NEW YORK/MEXICO CITY -- The race for the top job at the World Trade Organization is in full swing, with the winner set to play a pivotal role in international trade disputes as the body becomes a new front in the power struggle between the U.S. and China.
Eight candidates are squaring off to replace the current director-general, Brazil's Roberto Azevedo, who will resign next month. Two of the candidates, Nigeria's Ngozi Okonjo-Iweala and Mexico's Jesus Seade, sat down with Nikkei to discuss their visions for the organization, which has faced challenges to maintain its relevance since Washington declared a trade war on Beijing in July 2018.
Okonjo-Iweala, who stressed the next WTO leader needs to be first and foremost a listener, held several senior positions at the World Bank, including its No. 2 post as managing director. Having twice served as Nigeria's finance minister, she negotiated the cancellation of $18 billion of Nigeria's debt and was noted for her anticorruption reform efforts.
Seade, who positions himself as a trade expert with "a strong personality" and formulated proposals, was Mexico's chief negotiator for the new United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement. The economist and diplomat was founding deputy director-general of the WTO. He also served as a senior adviser at the International Monetary Fund. He has also lived in China, serving as associate vice president at the Shenzhen branch of The Chinese University of Hong Kong.
Among the other six other candidates is South Korean Trade Minister Yoo Myung-hee, whose country is embroiled an ongoing trade dispute with Japan over the latter's export controls of semiconductor materials.
Nominations have also come from Egypt and Kenya, but not from the U.S., the EU, or Japan. To be selected for the leadership role, a candidate has to receive consensus by the 164 member states. Azevedo, who announced his resignation in May citing personal reasons, will leave the post after Aug. 31.
The interviews have been edited for brevity and clarity.
Q: What do you see yourself bringing to this role?
A: I am a reformer. I have a reputation as a reformer. I have strong political and negotiation skills. I'm a good listener and you need listening skills to make this work. I'm pragmatic and I'm solutions oriented.
Q: How would you go about navigating reforms at the WTO amid a rise of unilateralism and U.S.-China trade clashes?
A: This is the topical question of the hour, the growing nationalism, the divide. But if you listen carefully, you find that there's some intersecting interests. After all, the same big powers that seem to have a big divide are sitting across each other at the table and negotiating some deals.
The WTO should work with all members including the big ones to find out what are those intersecting areas -- however small they may be -- how do we begin to deliver to make the two sides see their common interests that we can work on and build trust.
It will take time, it will be challenging, there's no magic wand to it, but you need someone with the energy, the passion, who is not a quitter, and who can deliver and work with these powers and listen -- listen to them, because sometimes they feel they're not even listening to the big powers.
Q: Could you talk about your visions for reforms?
A: First, updating WTO rules to the 21st century to take account of 21st-century issues, such as e-commerce and the digital economy, such as climate change, the green economy and biodiversity and circular economy ... the issue of women and trade and micro-, medium and small enterprise. Even technology, what technology is doing to supply chains.
Then you've got to look at existing rules and see whether they are serving the purpose. There are some members who feel that some rules may be leading to circumvention and disturbing the balance of rights and obligations of members. Issues like special and differentiated treatment, which developing countries feel very strongly about [but] developed countries have a different view.
The dispute settlement system is paralyzed. You cannot have a rules-based organization, which is the sole place where people can take their grievances and complaints, but rules are not being followed.
A third area I would mention is transparency and notification. Transparency is so vital to the multilateral trading system, and notification for businesses. If something is going to be done in a country, businesses need to know that you're willing to take one action or another, otherwise they can't function.
The WTO has to start achieving more outcomes. If it doesn't do that then people continue to see it as irrelevant.
Q: How should the WTO address Washington's complaint about China's state capitalism and developing country designation?
A: Those are some critical issues that members will need to discuss and debate on. But let's put it this way, we must make sure that all members of the WTO feel that the balance of rights and obligations for all members of the WTO is about a fair system. So, that's why it's important to listen to who feels it's not fair and then restore that balance of rights and obligations that members need to undertake.
Q: How do you see the situation of trade at this moment?
A: I feel bad that an organization I helped to create is now in a situation that needs a serious fix. I think I can provide that fix.
The crisis in the WTO is in good measure a crisis between the United States and Europe, not China, for dispute settlement.
For Europe, the dispute settlement system had to be like a "court" who decides things and establishes jurisprudence, whereas the United States always wanted a more basic approach for facilitation of the solutions.
The United States is very uncomfortable about how things have happened and has taken extreme measures, strong measures. That is why the appellate body now is no longer functional. So that's a crisis as important as COVID or as differences with China.
We need to fix that, urgently. It is a very complicated process it's not one country versus another country. There are many parties in many aspects. This is a very complex crisis. That is why we need a real expert.
Q: How will you become the bridge between the U.S. and China?
A: The United States and China are not talking. The director general has to get involved and lead the discussions. What they need is a strong personality, a strong leader to call them to discussions and be engaged on that discussion.
For the [director general] position, you need to be a top trade negotiator. Because if you come from a background in finance and politics, you can have fantastic leadership and leadership is very important, but at the first difficult discussion between the United States and China, or between the United States and Europe, what will happen?
I don't think we should have a director general only encouraging [the parties] to discuss. He has to be part of that, he has to lead the discussion.
Q: How would you enable the appellate body to function again?
A: What I have in mind is taking measures that diverse countries -- most of them, except the United States -- have proposed, which is called the Walker Principles, a package of measures [put forth by New Zealand's Ambassador to the WTO David Walker] that basically reinforce the measures that already exist. The United States is not rejecting the proposal, just saying that's not enough.
So what I'm saying is that I will propose those proposals and then two other measures I have in my mind that would have to be developed in detail, but the fundamental idea is already in my mind and would be additions to those proposals. I see no reason why Japan or the European Union or China would reject my extra proposals. What I hope is for the United States to say, "Ah! With those extra proposals maybe, this is going to be interesting," and then we'll hear from the United States.
It's not a very complex thing because nobody -- not the United States, not Japan, not Europe -- nobody is saying that it's necessary to change the dispute settlement understanding. I think there is something we should be able to solve in the matter of the weeks.
Q: How do you see the possibility of the U.S. leaving the WTO?
A: I don't see how that can happen because the business sector in the United States is very much against such an idea. Not only the business sector, even the political classes. Politicians from the Democratic Party or the Republican Party in general support the WTO. Most of them are greatly critical of China. They are very critical of the dispute settlement system. But they don't want to leave.