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Breakingviews

Breakingviews - Guest view: Crisis demands reformer at WTO helm

LONDON (Reuters) - Compared to the fireworks of the U.S. election, the contest to lead the World Trade Organization is a low-key affair. There are no viral ads, big reveals, or blockbuster endorsements. Few outside top-level business and politics could name one, let alone all, of the front runners. Yet to overlook this election would be a mistake. Though the impulse toward multilateralism has waned in recent years, the need for it, particularly in the wake of the pandemic, is greater than ever. As the world looks to rebuild, the WTO can guide the global economy in a fairer, greener direction - but only if it has a credible reformer at its helm.

A sign is pictured in front of the chair of the Director General before the start of the General Council of the World Trade Organization (WTO) in Geneva, Switzerland, July 22, 2020.

The need for reform could not be more urgent. Restoring the efficacy of the WTO means restoring its moral authority, and that means shaking things up. Too many benefits have been accrued by the winners of globalisation and too many have lost out. Inequality has spiralled. As a result, the good name of international trade has been sullied. On the left it is blamed for the destruction of once-prosperous industrial communities. On the right it is seen as standing in opposition to nationhood and patriotism.

Facing a world after Covid-19, the new director-general has an opportunity to reverse the world’s inward turn. The virus has exposed the dangers of connectedness without cooperation: We have been unable to stop a global crisis because we have been unable to rally a global response to it. This is true of the pandemic, of course. But it is true also of climate change, global inequality and the destruction of the environment. By placing these problems at the heart of the WTO’s mission, the next director-general can redefine the WTO as a force for good.

Such a progressive programme requires a director-general with the gravitas to make their presence felt on the world stage. “Gravitas” may sound vague, but it is important: The WTO director-general wields limited executive power, so their effectiveness derives largely from their status and influence. When they talk, the business world - and, crucially, China and the United States - must listen. Reforming zeal, unmatched by experience, will therefore be of little use.

Global leadership experience is particularly important given the daunting trade implications of Covid-19. Over $12 trillion in economic stimulus packages have distorted global markets to the detriment of poorer nations. Excessive risk-aversion - what economists call “precautionism” - is increasing red tape and pushing up prices. Antagonism between nations continues to undermine the case for openness.

Most pressingly, the new director-general will need to build a muscular strategy for coordinating fair distribution of a vaccine. This means ensuring that there is no repeat of the “sicken-thy-neighbour” measures seen during the early months of the Covid-19 crisis. “Vaccine nationalism”, though often described in humanitarian terms, is also an economic risk of the highest order. In an interdependent economy, no government can be sure of reversing its domestic economic fortunes if the pandemic continues to spread beyond its borders.

With the G20 having failed to forge a coordinated global response, hopes of avoiding a damaging escalation of vaccine-related trade barriers rest on the appointment of a director-general with real political clout. And, ideally, a good understanding of pharmaceutical supply and distribution chains.

Without these, the WTO will struggle to rise to the challenge of this moment. In recent years, the organisation has been hampered by squabbling and overcaution. To get a sense of its limitations, look no further than the process for choosing a director-general: all 164 members must agree on a winner, a system that risks favouring less-radical candidates.

The new director-general cannot afford to be inoffensive. Beyond the pandemic, the new head of the WTO will have a vital role to play in remodelling capitalism to meet the environmental and economic challenges of a world in crisis. This should begin with re-establishing the body as the central forum for global trade rule-making. While the WTO has made welcome progress in many important fields over the last few years, there is an urgent need to expand negotiations to cover a wide range of 21st century trade frictions — including the connection between trade and the environment.

This will be a big departure for an organisation prone to talking lots and achieving little. It’s why the WTO would benefit from someone from outside its ranks to take it forward. A fresh face, with a proven record of affecting change on the world stage, will be best placed to execute the progressive agenda required.

The WTO needs to change if it is to rediscover a renewed purpose in the post-Covid world. In recent years, the principles on which it is founded have been shaken by a global turn inwards. Geopolitical shifts have undermined the case for internationalism, just as the need for it became urgent. But visionary leadership from outside can restore the reputation of the WTO. Far from sounding the death knell of internationalism, Covid-19 can be a catalyst for a newly effective international trade body - one that can lead global capitalism into a greener, fairer future.

- Paul Polman served as chief executive of Unilever from 2009 to 2019 and is the founder of Imagine, a consultancy focused on environmental and social responsibility. The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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