Wed, Jan 16, 2013 - Page 9 News List

WTO’s next director-general will face a multitude of problems

The world’s trade ‘policeman’ will soon be looking for a new leader, but after the failure of the Doha talks and a boom in bilateral pacts, its relevance is in question

By Heather Stewart  /  The Observer, LONDON

“The developed countries do not want to have these discussions,” Flassbeck said.

However, without confronting issues such as these, which are key to emerging economies, the WTO may risk becoming irrelevant.

“If they [developing countries] are not treated as equal partners, if their concerns are not listened to, why should they say, ‘we’re willing to open our markets more’?” he asked.

He said that any new leader of the WTO should try to reposition it as a forum for broad discussions about the conditions for free and fair trade.

“I think what the WTO needs is intellectual leadership,” he said.

Meanwhile, many of the most fraught contemporary issues in the global marketplace rarely find their way into the corridors of the WTO. The debate on international taxation, for instance, which has seen the picketing of Starbucks branches in the UK and is critical to whether developing countries benefit from inward investment, is being overseen by the Organisation of Co-operation and Development in Paris.

The free movement of people, another major source of frustration for emerging economy governments, is also rarely mentioned as an aspect of global trade negotiations; nor are conflicting competition regimes in different economies.

“There’s lots of developments where the WTO’s role is being eaten away. This forces a reality check on what it can achieve,” Flassbeck said.

And since Doha has been in the deep-freeze, the world’s trading powers have been busy bypassing the WTO by signing a forest of bilateral and regional trade agreements. These can help cement the relationship between trading partners; but from the perspective of development campaigners, they have two big flaws.

First, the major nations — the EU and US, for example — can use their formidable bargaining power to exact more favorable concessions from weaker countries than they could get away with in the forum of the WTO, where the governments of smaller economies can band together. Second, they create what has been called a “spaghetti bowl” of cross-cutting and contradictory rules governing different markets, which can be very expensive for producers in poor countries to comply with. In some cases, six, seven or even 10 versions of the same product have to be made to satisfy the rules imposed by various markets.

“The WTO should be the world trade system that oversees all these developments,” Melendez-Ortiz said, but it has no formal oversight of this web of new deals.

Front-runners for the WTO director generalship include former New Zealand trade minister Tim Groser and Brazilian Roberto Carvalho de Azevedo, with many of the other candidates coming from emerging economies, including Indonesia, Kenya and Ghana.

However, whoever triumphs in the drawn-out selection process, which will involve all of the WTO’s 158 member countries and take up to four months, has a tough job ahead.

“We desperately need new rules for a world that is not only obscenely unequal, but is facing a massive ecological crisis,” Bloomer said.

With new trade disputes coming thick and fast, “the danger is that the next director-general will be overrun by disputes, that will overwhelm the capacity for reflection,” he said.

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