The WTO building in Geneva
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Geneva: Trade officials in Geneva on Friday failed to select an acting leader of the World Trade Organization to take over when current Director-General Roberto Azevedo steps down on Aug. 31.

WTO delegates couldn’t broker a consensus agreement this week after the U.S. demanded that an American, Alan Wolff, become interim director-general instead of Karl Brauner of Germany.

If the impasse continues into September it will leave the arbiter of international trade rules leaderless until WTO members select a new director-general for a four-year term — a process that is unlikely to wrap up until November and could potentially extend into 2021.

WTO spokesman Keith Rockwell downplayed the impact of the impasse in a press conference following the meeting.

“It’s not going to cause any real crisis in terms of the organization’s functioning,” he said. “Operationally, I don’t think it’s a big deal and I don’t think it will have an impact on the broader selection process.”

Nevertheless, this month’s stalemate adds to layers of dysfunction at an organization facing the most critical period of its 25-year history. It’s also a bad sign for the WTO’s deliberations to select a more permanent leader whose most important task will be repairing frayed ties among its 164 members and especially the growing divide between the U.S. and China.

“It is an indication of how far apart these members are,” said National Foreign Trade Council President Rufus Yerxa. “What’s fundamentally lacking at the WTO right now — and a real challenge for the new director-general — is a lack of trust among the membership.”

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The role of the acting director-general is to serve in an administrative capacity to make sure the organization functions normally during the vacancy.

The person selected is “not going to be pivotal in terms of setting direction policy-wise,” said Yerxa, who was a WTO deputy director-general from 2002 to 2013. “Most of the decisions that will have to be made are purely management decisions and budgetary and other things.”

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Another stalemate

Under WTO rules nations may select an interim director-general by consensus from among the WTO’s roster of four deputy directors-general. Of those, only Brauner and Wolff are currently under consideration.

Brauner has nearly seven years of experience handling the WTO’s dispute settlement, administrative and budgetary matters. That bolsters his case to step in as caretaker, particularly if the Trump administration demands changes to the WTO’s 2021 budget as it did last year.

Wolff is a seasoned American trade expert who served as a senior negotiator, lawyer and adviser to the Ford, Nixon and Carter administrations. Wolff was named deputy director-general in 2017 and helps oversee WTO divisions covering agriculture, environment, accessions and information technology.

The Trump administration said they preferred Wolff because he is qualified to serve as acting director general and there have already been three European directors-general and no Americans, according to a person familiar with the matter. The U.S. also said it would be willing to accept a monthly rotation between Wolff and Brauner but the proposal did not receive consensus support.

At least three WTO members said they opposed Wolff as acting director general: China, Venezuela and Cuba. The EU said they would prefer Brauner to serve as acting director general.

It is unclear what happens next. The chairman of the general council, David Walker, ended Friday’s meeting by saying he is available if people want to approach him about alternate options.

Members did, however, agree on three items:

  • There should be no change in the WTO secretariat structure until a new director general is selected.
  • The current roster of four deputy directors general may continue to serve their terms, which are not scheduled to end until September 2021.
  • WTO members may consult with Walker if they need political guidance on any matters.

One possibility would have the deputies collectively ensure the organization runs smoothly by managing their separate areas of jurisdiction.-Bloomberg

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