The Custom-House

You Win the WTO DG Race. What do You Do First?

You Win the WTO DG Race. What Do You Do First?

Once you�ve been chosen Director General (DG) of the World Trade Organization (WTO), what do you do?

Mike Moore, a former new Zealand Trade Minister and Prime Minister, was selected as Director General of the WTO in late-July 1999. His term began on September 1. An important meeting of member nation trade ministers was scheduled for Seattle, November 30 to December 3.

Moore looked back in his 2003 book, A World Without Walls . He didn�t look systematically at the steps involved in taking up the DG responsibilities, that wasn't the purpose of the book. But, he did describe some of them.

It's not dramatic, but you have to wrap up your personal business, and move to Geneva. In Moore�s case, as a New Zealand legislator and a Labour party loyalist, there were special considerations:

�My duty was clear: ensure my local party had a good choice of candidates because the seat was not safe for a newcomer ... I gave my last speech in Parliament and to the party caucus�

I left Parliament and New Zealand, ensuring my resignation was timed so I didn�t double-dip salaries and that there wouldn�t be a by-election just before a general election, which could have made my replacement vulnerable. As usual, I left Yvonne with all the problems of shifting base and trying to sell our home�

I arrived in Geneva a week before my contract started, stayed in a local hotel, and began to try and put things together for the WTO�s now notorious Ministerial at Seattle in November 1999..."

(pages 95-96)

Moving may have been complicated for Moore, although he doesn�t say so, to the extent that his family�s savings had been depleted in the selection contest: �My wife Yvonne and I had spent our modest savings.� (page 95)

Moore was selected for Director General in an acrimonious selection process. In fact, the WTO failed to reach a clear-cut decision, and the six year term was divided equally between Moore and the former Deputy Prime Minister and Commerce Minister of Thailand, Supachai Panitchpakdi. Moore got the first three years.

Miles Kahler describes the 1999 selection process on pages 62 to 72 of his book, �Leadership Selection in the Major Multilaterals� (this is available for reading on the Web; go to the chapter titled "Diagnosis: Selection At the World Trade Organization).

The divisive selection process created a need to engage the other side; the three year terms created an ambiguity about Moore�s status that needed to be resolved:

�My first step was to try and reach out to those who were my opponents. On the first day I rang the Thai Ambassador, suggesting an early meeting. He refused to meet me until the following week when I was formally the Director-General (DG). I told him: �Fine, I will be able to fit you in, in a month�s time.� He compromised, but said he wouldn�t meet me in the DG�s office. I agreed, but had to refuse his suggestion that I have a photograph taken with Supachai on my first day. There can be, I explained, only one DG at a time and I would be professional and ensure the transition, three years later, was clean, clear and proper; a duty I believed I carried out correctly and professionally.�(96)

The next rung down from the Director-General are four Deputies. Selection involves identifying the people with appropriate skill sets, looking for geographical balance, and accounting for commitments made during the bargaining process for the DG.

Kahler suggests that these commitments loomed large in the 1998-99 selection process for Deputy Directors General ("It seemed hardly accidental that the four deputy directors general appointed by Moore in November 1999 represented key parts of his coalition...The large emerging-markets that had formed the core of the Supachai coalition were notably missing..." (page 72)).

"Selecting my Deputy Directors-General (DDGs) was a revelation. Dozens of ambassadors wanted to press their candidates on me, which is fair enough, but exceedingly time consuming. How can you say �No� to thirty ambassadors, many of whom say they have been instructed by their Presidents and Ministers to make a submission and push their favorite.

I was determined to have a balance and ensure that Africa had its first DDG. I think I selected a good team, with complementary skills and experiences. Andy Stoler from the USA was a tough, professional public servant, who got the most difficult work. He was to be the Minister of Finance. Every organisation needs a dedicated bastard, I told Andy, and that was his job. He also has a strong social conscience, which he diplomatically keeps well hidden. Paul-Henri Ravier is a classic French bureaucrat, in the best sense of the word, whose memos are masterpieces. I asked him to write me one-page notes, as though I was fourteen � he responded with missives that would have got through to a ten-year old. He intimately understood the myriad details that escaped me. Miguel Rodriguez Mendoza, a former Minister of State and President of the Institute of Foreign Trade for Venezuela, was a technocrat who knew the subjects and had mastered the minutiae. And Ablass� Ouedraogo, a former Foreign Minister of Burkino Faso, had excellent contacts throughout Africa and access to the development agencies.

This proved invaluable in building coalitions and budgets, especially as I began to refocus the WTO to emphasise the Development Agenda.

Unfortunately, I didn�t have time to bring the DDGs on board ahead of the Seattle conference. They had never met as a group until we assembled in the USA, and I was unable to lean on their strengths beforehand...�

(96-97)

And then you have to learn the organizational culture, and what opportunities you have adapt the organization to your working habits and needs:

�Reforming multilateral agencies is much easier said than done, as I quickly discovered when I took up office. Here are some examples. When I arrived in Geneva, I wanted to have my four DDGs close by, on the same floor. I wanted to be able to drop in to their offices to seek advice. I�m used to a cabinet system and enjoy and benefit from a collective input. My DDGs had the skills, experience, knowledge and mastery of complicated details that I did not have at the time. A simple proposition, I thought. What I learnt was instructive of the manner in which the WTO and international institutions operate.

The problem, I was solemnly advised, was that Andy Stoler, the US DDG, had a four-window office. If the others were to join us on our floor, they would have to suffer smaller, three-window offices. Given my New Zealand experience, where protocol doesn�t exist, I couldn�t take this advice seriously. Easy, I replied, let�s paint over one of Andy�s windows.

Staff scolded me, saying this was a very important issue; I wasn�t taking this �problem� seriously. It was pointed out that at another major institution in Geneva, a similar problem emerged with one DDG having a toilet and shower, a profound privilege that other DDGs in that organization didn�t share. �Don�t tell me,� I replied. �They bricked out the toilet and shower to make than all equal!� �Yes,' came the reply.

Then divisional staff responsible to DDGs lobbied, suggesting that they needed to be close to their respective DDGs, whom I, in vain, wanted to rename Executive Deputies, with Divisional Directors becoming Divisional Managers. Another clash of cultures. I lost. Round One to the bureaucrats and the system...

�(pages 116-117)

In Moore�s case, the opportunity to make changes was severely constrained by the need to prepare for a meeting of member-state trade ministers in Seattle � scheduled to begin on November 30 � about 12 weeks after his term began. Perhaps this is also a reference to the work necessary for the Doha meeting in Qatar as well.

�In the end, I simply didn�t have the time or resources to overcome bureaucratic resistance, while also trying to get the new Round launched��(page 118)

The Seattle meetings were meant to lay the groundwork for, and initiate, a new round of trade negotiations. As it happened, pre-meeting planning and groundwork were not done very well, and the negotiations failed.

The planning failed, in part, because of the length and controversy of the 1998-1999 DG selection process. That process was originally expected to produce a selection in November 1998, to fill a position that would become open on May 1, 1999. As noted above, the process only ended in late July 1999. The previous DG, Renato Ruggiero had left when his term ended on April 30, 1999. So, from May 1 to September 1 the DG position was not filled. Then Moore only had 12 weeks to pull things together.

Sources: Moore, Mike. A World Without Walls. Cambridge University Press. 2003; Kahler, Miles. Leadership Selection in the Major Multilaterals. Institute for International Economics. 2001.

The NGOs' New Influence

The NGOs' New Influence

On January 26, the candidates for WTO Director General made presentations to the General Council of the WTO. Afterwards, three of them participated in a question and answer "public hearing" with a variety of NGOs. (here are the meeting minutes)

Evelyn Iritani, writing in the L.A. Times about the new influence of NGOs, treats this public hearing as exhibit one in her case: From the Streets to the Inner Sanctum (registration required).

"Unhappy over the World Trade Organization's refusal to discuss contentious labor issues at its 1999 meeting in Seattle, activist Mike Waghorne joined tens of thousands of protesters on the streets. The demonstrations, which turned violent, sparked anti-globalization protests around the world.

Nearly six years later, Waghorne is still unhappy with the Geneva-based trade group. But now he can voice his displeasure from a much more comfortable perch.

Waghorne was among 70 outsiders given the chance to grill three candidates last month for the position of WTO director general. It marked the first time in the organization's 10-year history that activists were allowed to have input in the selection process, an event that Waghorne, an officer with labor coalition Public Services International, described as "civil" and a far cry from the fireworks he had expected.

Once relegated to the streets and hallways, social and environmental activists like Waghorne are finding these days that businesses and trade officials are receptive to their concerns. Activists are prompting changes in corporate practices or trade policy, in some cases partnering with their former targets. Representatives of Amnesty International and other groups were even invited into the proceedings of the World Economic Forum last month in Davos, Switzerland..."

Should Airlines be Required to

Should Airlines be Required to Compensate Customers for Delays?

"If people are happy to carry the risk of cancellation in return for cheaper fares, why shouldn't they have that option?" (Dr. Eamonn Butler at the Adam Smith Institute Blog - "Compensation for air delays").

Bhagwati Separates WTO Critique Wheat

Bhagwati Separates WTO Critique Wheat and Chaff

Jagdish Bhagwati tries to separate the wheat from the chaff in the critiques of the WTO, in a Far Eastern Economic Review essay.

Dingel, at Exploit the Worker, links to, abstracts from, and critiques the article: "New Bhagwati Article: WTO Is Off Track".

Blustein's Book Reviewed Allen Beattie

Blustein's Book Reviewed

Allen Beattie reviews Paul Blustein's new book on the Argentine financial crisis (And the Money Kept Rolling In (and Out): Wall Street, the IMF, and the Bankrupting of Argentina ) in today's Financial Times: "The debt crisis that has taught lenders nothing" (subscription required)

The book gets a good review - it provides the "forensic examination" the Argentine crisis deserves; as "readable" as his book on the Asian crisis; "he reconstructs the riveting narrative"; provides more discussion of policy implications than the Asian book.

Among other take-aways - it wasn't a failure of the Washington consensus:

"...the familiar criticism of the IMF's actions - that it capriciously imposed fundamentalist free-market policies on Argentina and abandoned it to chaos when they failed - is 180 degrees in the wrong direction. The IMF, wisely as it turned out, was initially suspicious of the dollar peg currency regime that Argentina adopted in 1991 and which proved the country's undoing. But the fund became impressed by the peg's early success in reducing inflation, entranced by Argentina's dynamic but ultimately dangerous finance minister Domingo Cavallo, and breathlessly enthusiastic about the (somewhat botched) privatisation and liberalisation programme of the 1990s.

Accordingly, it suppressed its misgivings about Argentina's inability to balance its budget and its consequent need to borrow dollars from the global capital markets at ever-higher rates to back the dollar peg. Far from imposing the "Washington Consensus" (the first component of which, let us recall, is fiscal discipline) on Argentina, the IMF was fatally complicit in its violation. As the crisis deepened in 2000 and 2001, the fund was so keen to avoid blame for pulling the plug that it continued to lend until all hope was extinguished."

Bottom line:

"The crisis was not primarily made in Washington. Blustein finds the real culprits in Buenos Aires and New York: the Argentines who peddled a falsely glowing vision of their country's economic renewal and the herd-like investors who believed the story or simply tracked the index of emerging debt."

The Making of the WTO

The Making of the WTO Director-General, 2005, #2

This post updates a January 24 collection of links on the WTO Director-General (DG) selection process: "The Making of the WTO Director-General, 2005 ".

What does it matter

I didn't have this topic heading in January. I'll accumulate "so what" posts here. Why does free trade matter? Why does the WTO matter to free trade? Why does the DG matter to the WTO? What about the General Council Chair?

Here's a first installment - Pascal Lamy's articulate explanation of what the DG does: "What does the Director-General of the WTO do?".

How are Directors-General chosen?

This post links to the WTO DG selection rules, and to a newspaper article providing a summary description of the process: "The Rules for Choosing a Director-General of the WTO".

Miles Kahler critiques the methods used to choose leaders at the World Bank, IMF, and the WTO in the Institute for International Economics book, Leadership Selection in the Major Multilaterals. The chapters can be read (but cannot be downloaded) online. I learned about this from Daniel Drezner.

A Claude Barfield Financial Times column, arguing that a WTO DG should have considerable political stature, at the former head-of-state level, was the subject of this post: "What Should We Look For In a WTO DG?".

Early Maneuvering

Nominations had to be made by December 31. But the race began before then. Who might have been in? Why did some drop out while other stayed in?

Early on, Jagdish Bhagwati suggested, in the Jan/Feb 2004 Foreign Affairs, that the South African Trade Minister Alex Erwin was considered a leading contender. Bhagwati's article was titled : "Don't Cry for Canc�n". "...Alec Erwin, South Africa's trade minister and a favorite to become the next director-general of the WTO..." This was quickly denied.

A lot of people thought about running for DG: "People who might have run for WTO Director-General, but did not". In October, Brazilian and Uruguayan representatives met in Montevideo, without reaching joint agreement on a Latin American candidate: "Why are there two Latin Americans in the WTO race?". In December, Kenyan Trade Minister Mukhisa Kituyi almost entered the race: "There was another candidate".

And then there were four

When the sun came up on January 1, there were four candidates. Felipe Seixas Corr�a of Brazil, Carlos P�rez del Castillo of Uruguay, Pascal Lamy of France, and Jaya Krishna Cuttaree of Mauritius. Who are these men? What strengths and weaknesses do they bring to this office?

This Jan 2 survey post linked to pages with biographical information on each candidate: "Race for WTO Director-General". The Economist also surveyed the four candidates on January 7: "The Race for WTO Director-General".

Here is a report of an interview with Mauritius Foreign Minister Jayakrishna Cuttaree: "Jayakrishna Cuttaree". Here is a post on a Financial Times column that discussed Pascal Lamy: "The pros and cons of Pascal Lamy".

Alan Oxley, former Australian Ambassador to the GATT explains: "What's Wrong With Pascal Lamy". Peter Gallagher, an Australian trade consultant, discussed P�rez del Castillo and Lamy: "Advice on who to pick as the next WTO Director-General". Both Oxley's column and Gallagher's post offer much more.

Michael C. Boyer, James G. Forsyth, Jai Singh survey the four candidates, and their chances, in the February 2005 issue of Foreign Policy, "Who Gets to Run the WTO?". Very good. I learned about this from Daniel Drezner.

The race itself

How do you campaign to be Director-General of the WTO? Mike Moore, a former Prime Minister of New Zealand, was DG from 1999 to 2002. He described his race for DG in his 2003 book on the WTO, A World Without Walls. This post has an extract from the book, describing the race: "What's it like to run for WTO Director-General".

Mauritius sought support among the Indian diaspora for its candidate: "Cuttaree plays the ethnic card".

Uruguayan P�rez del Castillo traveled to Australia to meet with the trade minister there: "What will Australia do?�.

Brazilian Felipe Seixas Corr�a traveled to South Africa � another G-20 member: "The Brazilian visits South Africa". South African news reports suggested that South Africa was torn between its G-22 ties with Brazil and its connections with other African countries. This faced it with a choice, described in the post "Seixas Corr�a, or Cuttaree?".

The selection rules call for the presentation of the candidates to the General Council soon after the nominations end. In 2005, this presentation takes place on Wednesday, January 26: "This Wednesday�s WTO General Council meeting" and "The next step in the WTO race". A group of NGOs is taking advantage of the General Council meeting to schedule its own "public hearing" with the candidates on the evening of January 26: "Public Hearing for WTO Candidates". And another post: "Meet the WTO Candidates".

Once the presentations were completed, the texts were posted to the WTO website, and there was a spate of stories: "WTO DG Candidates Address the General Council". In a first, three of the candidates answered questions at an NGO sponsored "public hearing" on January 26. Here is a transcript: "Minutes of Civil Society Hearing for WTO Director-General Candidates".

Newsweek interviewed Pascal Lamy in late January: "Newsweek Interviews Pascal Lamy". Here is a February article on Lamy based on German sources: "Does Pascal Lamy have a good chance?".

In early February, the Australians came down in favor of Carlos P�rez del Castillo. Stories a few days before tied Australia's selection decision (which was said to be between P�rez del Castillo and EU candidate Lamy) to recent EU decisions on wheat subsidies "Which Candidate Will the Australian's Choose?"; "The Australians Opt for P�rez del Castillo".

This post links to a set of stories on P�rez del Castillo's claims about the division of Latin American support between himself and Seixas Corr�a: "Latins for P�rez del Castillo".

This post links to and quotes from an Indian column surveying the candidate-set from the Indian point-of-view: "An Indian View of the WTO-DG Candidates".

Cuttaree campaigns with a web site: "Jaya Krishna Cuttaree". I learned about this from Daniel Drezner.

The Choice

How was the selection ultimately made?

The Transition

What is involved in settling in to the office?

Last updated February 15, 2005; revised February 16

Dan Drezner WTO DG Post

Dan Drezner WTO DG Post

Drezer takes time off from following the World Bank race, to post on the selection of the World Trade Organization Director-General: "Handicapping the race for the WTO leadership"

See especially the link to a Foreign Policy story on the strengths and weaknesses of the four candidates, and a link to Mauritian Foreign Minister Cuttaree's campaign web page.

For background on the political economy of this type of race, Drezner recommends Miles Kahler's Leadership Selection in the Major Multilaterals (Amazon link).

Revised February 16 to note that Kahler chapters cannot be downloaded)

This book is also available at the Institute for International Economics website, where the chapters can be read (but not downloaded) individually: Leadership Selection in the Major Multilaterals. Kahler has chapters on leadership selection at the World Bank and IMF, and at the WTO. Looks good.

Alexander Hamilton

Adapting Tom Lehrer's rueful joke comparing himself to Mozart: "By the time Alexander Hamilton was my age, he had been dead for four years." Among other things, during his 49 years, Hamilton:

What Should We Look For In a WTO DG?

What Should We Look For In a WTO DG?

Claude Barfield thinks that the four candidates for Director-General (DG) of the World Trade Organization (WTO) are all "distinguished and able diplomats and negotiators." He doesn't think they have the requisite stature to advance the world trade agenda. A different type of candidate is needed, he argues in today's Financial Times : "Cause of world trade demands a powerful patron" . (subscription required)

Diplomats were Ok in a simpler time, when the world's trade rules were negotiated among a small group of developed countries, the rules did not interact as closely with domestic "financial and telecommunications regulations, intellectual property rules, health and safety measures, taxation and the environment" concerns, and did not attract the attention of such a wide range of interest groups.

Barfield thinks the world needs a stronger DG position, filled with candidates with more political (rather than technical) credibility. Following the political scientists Robert Keohane and Joseph Nye, he'd like to see "...effective politicians linking organisations to constituencies" chosen for the DG position.

What sort of a person would fill the bill:

"If the director-general is to be granted increased authority and stature, the bar must be set higher in terms of personal background and qualifications. The ideal candidate would be a current or former elected head of state, from at least a mid-sized developing democracy. There is such a candidate waiting in the wings - Ernesto Zedillo, the former president of Mexico. In addition to expertise in trade matters, Mr Zedillo's political credentials are impeccable: he guided Mexico through the difficult economic debacle that he inherited from his predecessor without reverting to traditional protectionism. More important, he presided over the first successful transfer of democratic authority to an opposition party.

If one wanted truly to jolt the system, there is Bill Clinton. Whatever the judgment of his US presidency overall, he has proved to be a defender of free trade, even against the dominant trends in his own party, and he retains a towering respect and influence in international circles, particularly among developing countries..."

Should the U.S. leave the

Should the U.S. leave the WTO?

Here's another potential bump in the road to the meeting of WTO trade ministers in Hong Kong this December, and the completion of the Doha Round of trade negotiations in 2006:

Jeffrey Schott, in his essay, "Confronting Current Challenges to U.S. Trade Policy" writes that this year, Congress

"...will likely be required to take another trade vote on a resolution to withdraw from the WTO. Section 125 of the Uruguay Round Agreements Act of 1994 requires the president to report to Congress every five years on the costs and benefits of US participation in the WTO. After receipt of the president's report, both houses of Congress have 90 days to vote on a joint resolution calling for the withdrawal of US membership in the world trade body. If adopted, the withdrawal resolution is subject to presidential veto, in which case Congress has an additional 15 days to override the veto. The first WTO withdrawl vote took place in June 2000; the withdrawal resolution was rejected by a vote of 35 to 0 by the House Ways and Means Committee, and by 363 to 56 by the full House...

The timing of the vote will depend on when the president issues his report on US participation in the WTO. Since the second five-year period ends on December 31, 2004, the report presumably should be presented in early 2005 after the new Congress convenes, with the prospective vote on the withdraw resolution in late spring..."

Schott speculates that a vote "could be more contested" this year. In part, he says, because of the publicity given to a series of trade cases the US has before the WTO. Actually, our record before the WTO hasn't been all that bad. Schott has a nice table (8.2) summarizing the US record in WTO dispute resolution cases. From 1995 to 2004 we appeared as a complaintant in 71 cases, of the 48 that have been won or lost, we won, or won on core issues (according to the USTR), in 44; we lost four. The US appeared as a respondent in 72 cases. Of the 49 that have been decided, we won, or won on core issues, in 24; we lost in 25.

It is hard to imagine that Congress would take us out of the WTO. It is easier to see opportunities for grandstanding and posturing, and Schott suggests the potential for the diversion of USTR office energy and time from Doha negotiations to servicing a Congressional debate. Schott also notes "defeating the resolution also could be costly if it requires acceptance of new negotiating constraints or other types of political side payments."

Schott's essay appears in a new book from the Institute for International Economics (edited by Fred Bergsten), The United States and the World Economy: Foreign Economic Policy for the Next Decade . It looks like all the essays can be read online, but they can't be printed out or copied. This post is also based on the Schott essay: "Renewal of the Trade Act of 2002".