Put a rocket under trade disputes, WTO hopeful says

London | The World Trade Organisation has to get quicker at sorting out trade disputes if it wants to stay relevant to business, one of the frontrunners to lead the body has warned.

Kenyan government minister Amina Mohamed is one of the eight candidates with their hat in the ring to take over as Director-general of the beleaguered WTO, in a drawn-out process that will eliminate three contenders at the start of next week.

The race has been running quietly in Geneva since early July, with rivals vying to prove they have what it takes to broker a truce in the entrenched US-China trade hostilities.

That means procuring a credible plan to revive the WTO appeals tribunal that the Trump Administration has mothballed, while also delivering on American insistence that the WTO must hold Beijing to account for its perceived trade misdemeanours.

But Dr Mohamed says she wants to take the ailing organisation back to basics, doing the things it was set up to do: making the rules and enforcing them.

“We need to start negotiating again. It’s a rule-making body, it should be continuously negotiating rules and disciplining trade. That is the one thing that has suffered the most,” she told The Australian Financial Review from Geneva.

The biggest business complaint about the WTO, though, isn’t that it's struggling to wrap up a fisheries agreement or start a proper negotiation on ecommerce. It’s that the dispute settlement system can be so tardy as to be almost useless.

A recent report from US think tank the Cato Institute showed that when the WTO was set up in 1995, a trade dispute could be resolved in between 226 and 455 days. By the end of 2019, it was taking at least a year – and sometimes more than three.

The Appellate Body was knocking off appeals in 57 to 114 days in its early days, while in 2015 it was taking up to 170 days. Since then it has slowed down even more, as the US refused to allow any new judges to replace those retiring – until the body became inquorate and ceased functioning altogether at the end of last year.

“Businesses want commercial disputes to be resolved much faster than they are, because it has an impact on their bottom line,” Dr Mohamed said.

Easy to say, difficult to deliver. Dr Mohamed said the first step would be to at least set some deadlines or parameters.

“You need some transparency and predictability as to how long it’s going to take to get that result, so that it’s not endless,” she said.

Since the supposed 90-day maximum was honoured only in the breach, “maybe we should think about having a longer time period, but just make sure that it doesn’t get extended endlessly – that won’t work for business”.

Australia is no stranger to the epic dispute resolution process. Indonesia launched a case against Australian anti-dumping rules on A4 paper in September 2017, which wasn’t finalised until January this year.

The landmark case on Australia’s plain-packaging rules for cigarettes, which went through a Panel and then the Appellate Body, kicked off in April 2012. The Panel didn’t report until mid-2018, and the appeal wasn’t finalised until June this year.

Dr Mohamed said the WTO couldn’t undertake reform without addressing this. “The dispute settlement mechanism as a whole injects credibility into the system,” she said.

The Kenyan is enjoying frontrunner status partly because she has an impressive trade CV – she was the country’s ambassador to the WTO and later its trade minister – and partly because there’s an expectation that an African, and a woman, would tick the right political boxes this time around.

But there’s another African woman, also an ex-minister, in the race: Nigeria’s Ngozi Okonjo-Iweala. She’s worked at the World Bank, but the most recent line on her CV is at the World Health Organisation and Gavi, the Vaccine Alliance. So she’s reportedly been urging the WTO to regain relevance by playing a bigger role in the recovery from the COVID-19 pandemic.

It’s also understood that she’s playing up her ‘outsider’ status, saying that puts her in a better position than her trade-immersed rivals to act as a change agent.

Dr Mohamed bristles against this, saying it's not about insiders or outsiders but about finding a way to broker disputes – particularly between the polarised big players.

The first thing Beijing and Washington have to agree on, though, is a single candidate for the job. It’s a consensus-based decision, so all 164 members have a veto.

Many observers wonder if any candidate can convince both behemoths that he or she is an independent actor, not beholden to one side or another – and able to stand up to either. If not, November could bring deadlock rather than a decision.

But Dr Mohamed said her discussions with diplomats and politicians had so far left her optimistic about the selection process: “Everybody will try and stick to it. There are no indications now that anybody wants to move away from that. All of us are hopeful that that’s the timetable that will prevail.”