EU wanted matters to get to the stage they have, and the USA might find it has a simultaneous fight on its hands with both of the two other major WTO players …..

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