WTO lacks free trade cheerleaders

Unlike the World Bank and the International Monetary Fund (IMF), the World Trade Organisation (WTO) is not a ‘club’ largely run by its founders.

It is a broad church with three-quarters of its members classed as ‘developing’ economies. It is traditional for the head of the WTO to be chosen on a rotating basis from either this group or the smaller one of rich Western countries, including Japan.

For one terrible period, the normal four-year term was split between the two: New Zealand’s Mike Moore doing the first couple of years and a Thai the remainder.

New Zealand Trade Minister Tim Groser has now thrown his hat in the ring to succeed former French trade unionist Pascal Lamy, whose efforts to restore the Doha Round have failed miserably.

But this has not halted a flow of bilateral free-trade agreements, which are highly prized in political circles but usually deliver much less in practice – one of the reasons for the failure of the multilateral Doha Round.

Being accepted by the WTO does not mean that a country believes in free trade or is prepared to unilaterally adopt it for the good of their economies, though some have followed New Zealand’s example.

The candidates

As Mr Groser sees it, the eight other candidates for the WTO job have trade minister or political credentials. All come from ‘developing’ countries.

They are Indonesia’s Mari Pangestu, as well as contenders from Ghana, Kenya, Jordan, Costa Rica, Brazil, Mexico and South Korea.

Apart from Mexico, which has a free-trade agreement with the US and Canada, none of these countries can be considered free-trade cheerleaders, though individuals may be strong believers.

South Korea, for example, is a closed market for the types of goods New Zealand exports but is good at getting access for its cars and electronic goods around the world.

Strong negotiator

Mr Groser’s strongest hand is not his political credentials but his background as a professional trade negotiator. Other New Zealanders have followed him and have had key roles at the WTO in Geneva.

Mr Groser is also a believer in free trade as a door opener, rather than something to be resisted. His line with the Russians, who are still highly protectionist despite now being in the WTO, is to tell them to ‘give it a go’ with a small nation such as New Zealand.

So far, no luck on that score.

By contrast, Ms Pengestu argues that countries like Indonesia, with millions living in poverty, cannot risk opening up their markets:

”A larger section of our agriculture is still subsistence farmers so we need to have instruments within the WTO to protect the livelihoods of these farmers,” she told the Wall Street Journal Asia.

It is hard to believe that the WTO will make much progress while the ‘developing country’ mentality holds sway; so all power to Mr Groser’s arm to pull off his quest.

Nevil Gibson is the Editor-in-Chief of the National Business Review based in Auckland. The above appeared in his weekly ‘Insight’ column.


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