Business Maverick

Business Maverick

Azevedo Stepping Down Early From a WTO Already on the Brink

Roberto Azevedo

The World Trade Organization’s top official is quitting before his term ends in 2021, setting up a potentially contentious search for a successor at an organization caught in the middle of an economic fight between the U.S. and China in the early days of a global recession.

Roberto Azevedo, a 62-year-old Brazilian, announced the decision to WTO delegates on Thursday. He has served as its director-general since September 2013 and his second four-year term began in September 2017. He said he’ll step down effective Aug. 31.
Roberto Azevedo

His departure comes at a precarious time for a global economy that’s suffering the worst downturn since the Great Depression because of the coronavirus pandemic — with trade worldwide projected to recede to historic lows and trade policies becoming a contentious political issue from Brussels to Beijing. Internally, the Geneva-based trade body was already struggling with an array of crises before the blow to international commerce.

Azevedo, in an interview, sought to explain the timing. “It’s the best thing for me, my family and the organization,” he said, adding that it’s not for health reasons or other political ambitions. “We are doing nothing now — no negotiations, everything is stuck. There’s nothing happening in terms of regular work.”

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The WTO has become a symbol of multilateral malaise following its failure to conclude the Doha negotiating round. More recently the trade body has become a lightning rod of criticism for the Trump administration, which argues that China has not fulfilled its 2001 commitments to embrace a more market-oriented economy.

Now, Beijing’s inability to contain the health crisis has emboldened the WTO’s critics, particularly inside the Trump administration and among its allies in Congress.

Senator Josh Hawley, a Republican senator from Missouri, said in a New York Times opinion article on May 5 that the WTO was an outmoded “relic” that should be abolished so the U.S. can better fight Chinese “imperialism.” He’s calling for a congressional vote this year for the U.S. to quit the WTO.

After news of Azevedo’s decision to leave was reported, Hawley tweeted, “just turn the lights off as you go.”

The WTO has three main functions: help negotiate multilateral trade deals, settle cross-border commercial squabbles and serve as a repository for members’ trade policies. The first two are essentially dead, partly because of an assault by Washington.

One of those key functions was dealt a major blow last year when the U.S. effectively paralyzed the organization’s dispute-settlement system by blocking new appointments to the seven-member panel that hears appeals. A quasi-supreme court for trade, the WTO appellate body is now unable to issue judgments on future cases as of Dec. 11 because there aren’t enough active members.

Successor Search

Azevedo’s surprise early departure clouds the organization’s future and may set up a relatively hasty process to replace him. Typically, the procedure to select the WTO’s top job begins six to nine months before the expiration of the current director-general’s term. In his remarks to delegates, Azevedo urged the WTO members to begin the selection process immediately.

At least three candidates have previously announced their intention to replace Azevedo:

  • Abdelhamid Mamdouh, an Egyptian attorney at King & Spalding LLP and former Director of the Trade in Services and Investment Division of the WTO
  • Yonov Frederick Agah of Nigeria, a WTO deputy director-general
  • Eloi Laourou, Benin’s ambassador to the UN

The search may be complicated by the fact that it will largely be conducted online because of the WTO’s pandemic restrictions on in-person meetings.

If WTO members are unable to pick a new director-general by Sept. 1, one of four deputy directors-general may serve as an interim caretaker. They are Agah of Nigeria, Karl Brauner of Germany, Alan Wolff of the U.S. and Yi Xiaozhun of China.

Neither an American nor a Chinese national has ever served as the WTO’s director-general since it was formed in 1995.

Going back to his 2016 campaign, President Donald Trump has called the WTO the worst trade deal the U.S. ever made, mainly because China was allowed to join in 2001 — a move that was supposed to speed Beijing’s reforms toward a more market-based system integrated with the world economy. That happened far too slowly for some critics.

In a New York Times op-ed piece on Tuesday, U.S. Trade Representative Robert Lighthizer said, without singling out the WTO, that the U.S. has lost at least 2 million jobs since 2001. On Thursday, Lighthizer said in a statement that while Azevedo will be “difficult to replace,” the U.S. “looks forward to participating in the process of selecting a new director-general.”

As recently as January, it appeared Trump had a willing partner in Azevedo for reform. The two men gave an impromptu press conference in Davos, Switzerland, where the U.S. president declared that they had discussed a “very dramatic” change for the WTO’s future.

WTO Takes Center Stage in Trump’s Global Show: Terms of Trade

“We’re talking about a whole new structure for the deal or we’ll have to do something,” Trump said at the time.

Azevedo sounded agreeable, acknowledging that a dose of theatrics might just be the antidote for curing what ails the WTO.

“If we are serious about changing and updating the WTO to make it more responsive to the changes of the 21st century, we need to be ready to be do things that are unusual, that are important, that are maybe even dramatic,” he said in January.


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