WTO crisis and reform

WTO director-general pushes ahead with secretariat reforms

The World Trade Organization is pressing ahead with controversial plans to shake up the workings of its secretariat – even though many in Geneva remain nervous about the planned overhaul and what it will deliver.

Management consultants McKinsey have been commissioned for a second time by the WTO’s Director-General, Ngozi Okonjo-Iweala, to draw up a plan to implement changes to the way the organisation functions.

This follows an earlier report by McKinsey, delivered last year, which analysed the way the WTO secretariat worked and which contained recommendations for reform.

The transformation is going ahead even though the first McKinsey report has not been published – and even senior WTO employees have only seen a summary version of it.

Strengthening the WTO to ‘address changing priorities’

In a written statement to Borderlex, Ngozi Okonjo-Iweala outlined that the purpose of the reorganisation was to ensure that the Secretariat remained “fit for purpose” in the face of changing priorities.

“The aim is to strengthen the WTO Secretariat to enable it to provide cutting edge services to Members in all relevant areas of WTO’s work and ensure that it takes account of the changing dynamics of the global economy and priorities of Members,” the director-general said.

But, as reported by Borderlex earlier this year, Okonjo-Iweala’s determination to change the way the WTO operates has caused some consternation among staff.

A number of long-serving senior officials have announced their intention to quit – although in many cases the people in question were approaching retirement age in any case.

Recent or imminent departures include Victor Do Prado, the director for the Council and the Trade Negotiations Committee; Christian Dahoui, head of human resources; Bob Koopman, the WTO’s chief economist; and Keith Rockwell, the WTO’s chief spokesman.

Will the WTO lose its ‘institutional memory’?

The internal politics of the WTO are perhaps of lesser significance overall than the parallel discussions over reform of the WTO’s public functions – and especially over how to address the evident dysfunctions in the trade negotiating and dispute settlement capabilities of the 164-member organisation.

And indeed, the topic of WTO reform looks set to be one of the dominant themes at the organisation’s upcoming 12th ministerial meeting on 12-15 June.

But many see a risk that the WTO secretariat, which provides legal, advisory and practical support for the WTO’s trade policy deliberations, may lose part of its ‘institutional memory’ – not to mention a great deal of expertise – if the internal reforms lead to a major clear-out of senior staff, whether through replacement or resignation.

Recommendations for reform remain unpublished

The disquiet that is being felt by WTO staff in Geneva is rooted in the fact that so little information is being published about the reorganisation.

Okonjo-Iweala has rejected calls by a number of WTO ambassadors to publish the first McKinsey report in the interests of transparency.

She is understood to have advised that the ‘diagnostic’ report contains specific analyses of each of the WTO’s internal directorates, and of the senior staff which run them, and that publishing information of this type would thus be discourteous to the staff concerned.

But this in itself has generated an unverifiable assumption that individual staff members have – probably – been singled out for criticism.

“What came out of the diagnostic, as I told members at the General Council last July, is that the Secretariat has a strong and talented staff functioning reasonably well but that there were areas that could be improved,” Okonjo-Iweala told Borderlex.

In response to questions about the cost of the two McKinsey reports, both of which were commissioned via competitive tender, the DG stated that “the details of the contracts with McKinsey are confidential”.

Implementation phase underway

The WTO is currently in an implementation phase, with the relevant changes expected to be “ready by summer”, according to Okonjo-Iweala.

The ‘transformation’ work began in February 2022, she said, noting that it is being overseen by a senior WTO staff member – namely Victoria Donaldson, who previously served as legal deputy director at Department for International Trade in the United Kingdom government.

“Initial work is focusing on making improvements to some internal processes, ways of working, and staff policies,” the DG stated.

“We will also be looking at ways to improve our use of technology and foster innovation.”

Dividing opinion

In post for little over a year, Ngozi Okonjo-Iweala has divided opinion among Geneva insiders – although she is viewed noticeably more positively by trade diplomats than by some current or former WTO employees.

Insiders have described the DG as “not easy to work with”, while others have accused her of seeking to concentrate executive power within the Organization among a small group of advisers, in a way which risked ‘hollowing out’ the deep trade policy expertise within the secretariat.

But others have sympathy for the Nigerian, noting that the WTO was probably overdue a revamp after 27 years of existence – with some staff having served in Geneva for most or all of that time.

“She is a new DG – it’s normal that she shakes things up a little,” said one diplomatic source. “She has taken over an organisation that, frankly, was in a bad shape. She wants to be sure that the secretariat is suited to address the problems of today.”

Diplomats also told Borderlex that Ms Okonjo-Iweala was instilling a sense of political leadership that had previously been lacking.

Her approach was compared favourably with that of her predecessor, Brazilian diplomat Roberto Azevêdo, who was in charge of the WTO between 2013 and 2020 before leaving office one year before his term was due to expire.

Addressing the ‘big picture’ in trade policy

The new Director General is widely viewed as being a ‘big picture’ person, rather than one who engages deeply in the minutiae of trade policy questions.

But while critics view this as a weakness, others note that the WTO secretariat contains plenty of policy expertise, and that political and thought leadership is what is required from a person in her unique position.

Okonjo-Iweala undoubtedly faces a huge challenge as she leads the organisation into her first ministerial conference against the backdrop of war in Ukraine, a continuing pandemic, and ongoing supply chain disruptions.

In the member-led WTO, the Director-General has precious few executive powers, and can only persuade, cajole or charm member governments into making decisions which benefit the multilateral rules-based trade system.

But she does have control over the internal functions of the WTO’s administrative body – and she is clearly determined to use them.

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