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Will an African candidate be China’s choice for WTO chief?

South China Morning Post
Jevans Nyabiage
Tuesday, July 14, 2020
  • With the trade body brought to a standstill by the US-China trade row, much will depend on whether the nominee can break the deadlock, Chinese government adviser says
  • Beijing will also be looking at each contender’s stand on national security exemptions, analyst says

Beijing is likely to favour an African candidate for the top job at the World Trade Organisation (WTO) as US-China trade tensions drive the body into dysfunction, according to an adviser to the Chinese government and observers.

Of the eight nominees vying to replace Brazil’s Roberto Azevedo, who is stepping down as WTO director general a year early at the end of August, three are from Africa.

Egypt has nominated Hamid Mamdouh, a former diplomat and ex-WTO official who helped draft an agreement on trade in services during the Uruguay Round of negotiations. Nigeria has picked former foreign and finance minister Ngozi Okonjo-Iweala while Kenya has proposed former WTO General Council chairwoman Amina Mohamed. Mohamed, Kenya’s sports and culture minister, ran unsuccessfully for the WTO director general post in 2013.

A Chinese government adviser, who declined to be named because he was not authorised to speak to the media, said that since Azevedo was a Brazilian, China was less likely to support another Latin American as his successor.

But whoever took over the job would have the tough task of breathing new life into the largely dysfunctional organisation.

“A forceful director general might break the stalemate of the organisation and should have the strength to balance and mediate interests of major members of the organisation. It would be a daunting challenge for the eight candidates,” the adviser said.

“If China, the European Union and the United States could coordinate, we may see a new chief with mild influence. The possibility of a continued standstill cannot be ruled out.”

Britain has nominated Liam Fox, its former international trade secretary and supporter of Britain’s exit from the European Union.

The other candidates are South Korean Trade Minister Yoo Myung-hee, Mexico’s former WTO deputy director general Jesus Seade Kuri, former Moldovan foreign minister Tudor Ulianovschi, and Saudi Arabia’s former economy and planning minister Mohammed Al-Tuwaijri.

William Reinsch, a trade expert from the Centre for Strategic and International Studies in Washington, said there was a lot of support in general for African candidates but the key issue was whether the continent could unite behind one of them.

“If it can, then that candidate would have a big advantage. If African support is divided among them, that would create a path for a candidate from a different part of the world to move forward,” Reinsch said.

The African Union had planned to narrow the continent’s candidates down to single nominee but had not done so by last week, delayed by coronavirus disruptions.

Reinsch said China would be inclined to support a candidate from a developing country because that was how Beijing saw China.

“I think they [Beijing] will take a very close look at the African candidates since it appears developing good relations with African countries is an important goal for China,” Reinsch said.

Beijing’s choice might also be swayed by its long-standing position of non-interference in other countries’ internal affairs, observers said.

Raj Bhala, an international trade law expert and a distinguished professor at the University of Kansas law school, said one key issue would be the national security exceptions in the General Agreement on Tariffs and Trade (GATT) – the legal cornerstone of the world trading system.

Article 21 of the agreement says in part that WTO rules cannot prevent a country “from taking any action which it considers necessary for the protection of its essential security interests”.

“China will not favour a candidate who views decisions about national security to be within the purview of WTO panels,” Bhala said.

Rather, Beijing would likely favour candidates who saw those decisions as something to be left exclusively to each member, Bhala said.

Azevedo is stepping down from the Geneva-based body amid growing trade tensions between the United States and China as well as continued economic devastation caused by Covid-19, the respiratory disease caused by the new coronavirus.

One of WTO’s main functions – to arbitrate trade disputes – has been brought to a standstill, with the US blocking the appointment of appeals judges to the WTO’s top tribunal – the seven-member Appellate Body – saying it had overstepped its jurisdiction. The tribunal needs a minimum of three judges to rule on an appeal but it has not had a quorum since the terms of two of its three remaining members expired in December.

However, the EU and 20 other countries came up with the Multiparty Interim Appeal Arbitration Arrangement, allowing them to solve trade disputes among themselves.

Fredrik Erixon, an international trade expert and director at the Brussels-based European Centre for International Political Economy, said the trick would be to get a candidate acceptable to both the US and China.

“The reality is that the WTO is not going to be a relevant body for trade policy as long as big powers are in big trade conflicts,” Erixon said.

He said it might be better to wait after the US election to make an appointment.

“It may be the case that the US under a new president would accept the appointment of new appellate body judges and that they would take a much more constructive attitude to all matters related to the WTO than the current administration does,” he said.

Derek Scissors, from the American Enterprise Institute, said the WTO had failed its mandate to progressively liberalise global trade.

“Since the Doha Round collapsed more than a decade ago, the WTO has accomplished almost nothing,” Scissors said. “The key member nations do not want to liberalise trade further – they like the status quo.”

Erixon said the big challenge for the WTO was that all “systemically important” economies – including China – would have to open up in a much more reciprocal manner.

“In the long term, the future of the WTO is in the hands of China. If China wants it to be a relevant body, it will have to accept much more economic liberalisation. If they don’t accept that, we will continue to see other countries raising their barriers to China’s level,” he said.

Additional reporting by Wendy Wu.

Faculty name: 
Raj Bhala