On May 14, 2020, then-director-general of the World Trade Organization (WTO) Roberto Azevedo announced he would step down on September 1, 2020, one year before his term was set to expire. That announcement initiated a search for a replacement, which is expected to conclude in November of this year.

Azevedo’s resignation added yet another challenge for the WTO to overcome during a critical moment for both the organization and the global economy. Fresh leadership with a bold approach to WTO reform could inject much-needed life into the organization. However, selecting a new director-general is no easy feat.

As the leadership race enters its final lap, the CSIS Scholl Chair is tracking the latest developments and what a new director-general will mean for the WTO, international trade, and global economy.


The Position

The primary formal responsibility of the director-general (DG) is administrative: supervising the WTO Secretariat, which is tasked with providing independent support to WTO members. Despite the title and spot at the top of the organization chart, the DG does not dictate the WTO’s negotiating agenda and cannot force members to settle disputes or take certain trade actions—those decisions are left up to the members themselves. However, DGs assume behind the scenes and public-facing roles that do allow them to influence the WTO’s overall direction.

Behind the scenes, DGs have historically sought to forge consensus between members at critical moments in negotiations. Some DGs have been more active and some more passive in this regard. Some have put actual text on the table late in negotiations in a bid to broker a deal. Others saw themselves as more passive participants in the negotiating process, nudging members toward agreement instead of putting forward proposals of their own. Historically, DGs have sought out government and business leaders ahead of key deadlines to build pressure behind the scenes for a deal. DGs also wield influence by acting as the public face of the WTO (despite the organization being member driven) and can use speeches, interviews, and other public appearances to shape the WTO’s agenda.

The Process

The WTO operates on the basis of consensus. While votes are theoretically possible, there has never been one on a matter of importance. As a result, there is not an election per se, but a process for arriving at a consensus behind a single candidate. Normally, the process begins approximately nine months before the end of a DG’s term, but this time Azevedo’s early departure has necessitated shortening the timeline while keeping the various stages intact.

The first step is for governments to nominate candidates. Candidates cannot nominate themselves; only a government can submit a name. In this cycle, eight candidates were nominated before the July 8 deadline.

The second step is the campaign. Candidates meet WTO ambassadors in Geneva and visit capitals to make their case. Covid-19 has made this step more difficult, but the WTO arranged a week-long “beauty contest” in Geneva in July where each candidate had an opportunity to present his or her views to the ambassadors, respond to questions, and meet with them privately. Some, if not all, have also found ways to visit with senior trade officials in member governments. There have also been public and private events with stakeholders and other members of the public.

The third step is a winnowing process. The chairs of the three major WTO committees—the General Council (GC), the Dispute Settlement Body (DSB), and the Trade Policy Review Body (TPRB), known informally as the Troika—conduct private meetings with each WTO member’s ambassador to find out their country’s preference for DG.

This process is lengthy and cumbersome. There are 164 WTO members, and each will have a private meeting with the Troika, known as “confessionals.” In these meetings, the ambassadors are asked who their government favors for DG, and they are expected to put forward several names, not just one. From these meetings, the Troika will conclude which five of the eight candidates have the best chance of obtaining consensus. Those names will be announced, and the three who do not make the cut are expected to withdraw. Then the same process will be repeated, again with all WTO members. Once completed, the Troika will announce which two of the remaining five are most likely to achieve consensus, again with the three not chosen expected to withdraw. Finally, the process will be repeated a third time, after which the Troika will announce the name of the single individual they believe most likely to achieve consensus.

After that, the membership will meet to (hopefully) formally ratify the consensus. If the Troika members have done their job well, no one will object, and there will be a new DG.

This time around, both internal and external factors will shape the race. Internally, members must decide whether they want a DG who is more active or more passive, as explained above.  They will also need to decide if they want an “inside” candidate—one with long experience in the WTO—or an “outside” candidate—a person of stature who does not have extensive direct WTO experience. Both are represented among the candidates.

Externally, three factors may shape the race: geography, gender, and status. There is a growing sentiment that it is Africa’s turn to occupy the director-general position and that it is past time for a woman to occupy the office. The WTO has never been led by a woman and has never had a DG from Africa. Previous DGs mostly came from Europe, with one each from Brazil, New Zealand, and Thailand. Some countries also have the view that the DG should be a current or former minister of a government, as opposed to an ambassador, to be better able to speak directly to ministers and other senior officials. Again, there are current candidates in both these categories.



 

The First Cut: Analysis

On September 18, the Troika announced the five candidates they believe have the greatest chance of achieving consensus in the organization. In practical terms, that means the other three candidates were effectively thrown under the bus and are now expected to pull out of the race. The three who will not continue on are Tudor Ulianovschi of Moldova, Jesus Seade of Mexico, and Abdel-Hamid Mamdouh of Egypt. The five that remain in the running are Amina Mohamed of Kenya, Ngozi Okonjo-Iweala of Nigeria, Yoo Myung-Hee of South Korea, Mohammed Al-Tuwaijri of Saudi Arabia, and Liam Fox of the United Kingdom.

If there are surprises here, they are probably the elimination of Seade, who most observers regarded as a strong candidate on the merits, and the survival of Al-Tuwaijri, who many had marked for early elimination. The Machiavellian explanation—and there always is one when the WTO is involved—is that the countries who are determined to have one of the women candidates be the last one standing wanted to make sure that only the weaker male candidates made it through the first round to make sure they are eliminated in the second. That would explain Seade’s fate. Removing Mamdouh takes one of the three Africans out of the running, leaving the two women and increasing the odds that one of them will prevail in the end.

While that may not have been a shortsighted strategy, it probably was not a necessary one. The three women—all current or former ministers with extensive experience (although not all of it with the WTO in every case)—were clearly strong candidates and were widely expected to make it through this first tranche on their merits. That they did so, in fact, may complicate the next two elimination rounds. While governments have been willing to say, privately, they would like a woman, or an African, or both, to lead the organization, they have been much less willing to say which woman or which African. It is now becoming more apparent than ever that they will be stuck with having to choose between them.

The next consultation process is intended to further winnow the field from five to two. The ambassadors announced it will be conducted from September 24 to October 6, with the decision narrowing the list to two coming shortly after that. Of course, that assumes a smooth path where everyone cooperates, which lately has been a rare occurrence at the WTO. Eliminating two more candidates should not be difficult. The EU is expected to oppose Fox given hard feelings over Brexit, and a number of countries will likely oppose Al-Tuwaijri. Getting from three candidates to two, however, is more difficult. Do you eliminate the South Korean, who is her country’s highly regarded trade minister, or one of the African women? To make that difficult decision, countries are going to have to show more of their cards than they have so far.

But this also presents the Troika with an opportunity to guide the process to a successful resolution. If the final two are Mohamed and Okonjo-Iweala, countries will be presented with a choice many of them may not want to make, particularly if African nations themselves are divided on who is the better choice. The two are not the same. The former is a WTO insider with extensive experience. The latter is an outsider with extensive experience in related areas and a reputation as an aggressive leader. Countries have a basis for choosing if they want to do so but run the risk of offending one or the other of two important countries on the continent. However, if the Troika were to decide on one of the two African women along with one of the other candidates, the final choice for the members would be much easier. That would bail out the members but put a difficult decision on the shoulders of the three ambassadors running the process. They will no doubt tell us that they are simply reflecting the will of the members, which is no doubt true, but sometimes the members’ will is not all that clear, which leaves the Troika members to do a bit of interpreting of their own. Let’s hope they get it right.

The Second Cut: Analysis

The selection process for the next director-general continues to roll on, surprisingly on schedule. David Walker of New Zealand, the leader of the Troika, had said the current round of winnowing would conclude on October 6, and the morning of October 8, Walker announced that the two remaining candidates most likely to achieve consensus were Ngozi Okonjo-Iweala of Nigeria and Yoo Myung-hee from South Korea. He also announced that the next round of consultations, which will reduce the field to a single candidate, will begin October 19 and conclude on October 27, meaning that it looks like we will have a winner prior to the U.S. election. So far, the process appears to have been smooth, and without visible dissent. Since the process is by consensus, making sure everyone is satisfied with the way it has been conducted, if not the result, is important. Consensus does not mean a unanimous vote is required at the end. It simply means that no one objects.

Today’s outcome makes it certain that the next DG will be a woman—an important milestone since there has never been one—but it does not guarantee it will be an African. We had previously speculated that there was a good chance the final two would be Ngozi Okonjo-Iweala and Amina Mohamed of Kenya, the two female African candidates, which would have put WTO members in the difficult position of having to choose between two well-qualified Africans. The Troika dodged that bullet, but they have nonetheless left the members with a difficult choice between two experienced, well-qualified candidates from someplace other than Europe, which has provided most of the past DGs.

Though both are excellent, they are not the same. Both either are (Yoo) or have been (Ngozi) ministers, a qualification that many members deem important. Because of her lack of direct WTO experience, Ngozi has been deemed to be the “outsider” candidate, which means, depending on one’s point of view, either that she is more likely to shake the institution up or that she will be at a disadvantage for not having been part of the WTO system and culture. Yoo, who is currently South Korea’s trade minister, has stronger WTO and direct trade credentials (Ngozi was finance minister), and has significant negotiating experience, including with U.S. Trade Representative Lighthizer in the updating of the Korea-U.S. Free Trade Agreement. Her challenge will be persuading members not to simply go with the African candidate and to ensure she has strong support in her own backyard. South Korea’s relations with Japan are particularly fraught at the moment, and they are not a whole lot better with China. Both those countries have been silent in the process so far, and it will be important for her to demonstrate that she has, if not their support, at least their acquiescence.

Ngozi, in contrast, likely goes into the final round with strong backing from Africa but will need to solidify her support in other parts of the world. The European Union earlier this week publicly indicated the two candidates it was supporting were the two who made it to the final round, suggesting that the fact that the EU member states stuck together gave them a good bit of influence over the process. Both candidates will likely be spending a good of time in Brussels and European capitals over the next few weeks. Latin America is likewise up for grabs since the sole candidate from that part of the world was eliminated in the first round.

The United States, as usual, has been silent about its preferences, knowing that publicly indicating its choice would not be helpful to that candidate. Based on their histories and statements so far, it is hard to see either candidate as being objectionable from a U.S. point of view, and it may, in fact, be hard for them to choose. Ngozi knows the United States well, has lived here, and is a U.S. citizen in addition to being a Nigerian citizen. The United States has had a long and close relationship with South Korea on many levels, and the renegotiation of the free trade agreement was generally regarded as a success, albeit a modest one. One of Lighthizer’s stated criteria for the position was that the candidate have “no whiff of anti-Americanism,” and it is fair to say that they both pass that test—at least in their public statement.

Both countries are committed to their candidates, and both have cards to play in what is turning out to be an interesting, if not yet exactly exciting, battle. We can expect both to make a strong push for the job. The final round will most likely be a fierce battle, couched, of course, in the careful diplomatic phrasing that typifies international institutions, but not without the backroom horse trading that also goes on in them.

The Current Candidates

 

The Eliminated Candidates

     

The Impact

The WTO is struggling to maintain its traditional position as the anchor of the global rules-based trading system. It has concluded only one multilateral agreement in its 25 years of existence—the Trade Facilitation Agreement—while other efforts either failed, like the Doha Round, or are struggling, like the Environmental Goods Agreement and the proposed fisheries agreement. As a result, support for the global rules-based system is at risk.

While the DG is not solely responsible for resolving those challenges, he or she is expected to bring fresh leadership, a vision for WTO reform, and a knack for creative diplomacy to provide a much-needed shot in the arm for the organization. Whoever is ultimately selected could be a strong indicator of the WTO’s future. An outsider at the helm may suggest that members are willing to entertain a new vision for the WTO, while the selection of an insider could point to members only being willing to accept incremental and technical changes to the organization.

Crucially, whoever is selected will have only a few months to prepare for the next WTO Ministerial Conference, currently expected to be scheduled for next June in Kazakhstan. Seen by many as a make-or-break moment for the WTO, the new DG will need to seize the spirit of consensus that enabled his or her election and channel it toward a successful Ministerial Conference.

CSIS Analysis