Supporting Dr Supachai
With Dr Supachai
Panitchpakdi taking over as head of the WTO for an abbreviated
term of three years, it is now even more critical for business
leaders to support actively the organization and its new leadership
team. The reason is simple. Progress on the global free trade
agenda can no longer be taken for granted. Unless the business
community, to say nothing of Geneva-based trade negotiators, their
member governments and more enlightened NGOs, provide more visible
support to the Director General than in the past, the risks of
a failure in the Doha Round increase dramatically. A Doha Round
failure would in all likelihood further alienate the emerging
economies whose expectations for greater inclusion in the full
world trading order have been raised. The support of these emerging
economies to continuing open trade will be critical in restoring
global growth prospects and in creating a more integrated, more
open, and more stable world order.
Increased support from all means, including the private sector,
will be required since successful conclusion of the current trade
round will encounter more challenges than ever before for a number
First, the membership of the WTO itself is much larger than in
past rounds. Membership has virtually doubled from 1999, to over
140 today - as have the number of official meetings held (up 94%
to 4,560) and documents produced (up to 58% to 76,000).
This increase in membership and activity has not been matched
by a commensurate increase in the WTO budget to support the increased
workload. As for any organisation, coping with increased demand
from a constrained resource base is a constant challenge. The
necessary response will require a ruthless setting of priorities
and adherence to these priorities by the organisation- and its
members. In addition to the expanded list of new members, notably
led by China's much heralded accession to full membership, a further
expansion to include the Russian Federation, targeted for 2004,
will absorb further scarce resources and increase the complexity-and
risk- of completing the WTO trade mandate in the artificially
shortened time frame.
Second, the current trade discussions will need to resolve a set
of highly sensitive issues left over from the past round, as well
as address an extended list of new and equally delicate issues.
The Doha Round was launched with much fanfare as the Development
Round. The launch took place despite valid griping from Malaysia's
Dr Mahathir, among others, that there were still many items left
to be implemented from Uruguay. Many of these unresolved items
involve access to developed markets by the emerging countries
in such highly charged areas as steel, textiles and agriculture.
In addition to these existing politically sensitive issues, such
new items as intellectual property rights and their application
to pharmaceuticals in poor AIDS stricken countries, acceptance
of genetically modified foods, access to international services
and new investment guidelines will add to the complexity of the
Third, trade friction between the two elephants at the WTO- the
United States and the European Union- may slow the progress of
reaching an accelerated conclusion on the broad agenda which was
difficult enough even to get started. Total support to agriculture,
now exceeding one hundred billion dollars on each side, and other
protectionist barriers provided by the CAP and US policies, have
not proven to be soft targets for small and weaker countries interested
in accessing the world's large markets. How far either side will
yield on key agricultural issues, among others is yet to be determined.
The determination of global trade policy has often in the past
been determined by the personal relationship between the two chief
trade representatives and their relative clout in home markets.
The combination of Pascal Lamy and Bob Zoellick and their ability
to overcome inevitable difficulties is, as yet, untested.
Fourth, the US position on the global trade agenda is still difficult
to ascertain. On the one hand, Finance Ministers and heads of
state from the developing world receive finger wagging lectures
on the importance of free trade and open markets from their American
counterparts. On the other, current US policies are characterised
by blatant protectionist measures in textiles, steel, agriculture
and the maintenance of non-tariff barriers to other sectors which
would be particularly attractive to developing economies with
low labour costs. With the Bush Administration particularly concerned
about mid-term election prospects, it is unlikely that a compromise
trade agenda will surface as a priority in the near term. The
U.S. farm bill signed earlier this year by President Bush increased
producer support by 80%. The potential for vacillation at the
negotiating table is not helped by an American economic and trade
team which appears to wield little clout in the current Administration
and is increasingly seen as a weakness by a broad spectrum of
US pundits. On the other hand, President Bush's fast track trade
negotiation authority, won last week by the narrowest of margins-
212 to 215 in the House - may provide some momentum to the liberal
free traders in the Administration.
Fifth, there is no longer a broad international consensus that
all trade is good for development- a feature in developed as well
as developing countries. When the relevant Ministers take proposed
agreements back to their home countries, there may no longer be
a consensus that free and open global trade is a good in itself.
Increased cynicism by the political masters of the trade negotiators
can only slow the process and reduce the area available for necessary
Finally, the recent pronouncements by Mike Moore that he might
see Dr Supachai "at the barricades" is unlikely to improve
the odds of success. While one hopes that the outgoing Director
General will soon adopt a more appropriate statesmanlike approach
and supportive role at this critical time for the organisation
he has led over the past three years, it is not yet sure that
his support is a given for the new team.
Given the difficulty of the terrain, and the increase in risk
in navigating to a successful conclusion of the Doha round, it
is essential to increase the positive contribution from all constituents
benefiting from the current multilateral rules-based global trading
system. But is there much that the business community do to improve
the chances of a Doha success?
Just as there will be many obstacles, there are multiple areas
for action by business leaders to contribute to the successful
conclusion to the current round. First, and most importantly,
individual business leaders can communicate to the relevant political
authorities their views on the importance of a successful trade
round. Taking free trade for granted can be a costly mistake which
can be avoided at virtually no cost or risk to the company and
teams individuals. The value of focus, speed and realism in negotiations
can be urged upon host governments. The opinion of business leaders
can count enormously in this area.
Second, business leaders can speak out more openly on the benefits
of free trade- to their customers, employees, suppliers and investors.
Re-establishing a consensus on the benefits of trade and setting
a more positive general background against which specific trade
initiatives can be assessed is both urgent and important.
Third, multinationals and domestic corporations can contribute
to the development of the voluntary code of conduct highlighted
by Dr Supachai in his opening comments upon taking over as Director
General. Long advocated by a number of enlightened business leaders
and NGOs alike, a voluntary code could clarify the responsibilities
of global corporations operating in developing economies, dispelling
much of the uninformed us/them thinking between developed and
developing nations. A clear sense of commitment to a principled
approach by multinationals operating in emerging economies could
avoid the conflictual discourse which surrounds many issues of
global business investment and operations.
The difficulties for successful completion of the current trade
round may have increased and the time frame shortened, but a small
investment by business leaders to support the WTO agenda today
could well pay enormous dividends to all of their stakeholders
for years to come.
Mark Daniell is
a Managing Director of Bain & Company, a global strategy consulting
firm. He is based in Singapore. His views do not necessarily reflect
those of KWR International.