After a bruising, eight-month battle, the World Trade Organization has a new director general. Actually, the WTO now has two director generals, although they will not be occupying the office at the same time. In a solution that optimists will call Solomonic, but is at best “diplomatic” — with all the ambivalences that word contains — the 134 members of the general council agreed this week to split the difference. Mr. Mike Moore, the former prime minister of New Zealand, will lead the WTO for three years; when his term expires, Mr. Supachai Panitchpakdi, Thailand’s deputy prime minister, will take over for the next three years. Neither term is renewable.
The relief felt with the ending of the dispute has been tempered by the terms of the deal itself. A WTO spokesman conceded that it “wasn’t considered a fully satisfactory compromise”; a less diplomatic diplomat said it left a “sour taste.” Even Bangladesh, which offered the plan, described it as “the least bad proposal.” All agree that it is the only practicable solution. Let us hope it is in fact workable.
The new director general has a full plate. First, he must prepare for the next round of trade talks that is scheduled to begin in Seattle in November. They may prove to be the most difficult trade negotiations ever because of their scope, the increasing volatility of the global economy and the growing skepticism about the fairness of the world trade regime. Mr. Moore is instantly handicapped in his work since the talks will continue long after his term in office expires. In other words, he is already a lame duck, and he will have only limited ability to influence the negotiations. Mr. Supachai may preside over their conclusion, but he too will be constrained by the fact that he will only take office considerably after the talks have begun. He may be powerless to guide negotiations that have assumed a momentum of their own.
The Millennium Round will be time consuming, but it is only part of the new director general’s responsibilities. He will also have to oversee negotiations with China over the terms of its admission to the organization. Of course, he will be guided by the bilateral deals that Beijing will have already reached with trade partners — the most important being the United States and the European Union — but reconciling them all will be a difficult assignment.
All the while, there will be trade disputes. Currently, there are fights over bananas, beef, lamb and steel, to name just the most visible. The windup to the 2000 elections in the U.S. will put an additional burden on the WTO head, since it will force him to frame all actions concerning the U.S. through the prism of that country’s domestic politics — and trade issues will be especially sensitive, especially if the economy slows down.
That will not be the only political challenge, however. There are growing doubts in the developing world about the fairness of the international trade system. The global economic crisis that began in Asia in 1997 has undermined the once solid belief that open markets are an unalloyed good. The protectionist measures adopted by the U.S., the EU and other developed nations have not helped the cause. Claims that free trade helps all countries have been weakened by statistics that show the gap between rich and poor, haves and have-nots, widening.
The bitter fight over the selection of the WTO director general has its origins in this growing skepticism. The developing world did not fight so hard for Mr. Supachai’s nomination purely for reasons of face. Rather, they supported him because those governments feel that it is necessary to have one of their own in positions of authority to protect their interests. In other words, they no longer believe the system itself will act in their best interest. Developed countries fought just as hard for Mr. Moore for the very same reason. The man in the middle matters.
This is a warning. The liberal consensus that has been the foundation for the postwar economic order is fragile. The next round of trade talks will be bitterly contested. Attempts to introduce new issues, such as human rights or environmental protection, could derail them. Mr. Moore and Mr. Supachai have the unenviable task of shepherding the negotiations and repairing that fraying consensus. They will be closely watched to make sure that their actions are fair and evenhanded. That scrutiny may be the only good thing to come of this long nomination process: If the trade regime’s reputation for fairness is restored, then the bruising fight may have been worth something after all.
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