WTO Director-General’s farewell address to the General Council while Members can’t agree on an acting Director-General



Terence P. Stewart | Current Thoughts on Trade

The WTO held its last regularly scheduled General Council meeting before the August recess on July 22 and 23. While the meeting had a full agenda, it was also the scene for the current Director-General Roberto Azevedo to give his farewell address to the membership. Director-General Azevedo steps down at the end of August. Before getting to Director-General’s farewell speech, I review several agenda items and activities at the General Council meeting that show the ongoing impasse among the membership.

Agenda item 4, Twelfth Session of the Ministerial Conference — date and venue

Because of the COVID-19 pandemic, the WTO postponed the 12th Ministerial Conference originally agreed to be held in Kazakhstan this past June until a future date in 2021. Kazakhstan has offered to host the conference in 2021. Moreover, the WTO has been able to advance in its use of virtual meetings and is now back with face-to-face meetings in Geneva as well. While the COVID-19 pandemic continues to be a global challenge, selecting a venue and time of meeting is obviously critical to permit the logistical planning involved for the next ministerial conference. Unfortunately, Members were unable to reach agreement on the venue or the date. Since it would always have been possible for Members to agree to Kazakhstan for June 2021, with a fallback venue of Geneva in December 2021 if by April Kazakhstan did not believe it could safely host the event, the lack of consensus on venue and timing is disappointing. This was agenda item 4. See WT/GC/W/802, 20 July 2020 (Proposed Agenda for General Council meeting on 22-23 July 2020).

Agenda item 6, Designation of acting Director-General

The Chairman of the General Council postponed consideration of the issue of the appointment of an acting Director-General during the General Council meeting, despite the issue being an important agenda item, as Members had been unable to agree on which of the four Deputy Directors-General should serve in this temporary caretaker position while a new Director-General is selected. Since the selection process for a new Director-General could extend until early November, the role of acting Director-General is limited in time (probably just two months and a week). Moreover, by agreement of the General Council in late 2002, the acting Director-General is to be chosen from the four Deputy Directors-General. Members have been able to interact with each of the Deputy Directors-General for years (seven years for three of them; three years for Alan Wolff). So how hard could selecting an acting Director-General possibly be? Press reports have indicated that the Chairman of the General Council, Amb. David Walker of New Zealand, has heard from Members general support for either Alan Wolff of the United States or Karl Brauner of Germany, but no consensus for either and opposition to each from some Members. The other Deputy Directors-General (DDGs), Yonov Frederick Agah of Nigeria and Yi Xiaozhun of China have each served seven years (as has Karl Brauner) and Nigeria had been thinking about putting Mr. Agah forward as a candidate for the Director-General position before choosing Dr. Ngozi Okonjo-Iweala. Thus, any of the four DDGs would be competent to handle the position for the two plus months needed. Why politicize the selection of an acting Director-General? What about a coin flip to resolve this impasse? The inability of Members to agree on an acting Director-General needlessly delays the process of filling the post and exemplifies the breakdown of trust and agreement on a common purpose that has increasingly characterized the activities of WTO Members. Roberto Azevedo must look at the continued lack of willingness by Members to pull together for the common good as confirmation that he has made the right decision to step down early. What a nightmare for those trying to serve Members and move the organization forward must be the posturing done by Members on issue after issue. The Chair of the General Council will continue to consult with Members in the hope of achieving consensus on an acting DG and then will call another General Council meeting to obtain formal consensus.

Agenda item 8, Covide-19 intiative: Protecting Global Food Security Through Open Trade – Statement by Co-sponsors of WT/GC/218/Rev.1

Many WTO Members have put forward proposals for addressing the COVID-19 pandemic, but there has been no Member-accepted proposal to date. While the pandemic is a health crisis with large numbers of export restraints having been introduced by Members on medical goods, some countries have also introduced restraints on the export of agricultural goods. The agricultural restraints have been particularly concerning as there haven’t been shortages of production globally of core agricultural products.

The Cairns group of Members (Argentina, AUstralia, Brazil, Canada, Chile, Costa Rica, Indonesia, Malaysia, New Zealand, Paraguay, Peru and Uruguay) has put forward a proposal to protect global food securing through open trade in response to the COVID-19 pandemic. See WT/GC/218/Rev.1. The proposal is embedded below but basically calls for WTO Members (1) to exercise restraint in imposing export restraints on agricultural products, (2) to roll back restraints “in a timely and effective manner”, (3) not to impose export restraints “purchased for non-commercial humanitarian purposes by the World Food Programme (WFP) and other humanitarian agencies and fulfill other commitments made in earlier ministerial conferences; (4) to continue and improve transparency on actions taken; and (5) to continue the reform process in agriculture. The proposal hardly restricts WTO Members from using existing flexibilities consistent with WTO rules. While questions and the raising of issues for additional consideration would be understandable, considering the severity of the pandemic on global trade, it is hard to understand the response of many countries that reportedly occurred.

Specifically press reports indicate that the proposal was attacked by a number of major countries – China, India and South Africa — as well as other developing countries. See, e.g., Washington Trade Daily, July 23, 2020 at 2.

Director-General Azevedo’s farewell address — “We’ve achieved a lot, but much remains to be done”

The current Director-General has generally received high marks for his efforts over the last seven years to move the organization forward and for achieving some successes along the way. He has always come across as a decent person working hard to be an honest broker and finding possible approaches to seemingly intractable differences.

That said, the last seven years have also been a challenging time with the inability to conclude the Doha Development Agenda (which in fairness had stalled back in 2008), a growing membership with radically different views of the needs and objectives of the organization, the economic shocks from the COVID-19 pandemic, the growing trade disputes among major players and unilateral actions taken outside of the system, the collapse of the Appellate Body, the limited functioning of the negotiating pillar of the WTO and so much more.

Being a former Ambassador to the WTO for Brazil, the current Director-General seems to have had better rapport with the Geneva Missions than his predecessor had, and at the same time DG Azevedo was able to have access at the political levels in capitals as needed. But for whatever successes DG Azevedo has had, there have been many frustrations as trust and willingness to work together have often been lacking from the Members on a wide range of issues.

His farewell address is a positive statement that reviews the logic of his early departure, reviews successes and the work left to be done. It is the type of farewell address that has Director-General Azevedo leaving on a high note and reflects positively on the character of the departing Director-General. The link to his address follows and the text is reproduced below. Seehttps://www.wto.org/english/news_e/spra_e/spra304_e.htm.

The Members owe Roberto Azevedo their sincere thanks for his unflagging efforts over seven years to help Members keep the organization relevant. That the WTO has lost some of its relevance and been unable to deliver on a range of important issues over the last seven years is attributable to the divides among the Members. DG Azevedo has been there for the membership. They just haven’t been there for themselves.

Godspeed Roberto Azevedo.

Statement by DG Azevedo on July 23, 2020 at the General Council meeting:

“Thank you, Mr Chairman.

“In preparing for today, I found myself looking back seven years to when I first addressed you as Director-General. And I can now tell you from experience, the last speech is much harder than the first.

“The first is about goals, and a game plan to tackle the future.

“The last one is about what has been achieved; how much is left to do; and saying farewell to people we really cherish. This final part is the toughest of all.

“Back in September 2013, I said that the WTO was at a crossroads. It’s still at a crossroads — and will continue to be for some time yet. This is not surprising, because this Organization is too important to have it easy.

Each word, each comma that we negotiate here has a direct and measurable impact on public policies and business realities — and consequently, on people’s lives.

“Our agreements are subject to dispute settlement procedures that are automatic and consequential — and I’ll come back to this point.

“This means that negotiated outcomes here are always the product of truly complex, long and painful diplomacy.

“It was clear then, when I made that first speech to you, that we needed to deliver agreements to bring this Organization closer to the changing realities of the 21st century.

“And together, we did. The Trade Facilitation Agreement, in Bali, put the Organization back on the map as a venue for global trade rule-making. It gave us confidence that the multilateral track was viable, and that with enough political will and pragmatism, we could strike deals of great value for trade, growth and development.

“After that, we tried to advance the remaining Doha Round issues. It was, quite frankly, a tall order. We confronted the gateway issues head-on, and tested a large number of potential approaches. But despite intense efforts, including daily meetings and consultations with permanent representatives, it became apparent that positions in many areas were further apart than ever, with gaps widening instead of closing.

“Still, in Nairobi in 2015 we managed to harvest some important multilateral outcomes. Eliminating agricultural export subsidies and the trade distortions they create had been a longstanding goal for many members. We expanded the Information Technology Agreement, reducing and eliminating tariffs on $1.3 trillion of new-generation tech products.

“Not long after Nairobi, and like all multilateral institutions, the WTO was engulfed by strong political headwinds. These headwinds, and the associated tensions around trade, owe much to dramatic advances in technology, and the changes they have provoked in labour markets and in societies as a whole. It is also true, I have to say, that domestic social and economic policies have not done all they could have to contain inequalities of income and opportunity, and to ensure that the benefits from trade are more widespread.

“Despite these very challenging circumstances, standing still, for this organization, was not an option. We needed to find ways to move forward.

“It was clear that Doha issues could not simply be abandoned. We needed to find new, creative ways of pressing on in areas of fundamental importance to a sizeable portion of the membership. And indeed, we have been able to make progress in the ongoing negotiations on fisheries subsidies as well as in discussions on agriculture and other important issues.

“At the same time, it was an inescapable reality that there were other, very real issues that needed to be addressed within the WTO. To take one example, it was simply not acceptable for the WTO to be in the 21st century, decades into a profound digital revolution, with no truly consequential discussions on digital trade.

“We therefore began to test other approaches available in the WTO toolbox. Groups of members started to explore innovative ways of advancing issues of interest. You know them all: e-commerce; the facilitation of investments for development; micro, small and medium sized enterprises; the domestic regulation of services; and trade and the economic empowerment of women.

“This second track of work received an important boost at MC11 in Buenos Aires in 2017. Those initiatives have since become an important part of work here in Geneva, with a growing number of participants from both the developed and developing worlds, and a welcome spirit of transparency and inclusivity from the proponents.

“Delivering on both the multilateral front and the joint initiatives will be vital for the future of the system. For the road ahead, MC12 will be a key landmark. It must deliver credible agreements and map the way for further reforms.

“I had hoped to work with you to deliver precisely such outcomes this past June. But the postponement of the ministerial to next year, because of the pandemic, brought me to the conclusion that I needed to step down this summer.

“Had I stayed on for the remaining year in my term, the DG succession process and the MC12 preparatory process would have overlapped. My decades of experience working with this Organization left me firmly convinced that this would have irremediably compromised prospects for success at the ministerial.

“In light of the COVID-19 crisis, MC12 has become even more important: it will be a key decision point for you to shape the direction of the post-COVID global economy.

“The date of the ministerial, which now seems likely to be held next June, was beyond my control. The timing of my succession, however, was within my power to change. My early departure allows you to decouple the two processes. This was best for the system, making my choice a no-brainer.

“It’s a no-brainer because the WTO is much more than just a job to me. My first posting in Geneva was in 1997. We lived almost five years in this building. Even after going back to Brasília in 2001, my kids used to tease me that I hadn’t actually left Geneva. I was still spending a big portion of my time here, first as a litigator, then as a negotiator.

“In 2008, I came back as Brazil’s Ambassador to the WTO. Five years later you appointed me Director General.

“Twenty-three years of my professional life have been intrinsically linked to this Organization. I have had many happy moments, but also — like most of us — my share of disappointments.

“But even at the lowest points, not once in these 23 years did I ever doubt the role that this system plays in improving people’s lives around the world. We will be worse off if the system’s relevance and effectiveness are allowed to erode.

“When I announced my decision to step down back in May, I said that MC12 would be a stepping-stone to the future of the WTO.

“But what should the future of the WTO look like? That’s the question. Of course, it will be shaped by you, the members. But I want to take this moment to share with you my own views on the subject.

“And let me start with a warning: don’t assume that the WTO has a future irrespective of what you do here.

“To assure the future of the WTO, it is fundamental that members truly believe in the need to update the system. Some may still believe that the pressures afflicting the WTO are localised, and therefore temporary. I want to assure you that they are not.

“The pressures on trade, and on the WTO, derive from fundamental structural changes in the global economy. Changes in technology, groundbreaking business models, and shifts in the balance of economic power — they all have fundamentally altered the way countries and companies interact, not to mention the ways we go about our daily lives.

“The rules we negotiated back in the 1980s and signed into force in 1994 are still very relevant and much-needed. They are, in fact, the last bastion preserving some degree of order and predictability in global trade and economic relations. Lose this, and we lose fundamental pillars of peace and prosperity.

“Yet lose them we may — if the WTO does not evolve.

“In substantive terms, there is a wide range of issues that are before you right now. Each of them would offer a meaningful contribution to WTO reform.

“But at least as important as the ‘what’ of reform is the ‘how’.

“The WTO is now driven by 164 members. I don’t have to tell you how different they are, and how differently they think. A one-size-fits-all recipe will not work.

“We should remember that agreements at the WTO have always sought to accommodate the diversity of our members with flexibilities of different kinds.

“Special and differential treatment (S&D) was one way.

“Member-specific flexibilities was another: subsidy caps, quotas, higher tariffs on certain products, and individual services commitments that open some areas — but not others.

“In short, our agreements always had a way of accepting different contributions from members.

“Our Trade Facilitation Agreement offers a new framework altogether for accommodating diversity among members. It allowed each country to specify the flexibilities and the time they needed to implement the Agreement. And it did so without compromising the high level of ambition that was the final destination.

“An open-minded approach to flexibilities would open up a new era of fruitful work for the organization. And when exploring potential areas for such work, unanimous agreement cannot be a prerequisite for starting conversations at the WTO. It’s as simple as that.

“Not all members will necessarily be ready for a particular conversation or a particular step. That is okay, and absolutely natural. But if full consensus is required to even begin to discuss any issue, this Organization will not survive. I’m glad that this is not where we are today.

“The joint statement initiatives potentially represent one path to a more nimble, flexible WTO. No member is compelled to participate, yet the doors are open to any member willing to join — or willing to leave.

“Plurilateral agreements have been with us since day one. But the fact is that any new flexible non-multilateral arrangement — whether it is the JSIs or something similar — will inevitably raise important practical and systemic questions.

“Multilateralising their results may not always be possible. But limiting their application to signatories leads us to many grey areas. There will be many systemic questions, and the answers will differ, I suppose, from case to case. I’m sure you will be able to find them.

“But even before you get to that point, you will need to get past the most common question I hear in discussions about such arrangements. And that question is: “Won’t this approach compromise multilateralism?”

“That’s a big question. But my answer would be: “This approach is the only way we can save trade multilateralism.”

“And in this Brave New World of ours, predictable and updated rules are of enormous value. They will be pursued, believe me. If not in the WTO, then in other less representative forums. And if governments are unwilling or unable to define the rules of the game, then these rules will be set by private parties — even less representative, and even less likely to deliver gains for everyone. We would all be better served if these rules, if these parameters, are negotiated at the WTO’s large table.

“Then again, we know that agreements reached at the WTO have historically been valued for their enforceability through the dispute settlement mechanism. And here, too, we have a problem.

“We all know where we are with the appeals stage of that mechanism. Finding a solution is not particularly hard, if you all truly want a solution. And in this regard, I’m not sure this is where things stand.

“There are stop-gap solutions out there. Some of you are moving in that direction already. Nevertheless, the fact that we are not in a position to agree on the means of enforcing our agreements speaks volumes.

“Whatever decision you take on this, I would argue that a dysfunctional dispute settlement mechanism introduces an unacceptable asymmetry in the system. This asymmetry is to the particular detriment of the smaller and more vulnerable parties to any dispute. I don’t think we can simply sweep this under the rug, and it must remain a priority for WTO members to address.

“I’m sure that much of what I’ve said today is not news to you. I have made many of these points on previous occasions. Nonetheless, I thought I should clearly spell out what I think the most critical challenges and the more promising avenues are. And to the extent I have been able to facilitate and encourage some of this new thinking during my tenure as Director-General, I have been happy to do so.

“All these innovative approaches are just a start, I would say, but a very promising start. Members now have a foundation on which to build new rules and standards, without ever forgetting the multilateral track and the fundamental issues that must still be addressed more fully.

“We’ve achieved a lot and we must be proud of that. But much remains to be done.

“I wish the next Director-General every success in addressing these and other challenges. I will certainly be supportive of your efforts and will be a passionate advocate for the system wherever the future takes me.

“As I said earlier, the WTO has been an integral part of my life. Over the past 23 years, I have made life-long friends among delegates, peers — including you yourself, Mr Chairman — and the Secretariat.

“Speaking of the Secretariat, I want you to know that we have within these premises nearly 700 souls who dedicate their careers to serving you, members, with commitment, professionalism, and a degree of excellence that you will not find anywhere else. I knew that before, and my time as DG confirmed everything I said. I am privileged to have worked with them and you are fortunate to be supported by people of such calibre.

“I would like to extend special thanks to my deputies — Alan, Fred, Karl and Xiaozhun — for their wise counsel and active engagement with members and the wider trade community. And I want to thank each and every member of the Secretariat, both those who worked closely with me, including past and present members of my office, and those that I unfortunately didn’t get to see as much. Without you, we would not be the organization we are.

“On the subject of support, I must find a very special place for my family — which is growing by the minute. In both the good moments and the difficult ones, they have all been great enthusiasts for the WTO project. Our fantastic daughters, Paula and Luisa, who with their dear husbands, Andre and Thiago, have given us five beautiful granddaughters: Alice, Olivia, Eva, and the twins Catarina and Isabela. My mom, Normisa, with her unconditional love and advocacy. My equally loving “other” mom, Maria, who raised me as surely as my blood relatives. My father and brother, Renato and Claudio, who are no longer here, but who are always here. And my wife, Lelé, without whom none of this would have happened, who has always been there to help me reach higher and catch me when I fall.

“Regardless of what has or has not been achieved over the years, this human connection with all of you is what I prize the most. These deep and fundamental connections never disappear. So I’m sure that this is not a farewell. This is, as we say in Brazil, just a “tchau”.

“Thank you all for your strength, your companionship, your solidarity, your support and your friendship. Come visit!

“Thank you all once again, and like I said before: Tchau!”

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