TRADING THOUGHTS. WTO chief is leaving behind a sinking ship

D Ravi Kanth Updated - May 15, 2020 at 09:32 PM.

Director-General Azevêdo’s early exit comes at a time when his leadership is needed to tackle challenges posed by the US

Bowing out: Roberto Azevêdo

Amid the Covid-19 pandemic, the World Trade Organization is experiencing an administrative shock. Its Director-General Azevêdo wants to leave on grounds that are not known yet. At a time when the shrewd leader is much-needed to navigate the WTO through a global crisis ahead of the 12th ministerial conference, he wants to abandon the sinking ship.

US spells trouble

Already, the US Congress is considering a legislation to withdraw from the, put forward by House Democrats Peter DeFazio and Frank Pallone on May 13. Their action follows Senator Josh Hawley’s (R-Mo) introduction last week in the Senate of a joint resolution to withdraw from the WTO. The US has not benefited from membership in the WTO, the two House lawmakers said.

“The WTO has been a disaster for the US,” the Congressmen said. “With millions of jobs exported, ballooning trade deficits, and the erosion of US sovereignty, the WTO has a 25-year track record of putting the profits of multinational corporations above the interests of American workers,” DeFazio claimed.

The Covid-19 pandemic has shown how the loss of US manufacturing jobs to China and other countries has undermined US ability to respond. “The US needs to withdraw from the WTO to strengthen and protect our manufacturing base, public health and safety, industry and jobs, US sovereignty and the environment,” DeFazio said, according to a report in the

Washington Trade Daily on May 13.

“After 25 years of participation in the World Trade Organization, our workers have seen little to no benefits for their families and have instead watched as the WTO gives countries like China protections to use tariffs and other unfair trade practices to its advantage,” added Pallone.

Against this backdrop, one would expect Azevêdo to continue until his term came to a close on August 31, 2021. But apparently, he feltit is not proper for him to preside over the WTO’s 12th ministerial conference in June 2021 when a new DG would have been selected by members then.

Azevêdo took over as the WTO DG on September 1, 2013, three months before the WTO’s 9th ministerial meeting in Bali, Indonesia. He replaced Pascal Lamy, the former European Union trade commissioner, who had served two terms during 2005-13. Azevêdo, a former Brazilian trade envoy, is the WTO’s sixth DG. The other chiefs of the trade body include Peter Sutherland (July 1, 1993-May 1, 1995), Renato Ruggiero (May 1, 1995-September 1, 1999), Mike Moore (September 1, 1999-September 1, 2002), Supachai Panitchpakdi (September 1, 2002-September 1, 2005), and Pascal Lamy.

At the helm

Azevêdo was nominated by the now impeached Workers’ Party government of Dilma Rousseff in December 2012. The Brazilian government supported his globe-trotting campaign. In a hard-fought contest with seven other candidates, including serving trade ministers, he scored a solid victory. “To be an effective DG, you need two things: you have to be a strategist and you have to know the details,” he had said during his campaign in January 2013.

“In Geneva, you have to know the forests and you have to know the trees and you have to know the branches of the trees and the leaves on the trees if you have to go anywhere,” he added. It is little wonder he managed to secure support from the developing countries, particularly India, on the expectation that he would address core developmental issues in the global trading system.

He repeatedly claimed credit for concluding what he called the first multilateral agreement on trade facilitation at the WTO, notwithstanding the fact the trade facilitation agreement that was part of the Doha Development Agenda. The TFA, as it is known, is the jewel in the crown for the US and even China. Surprisingly, Azevêdo, when he was Brazil’s trade envoy in 2012, had remained sceptical about the possibility of harvesting the TFA. “For Brazil and many others, this (trade facilitation) is not a self-balancing issue,” Azevêdo had said at the informal head of delegations meeting of the general council on June 7, 2012.

He led Brazil in a major cotton dispute against the US at the WTO. The WTO’s highest court — the Appellate Body — dealt a body blow in 2005 by ruling against Washington’s trade-distorting subsidies. Surprisingly, after securing the major victory, Azevêdo had settled for a framework agreement that let Washington off the hook. The US bought its way out of this dispute, without having to reform its subsidies, by paying a lump sum of $300 million while Brazil forfeited $829 million in WTO-mandated sanctions against US goods and services.

After the trade facilitation agreement was concluded, Azevêdo rarely mentioned the ongoing DDA negotiations, or the Doha negotiating group which he continues to chair even now. So, it seems Azevêdo leaves the trade body after it was brought to its knees by the US, while once he had regarded his dharma as silently pushing Uncle Sam’s trade agenda.

Published on May 16, 2020 07:17