The WTO DG Race: What Happens Now?

William Alan Reinsch
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On October 28, David Walker, New Zealand’s ambassador to the World Trade Organization (WTO), convened a meeting of the heads of WTO delegations in Geneva. He announced that following the third consultation period, it appeared that Ngozi Okonjo-Iweala of Nigeria was the candidate for the vacant director-general (DG) position most likely to obtain consensus. This was not a meeting to make that decision—that is scheduled for November 9. All of the delegations that spoke except for one apparently indicated they would support the consensus. The dissenter was the United States, which made clear it continued to support the other candidate, Yoo Myung-Hee of South Korea, and would oppose Okonjo-Iweala. The South Koreans did not speak at the meeting, and Yoo did not immediately withdraw her candidacy, as the other failed candidates had done. So, what happens now?

There are several possibilities, and the path will almost certainly not become clear until after the U.S. election on November 3. One thing is for certain: there will be a lot of behind the scenes talking between now and November 9. Those conversations will attempt to find out what the United States really wants.

One possibility is that the Trump administration simply means what it says—it wants Yoo and opposes Okonjo-Iweala. Another possibility, however, is that the United States is using the issue to pursue other objectives. It has a long list of complaints about the WTO relating to the Appellate Body, the definition of “developing country,” and the failure of many members to meet their obligations to report their subsidies. It is also working hard to achieve a meaningful fisheries agreement in the face of opposition from China and others. One solution to the impasse would be for the United States to agree not to block Okonjo-Iweala in return for progress on some of these other matters. That could actually be a win-win outcome. The other members get the DG they want, and the United States gets some reforms it has been demanding. No doubt other countries will resist that, but they might ultimately conclude it is better than the other alternatives. However, it is hard to see such a grand bargain being struck between now and November 9.

As for the other alternatives, the most likely one is delay, but that depends on the U.S. election. If Joe Biden wins, many countries may say, “let’s simply put off the director-general decision until late January” on the assumption that a Biden administration would not block Okonjo-Iweala. That may be correct, although I’m confident nobody in his campaign is thinking about that now, and they are not likely to think about it until much later. The alleged U.S. complaint about Okonjo-Iweala is that her many years at the World Bank have made her too close to the globalist views of people like Robert Zoellick (a Republican whose views are in the mainstream of thinking about these issues). There are a good number of Democrats who are suspicious of globalization and do not agree with Zoellick, but one of the hallmarks of a Biden administration will be to restore U.S participation in, and leadership of, multilateral institutions. It is entirely reasonable to expect him not to block a consensus in the WTO on this.

Another possibility is a vote. WTO rules permit one, but it has never happened, and there are many countries who will oppose doing that even though they favor Okonjo-Iweala. Adhering to a consensus approach gives small countries and frequently dissenting countries like India much more influence than they would otherwise have, and they are very unlikely to set a precedent that could come back to bite them, however satisfying it might be in the short run to spite the United States.

Last, there is always the possibility of compromise. In 1999, there was an impasse between two candidates for the DG job, which was resolved by converting the standard four-year term to six years and giving three years to each of the candidates. No one was particularly happy about that (except possibly the two candidates), and the decision led to the development of the winnowing selection process that has been used ever since. Another possibility would be a search for another candidate, either by starting the process over or by backroom negotiation. That will likely be the course of last resort. Most unlikely is the possibility that the other 163 members will simply go along with the United States’ insistence on Yoo, although she, like Okonjo-Iweala, is certainly well qualified for the job.

I will close with an editorial comment. This is a sad development. I had hoped the United States would have had more respect for the institution than this. Both candidates are excellent, and both meet the criteria Ambassador Lighthizer laid out when the process began. The WTO neither needs nor deserves a fight about this, and the United States should have joined the consensus like everyone else. It did not, and we now face possibly extended uncertainty about the way forward. For people like me who write about it, that may be good news—I foresee many columns ahead—but it is not good news for the organization, for the trading system, or for the United States, which is continuing to isolate itself at a time when we need more engagement, not less.