Abu Dhabi, UAEMonday 19 October 2020

Brexit

WTO contender suffers EU Brexit slight in leadership bid

Brexiteer Liam Fox praises UAE policy agility as he identifies reform agenda for trade body

EU and Britain battling over the next candidate for Director General of the WTO post. AFP
EU and Britain battling over the next candidate for Director General of the WTO post. AFP

Britain and its erstwhile EU partners have found a new battleground to play out their tension by throwing their weight behind different candidates in the race to find the next leader of the World Trade Organisation.

The global system is creaking under the strains of international division as it chooses a new leader after Director General Roberto Azevedo unexpectedly quit less than a year into his second term.

Voting is under way to whittle the second-round contenders list down to a final two before the end of this week.

The EU ambassadors at the WTO headquarters have been instructed to snub Britain's Liam Fox.

Instead they have plumped for Ngozi Okonjo-Iweala, Nigeria's former finance minister, and Yoo Myung-hee, South Korea's trade chief.

Dominic Raab, the British Foreign Secretary, hit out at the decision on Tuesday, telling Parliament that Mr Fox, a former defence and international trade secretary, had the political skills to do the job.

“I think he would not just do the job well, technically, given his trade experience, but I think he's a political heavyweight," Mr Raab told a parliamentary hearing.

"He's been in cabinet in different roles. He will be good at resolving some of the political tensions that we know have afflicted the WTO.”

Mr Fox says the members must put the trade body's future relevance first and to do so it must embrace wholesale changes in how it operates and the scope of its remit to regulate the tariff system as the economy transforms.

Speaking to The National, Mr Fox gave the UAE regulatory approach as one that the WTO could take cues from as it overhauls its founding vision and returns to its pre-eminent position in the global trading system.

"In the Gulf, countries like the UAE have understood that creating the right regulatory framework can make you a hub for life sciences, for example, and the WTO can facilitate this by getting others to understand it in the same way," he said.

"Making these changes can be hugely beneficial in terms of attracting investment and skills, which also helps overcome the skills gap in time.

“Most of the problems in global trade today are political, they’re not technical, and therefore we need somebody with political experience and skills to take the organisation forward.

“I think we also need someone who’s a committed multilateralist who genuinely believes in free trade and the power of comparative advantage in an open economy.”

Julian Braithwaite, the UK permanent representative to the WTO, unsurprisingly agrees with Mr Fox and endorses his candidacy.

The slowdown in the global economy caused by Covid-19 has triggered fears that trade frictions could escalate further into all-out trade wars.

Mr Fox points out that world trade volumes were already in decline even before the pandemic was declared earlier this year.

"Global trade was shrinking before we got to Covid-19," he said.

"In the last quarter of 2019, global trade declined in in both volume and value terms. So we were already in a serious problem. I think there is a feeling of drift at the WTO.

"There's a frustration that it’s still behaving as if it was business as usual, and quite clearly the trading system is contracting. And we have got to really be in emergency mode, not 'business as usual' mode."

Mr Fox has said he has sympathy with the reform proposals put forward by Robert Lighthizer, the US trade representative appointed by Donald Trump to campaign for a "broad reset" of international trading rules.

Defender of tariff capping rule

The veteran British Conservative is close to his former US counterpart but is also an outspoken defender of the Most Favoured Nation (MFN) rule that caps most tariffs between members.

"I'm not keen on revising that. But I do think we have to look at the organisation and say, how do you deal with rules of origin in a world where global supply chains are so interconnected.

We could see a public health crisis followed by a humanitarian crisis - if we're not careful

Liam Fox

"And we need to look at the rise of the non-tariff barrier, we need to look at the fact that goods and services are much less definable than they once were.

"If I sell you a digital code over the internet to make something on your 3D printer, have I sold you a good or a service? At the moment, the way the WTO is constructed it can't answer that question."

Others in the race for the final slots include Amina Mohamed, a former Kenyan minister and Saudi Arabia’s Mohammad Al Tuwaijri.

Looking back to the Uruguay trade round conducted under the WTO's predecessor regime, the General Agreement on Tariffs and Trade, Mr Fox was struck by the "genuine sense of shared endeavour" of the participants. That is now lost, he said.

What makes the pandemic a dangerous moment is the sense that the crisis could spread from health to basic needs, and from temporary emergency measures to permanent barriers to trade.

"We could see a public health crisis followed by a humanitarian crisis. If we're not careful and if we don't ensure agricultural goods can move," Mr Fox said.

Saudi Arabia's Mohammad Al Tuwaijri is a rival of Liam Fox in the race to be director general of the WTO. Reuters
Saudi Arabia's Mohammad Al Tuwaijri is a rival of Liam Fox in the race to be director general of the WTO. Reuters

"If we don't ensure that global stocks can be mobilised that's an immediate challenge, but then we've got the other Covid-19 specific ones of export restrictions being put in place for medicines and medical goods that need to be lifted.

"We need to ensure that any restrictions that are put in place are properly notified through the WTO and that they are genuinely temporary.

"I'm afraid that there's a bit of the political cynic in me that, from experience, suggests that there's nothing so permanent as a measure introduced as a temporary one in a crisis."

Updated: October 7, 2020 02:33 PM

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