Mr. Robert Azevêdo, the director-general of the World Trade Organization resigned effective August 31st, and many scholars considered this departure as another adding element of uncertainty to trade during the coronavirus pandemic and escalating trade conflicts.
As his resignation comes short after a Joint Resolution to withdraw from the WTO was introduced to the US Congress, would Mr. Azevêdo wanted to avoid his name being associated with the USA withdrawal from the organization? Or, Mr. Azevêdo wanted to do a favor to the WTO by avoiding an unmanageable simultaneous competition for his succession and ministerial conference to be held in 2021?
We do not hold the answer. But a fact is certain, the WTO is not going through the easiest of times and has struggled to remain relevant under Mr. Azevêdo’s tenure, with international trade tensions, protectionism and unilateralism on the rise.
Still, we argue that in the WTO, power is not delegated to the organization’s head or a board of directors. The WTO is run by its members and all major decisions are made by the membership as a whole.
In 2001 the WTO members launched the ”Doha Development Agenda” and that will make 20 years without any significant update of the rules, despite entering into force of the Trade Facilitation Agreement in February 2017. From 10 December 2019, the mandates of two of the remaining three Appellate Body members expired and the organization was no longer able to decide on appeals in trade disputes between WTO members. As such, the dispute-settlement function of the WTO ceased to perform, while its policy-making function has been paralyzed for years over internal discords. The WTO members moved further away from multilateral trade and devoted more financial and political resources to preferential trade agreements, to bilateral agreements, to regional or multiregional trading blocs. The WTO witnessed a rise in trade restrictions and protectionist measures, without real consequences for the members apart from “naming and shaming”. World trade declined because of the USA’s trade wars with China and the EU and has dropped further since the economic activity ceased in many countries due to coronavirus pandemic. As to the existing talks in the WTO, there are slim hopes for an outcome regarding the fisheries subsidies, domestic regulation in services, investment facilitation and electronic commerce. These issues were to be discussed during the 12th WTO’s Ministerial Conference, planned in June 2020, and now cancelled due to the coronavirus pandemic, even it was never expected to produce important breakthroughs on the most controversial issues.
Currently, the WTO continues to function only in terms of transparency and monitoring of trade policies. Basically, the WTO is shattered, and its members will have to find a new business model and to undertake necessary WTO reforms as fast as possible.
Even the head of the organization has no “power of change”, through offering convening power, good offices, and a consensus building voice, the new WTO’s director-general has to play an important role in convincing the membership of making a substantive reform of the organization, ensuring that the multilateral trading system responds to new economic realities, the post-coronavirus world and the challenges that lie ahead.
Conversely, the WTO is becoming aimless and going nowhere.
by Octavia Cerchez