WTO: Focus on transparent, member-driven reform now
After a successful ministerial meeting, it is rare to witness the director-general (DG) of a member-driven, rulesbased, and intergovernmental organisation pushing back against its members. “I think some of the comments [of members] made have led me to push back a bit,” said Ngozi Okonjo-Iweala, DG, World Trade Organization (WTO).
The DG is annoyed because around 40 members, including India, complained about the lack of transparency and inclusivity at the recently concluded WTO’s 12th ministerial conference. In addition, several members disapproved of the green room meetings, where select countries are invited to decide on crucial issues. As a result, almost two-thirds of members are excluded from the crucial rulemaking decisions. Singapore and the United States (US) praised the DG for the way she conducted the meeting. These two countries said deciding issues with 164 members in the room is challenging. The US has even complained against journalists, including this writer, who informed members about the green room discussions.
Lack of transparency has always been a problem with the WTO. Its non-transparent processes have been institutionalised over the past one-and-a-half years. Consider the
“decision” on the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for relaxing certain provisions of patent rules for vaccines. Under the leadership of the DG and her deputy, the decision-making process was shrouded in secrecy. Four countries — the United States, the European Union, India, and South Africa — not only negotiated the TRIPS decision, but it was also agreed upon at the ministerial meeting with few changes.
Against this backdrop, another pet project of the DG is gaining notoriety. That involves the reform of the WTO Secretariat by McKinsey & Company. The DG drafted the consultancy firm to transform the Secretariat, and the project carries a hefty price tag of hundreds of thousands of Swiss francs. When the WTO faces a resource crunch, it may seem like a lavish expenditure on a private outfit from members’ contributions. The findings of the McKinsey report could create new departments that may be unwarranted. Currently, several divisions are underemployed. About 25 staff members of the defunct appellate body, the highest adjudicating arm for resolving global trade disputes, were absorbed into various divisions recently. The appellate body became dysfunctional in December 2019 after Washington blocked the selection process for filling the vacancies on extraneous grounds.
Coming to McKinsey’s blueprint, OkonjoIweala wants to create a new strategic and planning unit. However, it is unclear what purpose this unit would serve, as there is already the administration and general services division. In addition, many officers are not being employed properly.
The WTO is not like the World Bank that needs such an office. Perhaps, due to her long association with the Bank, the DG wants to model the WTO on the Bank, but they are two different institutions. The WTO is a memberdriven institution, and it is the members who set the strategic vision of the multilateral trade body.
The McKinsey report suggests the need to create a country and regional unit. Here again, one may question the relevance of such an office. The moot issue is how such a unit would further the members’ work.
The DG says that when she travels, every division provides briefing notes and that it is difficult to collate them. Hence the need for such a unit. Earlier, the DG’s Office (DGO) did collation work. There are five senior advisers in the DGO, and they should be able to do that work.
Contrary to the standard contracts, McKinsey is tasked with overseeing diverse assignments. Accordingly, the agency submitted its report on the Secretariat’s transformation. But now, it is being asked to implement its findings, which is rather unusual.
The company has been given a room at the WTO and allowed to sit in on the regular directors’ meetings. This is a conflict of interest, which strikes at the heart of the WTO rules. In addition, there may be hidden attempts to use McKinsey to reform the WTO.
Nonetheless, a restricted partial report issued on July 4 says critical Phase I reform initiatives have been launched, resulting in “quick wins”. The initiatives include reinforcing Secretariat talent management practices, strengthening the Secretariat’s ways of working to optimise efficiency and impact, and leveraging data, technology, and innovation opportunities to secure long-term relevance.
The report says there is a need to “establish reward schemes [outside promotion] for Secretariat staff,” a process that could undermine the independent and impartial role of the Secretariat and encourage cronyism among members.
Expressed in corporate jargon, these initiatives fail to illuminate what is being done nor explain the underlying rationale as to what concrete results will be achieved. “The whole report could pave the way for McKinseyization of the WTO Secretariat,” said a staff member. More worryingly, the McKinsey reforms strike at the root of the Marrakesh Agreement that led to the establishment of the WTO in 1995.