[Ip-health] Professor Frederick Abbott in Health Policy Watch: World Trade Organization Faces Leadership Battle In Shadow Of Crisis Over Organization’s Future

Thiru Balasubramaniam thiru at keionline.org
Mon Jun 15 07:24:23 PDT 2020


World Trade Organization Faces Leadership Battle In Shadow Of Crisis Over
Organization’s Future
Analysis <https://healthpolicy-watch.news/category/content-type/analysis/>
12/06/2020 • Frederick M. Abbott

The early resignation of Roberto Azevedo from the post of Director General
(DG) of the World Trade Organization (WTO), sets the stage for a highly
politicized competition over his successor – who will face a major
challenge in demands to reshape the WTO in the wake of repeated US
complaints about its trade dispute rulings and policies with an alleged
pro-China tilt.

Azevedo announced in May that he would be resigning from the position as of
31 August 2020, a year before his term formally ends. Azevedo, a seasoned
and well-regarded member of Brazil’s diplomatic corps before taking on the
role of WTO DG, presided over a period when the WTO’s effectiveness as a
negotiating forum was eroded. Political conflict between economically
powerful Members, most recently precipitated by the United States, brought
its highly regarded dispute settlement system to a standstill. Now, as the
COVID-19 crisis has sent global trade into a tailspin, the question is who
– if anyone – can revitalize the Organization and reassert its preeminence
in trade governance.

The new Director General will face a range of sharp debates around trade
issues that are critical to health – including the need to ensure wide
global access to new COVID-19 medicines and vaccines. But beyond the
current pandemic, the WTO may also play a lead role on other critical
policies that affect health as well as broader economic well-being,
including: import and export barriers affecting fragile economies; policies
around trade in agriculture and food products; and ever more urgent
questions surrounding trade, climate and sustainability.

So far, three candidates have been formally nominated
<https://www.wto.org/english/thewto_e/dg_e/dgsel20_e/dgsel20_e.htm>: Jesús
Seade Kuri, Mexico’s chief negotiator for the ‘New NAFTA’; Abdel-Hamid
Mamdouh, former director of the Trade in Services Division of the WTO; and
Ngozi Okonjo-Iweala, board chair of Gavi, the Vaccine Alliance and former
Nigerian Finance Minister, who also spent 25 years in Washington, DC with
the World Bank.

On Tuesday, June 9, European Trade Commissioner Phil Hogan told reporters
that he was also considering a bid to become WTO Director General. At a
meeting with European Union trade ministers
identified trade and health issues, and the urgency of addressing the
COVID-19 crisis, as priorities. Hogan also suggested that the European
Union should put forward a single candidate, saying: “The EU has very
strong multilateral credentials and is recognized as a force that could
shore up the WTO and protect the multilateral trading system. This puts the
EU in a legitimate position to offer a Director General to the WTO.” The
Croatian Foreign Minister confirmed that EU members would discuss whether
to unify around a single EU candidate during the next month.

The fact that Phil Hogan has put his name forward does not assure his
position as the EU nominee. Other Europeans also reported to have expressed
interest include: Arancha González-Laya, Spain’s Minister of Foreign
Affairs and a former WTO Chief of Staff; and; Sigrid Kaag of The
Netherlands, currently Dutch Trade Minister, formerly UN
Under-Secretary-General, with experience at UNICEF and UNDP. (An
interesting – if perhaps academic – question: The EU has exclusive
authority over trade matters for its member states, while the EU and each
of its member states are Members of the WTO, with a unique voting
arrangement. If the EU nominates a DG candidate, does that preclude
individual member states from nominating their own candidates?) Peter
Mandelson, of the United Kingdom (now no longer EU!), but a former EU Trade
Commissioner and UK Secretary of State for Trade and Treasury, has signaled
interest too. While there is a long history of European heads of the WTO
antecedent, the General Agreement on Tariffs and Trade, whether this argues
for or against a new DG from Europe is not clear.

Appointments to leadership posts at multilateral organizations take account
of the merits of the candidates, but realistically they must be viewed
through the lens of political gaming and the exercise of power. Neither
China nor the United States have as yet nominated a candidate, and perhaps
neither country will because of the almost-certain divisiveness this would
evoke. But it would be a mistake to think that either Beijing or Washington
view this appointment exercise as one of identifying the smartest trade
expert in the room. The recent battle over the appointment of a Director
General for the World Intellectual Property Organization (WIPO) was
hard-fought between US and China-sponsored candidates. With the US having
prevailed, China will be looking again to assert its growing power. And, we
have not yet heard from India.

Also, tradition holds that the leading positions in the United Nations and
other multilateral organizations are divided up between regions – and that
balance will play a role in the debate over whether a candidate from Asia,
Africa, Europe or the Americas will succeed.

A candidate from Africa, such as Ngozi Okonjo-Iweala, might seem a
“neutral” prospect as compared to candidates from one of the major trading
powers. Okonjo-Iweala, who studied at Harvard and earned a PhD from MIT,
might also be someone who the Americans would support. Kenya’s Amina
Mohamed, former Ambassador and Permanent Representative for Kenya in
Geneva, served as the first woman to chair the WTO General Council and as
chair of the 10th WTO Ministerial Conference in Nairobi, and is certainly
qualified, as is Abdel-Hamid Mamdouh of Egypt. Yonov Fredrick Agah, of
Nigeria, currently a WTO Deputy Director-General, and previously Nigeria’s
Ambassador to the WTO is said to have expressed interest, along with Eloi
Laourou, of Benin, currently Ambassador and Permanent Representative of
Benin to the UN in Geneva.

In terms of UN agency heads, Dr. Tedros Adhanom Ghebreyesus of Ethiopia is
currently leading the WHO and Mukhis Kituyi of Kenya is leading UN
Conference on Trade and Development (UNCTAD). Viewed through the lens of
regional diversity, this might seem an obstacle to appointment of another
Geneva DG from Africa. (Asia is poised at the top of WIPO, with Daren Tang
of Singapore elected to succeed Francis Gurry.) Through a wider UN and
global lens, however, the UN (António Guterres) and the International
Monetary Fund (Kristalina Georgieva) Secretariats are headed by Europeans,
and an American (David Malpass) is leading the World Bank. Seen from that
perspective, the prospects for a third African Geneva leader may look

In years past, despite their differences, the United States and European
Union were allies with shared trading system interests that would
ultimately cooperate over the selection of a WTO (or former GATT) Director
General, even if each had a candidate in the running. However, the Trump
Administration has done everything it can to blow up the US relationship
with the EU, so a prospective alliance over the choice of a candidate for
WTO right now is in doubt.

This is not the best time to be “counting chickens” as we still are at
relatively early days in the nominating process – which is scheduled to run
until 8 July 2020

Following that, candidates “will have a period of time to make themselves
known to members,” according to the process outlined by WTO
<https://www.wto.org/english/news_e/news20_e/gc_29may20_e.htm>. That is to
include a special meeting of the WTO’s General Council, which includes all
WTO member states, “where the candidates will be invited to make
presentations, followed by the consensus-building phase devoted to
selecting and appointing one of the candidates.”

However, the final appointment date remains unclear. General Council Chair,
Ambassador David Walker (New Zealand) has said only that he will be “will
be consulting with members in order to establish expedited deadlines for
the post-nomination phases so that members may have clarity on the timeline
for the appointment process by the end of the nomination period.”

In theory, then, the DG appointment could also be delayed beyond the US
Presidential elections scheduled for November.

The choice of WTO DG is important to the future of public health. Through
the implementation of the Agreement on Trade-Related Aspects of
Intellectual Property Rights (“TRIPS Agreement”), the WTO sets the ground
rules for the granting and use of intellectual property rights, including
patents, for  diagnostics, medicines, treatments and vaccines. The TRIPS
Agreement embodies important “flexibilities” that allow governments to take
measures to promote and protect public health, including to grant
compulsory patent and government use licenses for the generic production or
import of patented drugs, and to make use of other exceptions to IP rights.
Historically, the exercise of these flexibilities has provoked controversy.
The COVID-19 crisis, whereby hundreds of existing and new drug
formulations, as well as vaccines, are currently being trialed in combat
against the virus, is expected to further test those WTO TRIPS
flexibilities – and the ability of WTO to support comprehensive and
equitable distribution of health products.

The new WTO Director General will thus be called upon to reassure member
states that they can provide for vital national health needs – without
facing undue pressure over Intellectual property interests or issues.

The new WTO director will be confronting COVID-19 in the shadow of the
historic dispute over access to medicine that raged while the HIV-AIDS
epidemic grew unchecked in the mid- and late-1990s. At that time, the
government of South Africa came under intense pressure from the United
States, the European Union and the innovator pharmaceutical industry based
on unsupported allegations that South Africa’s 1997 health legislation
amendments, permitting measures such as the parallel import of patented
HIV/AIDS drugs, violated the TRIPS Agreement. Collapse of the industry case
was followed by adoption of the WTO Doha Declaration on the TRIPS and
Public Health along with the TRIPS Article 31*bis* amendment on compulsory
patent licensing predominantly for export. This further clarified the
rights of countries to produce or import generics of vitally needed health
products in times of need.

Throughout the saga, either one of the two successive WTO Director
General’s, including Renato Ruggiero (to September 1999) or Mike Moore (to
September 2002), could have issued a clear public statement that the South
African legislation did not violate the TRIPS Agreement, a fact which no
serious trade and IP expert doubted (and which has been confirmed not only
by the Doha Declaration, but even by the US Supreme Court).

Had they done so, the pharmaceutical industry would have had a very
difficult time justifying its litigation, and the EU would also have been
under considerable pressure to withdraw its trade threats (which the US did
earlier on). But neither Director General spoke out. Not only did the
failure to support  South African prolong insecurity in South Africa’s
health system, but it damaged the public perception of the WTO as an
institution, because the basic charge of the pharmaceutical industry was
“we have these patent rights given to us by the WTO that are under threat”,
while in fact WTO rules allocated no such rights.
Pandemic Will Test Mettle of WTO Flexibilities

In case you were on the recent space shuttle mission, and missed entirely
the start of the COVID-19 pandemic, international interest in the legal
mechanisms that will be used to develop and distribute vaccines,
treatments, diagnostics and medical devices to address the pandemic is at a
historic high – and WTO once again has an important role to play.

In fact, several governments, several governments – including France
 and Germany
already have modified their legislation to facilitate the compulsory
licensing of patented health products to address the pandemic.  Israel has
issued a compulsory license

Along with the much-touted WHO-supported *voluntary* COVID-19 patent pool
launched two weeks ago, proposals for compulsory patent pools are in the
works, as are suggestions for taking advantage of the TRIPS Article
31*bis* provision
allowing compulsory licensing predominantly for export. So, the mettle of
WTO rules regarding intellectual property are likely to be tested again,
perhaps even more severely than before, as the current pandemic has touched
rich and poor countries alike in the greatest global public health crisis
of a century. The new WTO DG will thus be called upon to provide leadership
in assuring that TRIPS Agreement and other WTO flexibilities are respected.

In addition, there are critical health-related issues involving export
restrictions on critical health products, subsidies to the pharmaceutical
sector, and others that involve complex questions of WTO law and will need
to be addressed. Again, a strong DG voice at the WTO may be important.


As the electioneering commences, the WTO is at a critical, nearly
life-or-death, juncture.

Yet in the final analysis, the WTO Director General has rather limited
“actual authority” – rather like the head of the World Health Organization.
The constitutional document of the WTO,  the 1995 Agreement Establishing
the World Trade Organization
<https://www.wto.org/english/docs_e/legal_e/04-wto.pdf>, provides that the
WTO Secretariat will be headed by a Director General, appointed by the
Ministerial Conference (of member states), which will also “adopt
regulations setting out the powers, duties, conditions of service and term
of office”.

Significantly, WTO members never adopted the called-for regulations setting
out the powers and duties of the DG, although they have established the
term of office and conditions of employment.

Even so, along with staff appointments and budget management, a recurring
and significant role of the Director General involves the appointment of
expert panelists at the first level of WTO dispute settlement proceedings,
should disputing parties fail to agree.

The Director General traditionally has also played a major role in the
negotiation of new WTO (and former GATT) agreements. The DG has acted as
Chair of the Trade Negotiations Committee that coordinates the proposals
and drafts of the agreements that are ultimately presented to the Members
for adoption, and through that function, past Director Generals have played
a critical role in facilitating compromise texts and solutions to
disagreements between member states. The DG brings interested groups of WTO
delegates together for face-to-face discussions as they address issues in
various negotiating contexts.

Yet with these things said, the WTO DG is mainly a political figure at the
head of the institution who gives the appearance of “leading”. The extent
to which that leadership is taken seriously by WTO Members or the wider
public may also depend on the personal character and charisma of the
individual. He or she – bearing in mind there has never been a female
Director General at the WTO – can only persuade. The DG does not issue
orders, other than to the Secretariat staff.

Efforts to accommodate what may be some legitimate US concerns are
problematic because President Trump appears to have no real interest in
“solving” the technical problems with the way the WTO works. He requires
some grand gesture for which he can claim victory — or to use his current
jargon “total domination”.

Grand gestures are all the more important to Trump as the DG appointment
process coincides with the lead-up to the US presidential elections in
November.  While a new DG should, in theory, be put into place by 1
September, it’s not at all clear that will happen in the current

Selection of a strong and charismatic figure to “right the ship” of the WTO
is thus important for many reasons, including for public health. Developing
economies remain dependent on an open international trading system, and the
health of people around the world is certainly affected by their economic
conditions. As discussed, there are specific WTO rules that may have a
significant impact on health affairs, and how the WTO manages its rule
system makes a difference. But multilateral cooperation in economic
affairs, as in other spheres, is important not only for the particular end
that an institution seeks to achieve, but also to avoid devolution of
international relations that ultimately might come to a bad end.

It is far from clear that any single individual will be able to pull the
WTO out of its current difficulties. But the right appointment is likely to
have meaningful consequences in terms of giving the organization a fighting
chance. And the next WTO DG must be committed to improving standards of
living, including standards of healthcare, for all. The world could use a
WTO DG who can actually help make that happen.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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