No. 20 IMD Faculty The World Trade Organization Leadership Transition Carlos A. Primo Braga Professor of International Political Economy and been more apparent. The new Director- Director of the Evian General must be a leader with the Group@IMD communication, diplomatic and managerial skills needed to face major challenges, Research & including the question of how to bring to Development closure the stalled Doha Development Agenda negotiations, also known as the Christopher Zintel “Doha Round.” Richard Eames Lindsay McTeague Officially launched in November 2001, the Doha Round is the latest in a series of trade negotiations among the 158 WTO member nations that aims to achieve major reforms of the international trading system by further liberalizing trade and strengthening multilateral trade disciplines. Reaching The growing fragmentation of the global agreement among all members, 121 of which governance system and the lingering effects are developing countries, has proved difficult of the global financial crisis have raised due to differences between developed and questions about the effectiveness and developing countries on issues such as In January 2013, The legitimacy of multilateral institutions. The access to agricultural markets, industrial Evian Group@IMD selection of new leaders for key global tariffs, services, and non-tariff barriers to convened a public institutions in recent years – including the IMF trade. Another issue that will require debate in Lausanne in 2011 and the World Bank in 2012 – has renewed attention concerns the perceptions during which five of focused attention on the role of leaders in the and engagement of the private sector with the nine candidates to global governance system. The world again the WTO. become the next focuses on this space as the World Trade Director-General of Organization (WTO) prepares to appoint a the World Trade new Director-General to succeed Pascal Selection process Organization (WTO) Lamy, whose second term of office expires on outlined their visions for August 31, 2013. The decision of who will be The selection process for the next Director- global trade. The event the next Director-General of the WTO, the General started on December 1, 2012. Nine focused on how to international organization dealing with the candidates have been nominated by WTO rekindle the interest of rules of trade between nations, will be vital for members, a record in the history of the WTO st the private sector in the global governance in the 21 century. The (and of its predecessor the General 1 WTO. Director-General’s role is not only to facilitate Agreement on Tariffs and Trade, or GATT). global trade negotiations that aim to spur The new Director-General will not be from The Evian Group@IMD, founded in growth by removing trade barriers but also to Europe or the United States: candidates come 1995, is an international coalition of corporate, government and opinion manage an organization that has an important from Latin America (Brazil, Costa Rica, leaders, committed to fostering an “judicial” rule as the enforcer of multilateral Mexico), Africa (Ghana, Kenya), the Middle open, inclusive, equitable and trade rules. East (Jordan) and Asia-Pacific (Indonesia, sustainable global market economy in a rules-based multilateral framework. To find out more, go to In a globalized world that continues to 1 www.imd.org/eviangroup. For the bios of the candidates see undergo profound transformations, the http://www.wto.org/english/news_e/news13_e/dgsel importance of strong leadership has never _03jan13_e.htm © 2013 IMD – International Institute for Management Development. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the permission of IMD. New Zealand, South Korea). In a The selection will be facilitated by a statistical sense, there is a one in three troika composed of the Chair of the chance that the new Director-General will General Council, and the chairs of the be a woman (an outcome that would be a Dispute Settlement Body and the Trade first in the history of the GATT and the Policy Review Body. The troika will WTO). Four of the candidates currently consult with the ambassadors have ministerial rank while three others representing the member nations. are former trade ministers of their Diplomats are asked to express their countries. Moreover, all of them have a preferences (some do this in an explicit substantive trade negotiations manner, others in a coded style that background, at either the multilateral or needs to be interpreted by the troika). bilateral level. Successive rounds of consultations take place until the consensus candidate is identified. The system relies on trust (for example, the troika is not required to disclose the exact support numbers associated Casagrande with each candidate as the process evolves). The process of selection is expected to be concluded by May 3 Photo © WTO/Studio 31, 2013. Each candidate presented his or her credentials to the WTO membership in the General Council, 29–31 January 2013. The selection process is designed to WTO leadership debate foster consensus-building around one candidate. In theory, these consensus- Against this background, The Evian fostering procedures are based on a "no Group@IMD convened a public debate in veto, no vote" culture that puts a Lausanne on January 30, 2013 during premium on political legitimacy. In which five out of the nine candidates for practice, however, the process provides the position of Director-General scope for interpretation and the use of presented their visions for global trade political influence. In the past, the WTO and focused on how to rekindle the selection process has often led to interest of the private sector in the WTO. disputes, notably when Renato Ruggiero (Italy) was selected in 1995 with an Debate host Carlos Braga, Director of agreement that he would be limited to The Evian Group@IMD and Professor of one term of office; and again when Mike International Political Economy at IMD, Moore (New Zealand) and Supachai said that when CEOs and private sector Panitchpakdi (Thailand) assumed the DG representatives were asked to play a role for three years each from 1999, with game of word association in relation to no possibility to extend either term. Since the WTO, a word that often came to mind then an attempt has been made to codify was “frustration.” This is a reflection of the procedures for the appointment of the the slow pace of multilateral trade talks, Director-General, which contributed to in particular the stalled Doha Round, and the relatively smooth appointment of also the perception that WTO rules do Lamy in 2005, and his reappointment for not address the most relevant trade another four-year period.2 issues of today – such as the operations 3 For further details about the selection 2 See WTO (2003) “Procedures for the process see http://www.imd.org/news/The- Appointment of the Director-General,” WT/L/509 WTO-Leadership-Conundrum.cfm Page 2 www.imd.org insights@IMD of global supply chains and the see some of the 21st-century agenda that proliferation of preferential trade affects the private sector being agreements. addressed. So there needs to be dialogue,” she said. The five candidates present then began the debate in front of an audience of Tim Groser, New Zealand’s Minister of around 250 that included representatives Trade, said the private sector will show from the private sector, IMD alumni, much more interest in the WTO when it representatives from civil society, sees evidence of real momentum in academia and the Geneva diplomatic multilateral trade talks. “The problem lies community. Although the five candidates with us. We have to develop momentum, agreed that the WTO and the private and then business will come. And we will sector need to engage more closely and need business support to get any regularly with each other, they agreement through,” said Groser, who is As Carlos Braga points emphasized different aspects of this also his country’s Minister for Climate out, the next director general of the WTO must relationship in their remarks. Change Issues and Associate Minister have exceptional qualities for Foreign Affairs. of leadership both in vision Alan Kyerematen, a former Minister of and execution. But leaders, Trade and Industry from Ghana, said the Amina Mohamed, Kenya’s former WTO no matter how brilliant, WTO needs to reach out more actively to Ambassador, said the WTO has not lost need support. If the private sector does not support business – including via a global trade the private sector, despite the current the WTO leadership, the summit. But, echoing some of the other frustration. “The private sector and the multilateral system will be candidates, he underscored that the WTO are partners, and a divorce couldn’t in danger. To paraphrase private sector does not only include large happen even if we tried. Trade is an the famous maxim of the multinational companies. “The private engine for growth, and business is 18th-century Irish philosopher Edmund sector is not only the big companies, interested in predictability, stability and Burke (who said, “All that MNCs, but the small and medium open markets. And that can only be is necessary for the enterprises are a major part of this all provided at a multilateral level through triumph of evil is that good over the world… If we are going to make the WTO,” she said. men do nothing”): All that the private sector benefit from the work is necessary for protectionism to flourish is that we do, then I think that poor Alejandro Jara, a current WTO Deputy for the private sector to do communities must have a stake in this.” Director-General, drew three lessons nothing!” from the experience of WTO–private Anabel González, the Minister of Foreign sector relations during the last eight Jean-Pierre Lehmann, Trade of Costa Rica, said that reaching a years in which he has held this position.