- World Trade Organization (WTO) Director-General Roberto Azevêdo announced on May 14 that he would resign from his post.
- The position plays an important role in advancing global trade and cooperation, despite having little formal power.
- With the organization under threat, the new CEO will have the opportunity to make a big difference.
World Trade Organization (WTO) Director-General Roberto Azevêdo announced on May 14 that he would step down a year earlier than planned. Governments are already using this as an opportunity to push their own agenda for the global trading system, rallying behind their preferred candidates for his successor or perhaps plotting to halt the process altogether.
However, the position of Director-General has almost no formal power. He or she cannot single-handedly reform the organization, force governments to take specific measures or even dictate the agenda.
So why does the CEO matter? Here are five reasons why the position, and who occupies it, matters, especially right now.
1. The Director-General is the only person who can defend the WTO without vested interests beyond the organization itself.
This is particularly important now. The WTO and its rulebook play a vital role in the global economy, but the organization is under threat. The problems facing the WTO – trade tensions between the US and China, the unilateral rise of trade barriers, the fact that the WTO Appellate Body can no longer function – were formidable even before COVID-19. Now, the pandemic has further weakened international relations, leading to a proliferation of new export restrictions, demands to “restore” supply chains, forecasts that global trade could shrink by as much as 32% this year, and led to the postponement of the WTO’s biennial ministerial conference, which could have been a venue to try to address some of these problems. In such dire times, the role of the Director-General in defending the system around the world, at G7 and G20 meetings, in the media, and with the private sector, is essential.
World merchandise trade volume, 2000-2022 - Source: WTO
2. The CEO wields a great deal of soft power.
WTO members drive the work of the organization, but the 164 member governments have never been more divided than they are today. Without overstepping the mandate of the office, the Director-General can use the soft power of the office combined with his political connections and influence to convene and convince members to act. Of course, the Director-General cannot achieve anything without the members, but at the same time, if members want to move forward, they need the help of the Director-General.
3. The CEO can be the difference between success and failure in a negotiation.
The first multilateral agreement in the history of this “member-led” organization came to the Director-General’s hands: the Trade Facilitation Agreement, which was finalized during the Bali ministerial conference in 2013. When ministers arrived at the conference, trade facilitation negotiations had been underway for about 10 years and the draft agreement was in its 17th iteration. As talks continued, ministers were unable to close the gaps needed to finalize the agreement. When time ran out, they asked Director-General Azevêdo to come up with a proposal that, with his knowledge of the parties’ red lines, he believed had the greatest chance of being accepted by all. He presented his compromise text and, with great success, the deal was done.
4. The Director General can make discussions more inclusive and democratic.
A long-standing criticism of the WTO has been that decisions are often made by a handful of powerful countries, and then presented to the other members as a fait accompli. These small gatherings are known within the WTO as “green room meetings,” named after the Director-General’s private meeting room. The Director-General cannot eliminate power politics from global trade, but he can change the way debates and negotiations are structured, starting by eliminating such outdated practices. Significant progress has been made on this front. As the new great-power rivalry grows, the next Director-General will need to work hard to ensure that the voices of other players continue to be heard, while keeping discussions productive.
5. The WTO is entering a new era and the Director-General has the opportunity to help shape it.
There is broad consensus that the WTO needs reform, but there is no consensus on what reform should look like. The Director-General can try to move this debate forward, demanding the attention of leaders, negotiating agreements, driving efforts to find possible ways forward, and offering a positive narrative for the future role of the organization. However, progress may be elusive. Even an optimist would accept that major reforms seem unlikely in the current political context.
Despite this challenge, the Director-General can make a difference by working with members to achieve incremental change. Large groups of members have already been doing groundbreaking work on issues including e-commerce, investment facilitation and SMEs. Many will see the further development of this work as proof of the organization’s viability. By supporting these efforts, the Director-General can help achieve some quick wins while also laying the groundwork for a more fundamental transformation of how business is done at the WTO.
An effective CEO must combine technical knowledge with creativity and political judgment. They must have boundless energy and almost infinite patience. They must be seen as a driver of fair and honest trade, trusted by governments and leaders without favoring any one in particular. Finally, they must have ambition and vision complemented by the humility to know the limits of their influence.
If the job is difficult in normal times, it is almost impossible today. But the new CEO will have that rare thing: the opportunity to make a big difference.
David Tinline and Tatiana Lacerda Prazeres. World Economic Forum.
Aduana News is the first Argentine customs newspaper to launch its digital version. With 20 years of experience, its publications and initiatives aim to provide the most relevant knowledge on customs issues in order to contribute to safe trade in the region.
