The United States has suggested that the process to find a new Director-General of the World Trade Organisation (WTO) needs to be reopened, in what would be an unprecedented move.
President Donald Trump’s trade chief, Robert Lighthizer, told the British broadcaster BBC that the WTO needs “someone with real experience in trade”.
The US had earlier opposed former World Bank economist and Nigeria’s candidate, Dr. Ngozi Okonjo-Iweala, for the job. A consensus still hasn’t been reached.
The doubling down on the rejection of Okonjo-Iweala, despite widespread support from other countries, escalates one of the most pressing global trade issues Joe Biden will have to solve as US President.
The other finalist for one of the top jobs in international trade is South Korea’s Trade Minister Yoo Myung-hee, and the pair have been left in limbo for more than five weeks.
Lighthizer confirmed that there was no way the Trump administration would be persuaded to back the Nigerian ex-finance minister in its remaining weeks in office.
The impasse at the WTO comes at a sensitive time for global trade, which has suffered because of the coronavirus pandemic, with a new leader being seen as crucial for achieving meaningful change.
Lighthizer said the WTO, “is massively in need of reform”, adding that the US needs to “start making headway” on that process.
If a new Director-General is not appointed before Joe Biden’s inauguration as US President on 20 January, it is likely the process will be delayed for several months as a new US trade team is put in place.
That includes Katherine Tai, who has been picked to be Mr Lighthizer’s successor but needs Congressional approval.
Mr Biden may also embark on a widespread review of US trade policy, as dozens of industry groups are urging him to do. But he has said he doesn’t plan to immediately remove any of the tariffs Mr Trump imposed on China, and which the WTO has judged to be “inconsistent” with international trade rules.
The WTO plays a crucial role in brokering trade deals and upholding international trade law, however, it has been without a leader since its former Director-General, Roberto Azevedo, resigned in August, saying someone else would be better placed to deliver the needed reforms.
His tenure was blighted by the US-China trade war and President Trump’s widespread use of tariffs to achieve his goals on trade.
Okonjo-Iweala, 66, was Nigeria’s first female finance and foreign minister
According to Lighthizer, the WTO has, “failed to function as a negotiating body”.
He also pinpoints that “massive reform” is needed for the dispute-resolving Appellate Body, which he feels has evolved into a body creating a common law of trade, “taking away benefits” that members had negotiated for ” and putting a restraint on things that had been conceded”.
The Appellate Body has been incapacitated by the Trump administration vetoing the appointment of new judges.
“I think there’s a consensus developing at the WTO that we need the appellate body reform,” he said.
“We need to start negotiating again, we need to start making headway. So I’m glad you brought up the WTO, it’s been clearly a focus for us, and to us, it’s an organisation that started off as a good idea and basically isn’t functioning very well, but I think that can be sorted out also.”
The Director-General has an important role to play in bringing change according to a former chairman of the WTO Appellate Body, as well as a former US trade negotiator, Prof. James Bacchus.
“Effective multilateral cooperation to lower barriers to trade is urgently needed to help jumpstart the global economy and recover from the pandemic,” he said.
“That requires creative leadership from an honest broker in the role of director-general.”
Joe Biden hasn’t given any indication that he prefers either Yoo or Okonjo-Iweala for the WTO’s top job.
However, when it comes to trade, he recently said: “We need to be aligned with the other democracies.. so that we can set the rules of the road instead of having China and others dictate outcomes.”
“If the Biden administration can trade-off support for Ngozi for political capital on other reforms, that certainly seems like a good idea,” Simon Lester, a WTO expert at the Cato Institute in Washington told the BBC.