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World Trade Organization
I suppose that after this piece another invitation to a sumptuous dinner at the splendidly appointed Villa Firenze, the official residence of Italy’s ambassador to the United States, will no longer be in the cards–but here goes anyway.
The issue is the selection of a leader for the new World Trade Organization. There are three candidates for the office: former President Carlos Salinas of Mexico; Renato Ruggiero, a former trade minister of Italy; and Kim Chulsu, the current trade minister of Korea.
In championing Mr. Ruggiero’s candidacy, the European Union is demonstrating a callous arrogance and an outdated view of the realities of what passes for a new world order. The day is long past when Europe can expect to pass off a second-level bureaucrat and self-described “international civil servant” as a leader with the stature and authority to take charge of the new multilateral trading regime.
In the future, the WTO, unlike its weak predecessor, the GATT, is certain to become the most important multilateral international economic organization. As a result of the Uruguay Round, the new body will have vast new authority in areas such as intellectual property, services and investment, and the first real authority over old areas such as agriculture and textiles.
With more than 120 nations now claiming membership, and with the emergence of major new trading nations in Asia and Latin America, which increasingly will share power with the developed countries, the first WTO chief will assume a job fraught with daunting challenges.
Almost daily, he (or she) will be asked to make precedent-setting decisions that will test both the fundamental principles of the multilateral trading system and the viability of the new procedures and structure embodied in the WTO itself.
Leadership of the complex new multilateral trading system demands a figure of internationally recognized stature and force of character, such as a Jacques Delors or a Margaret Thatcher — or even Leon Brittan, who gained enduring world respect for his strong convictions and successful guidance of the end-game of the Uruguay Round. Whatever his estimable qualities, Mr. Ruggiero is not in that class.
While former President Salinas is by no means the only potential candidate with the stature and background to fill the office, he is certainly the only one of three announced candidates to meet such requirements.
As president, he created an economic reform program that included fiscal discipline, privatization of inefficient state enterprises, sweeping deregulation of key sectors, a systematic attack on foreign debt and realistic currency valuation.
The result was that Mexico’s external debt declined from over 60 percent of GDP to just over 30 percent of GDP, the inflation rate dropped from 160 percent to 7 percent and international trade tripled in value. Despite the sharp decline in the value of the peso last week, Mr. Salinas left Mexico with a basically sound economy.
All of this was accomplished as Mr. Salinas maneuvered to reform the dominant Institutional Revolutionary Party (PRI) and open Mexico to political pluralism. While his record was not perfect, Mr. Salinas faced and overcame political challenges far beyond the experience of the other candidates for WTO leadership.
The third candidate, Korean Trade Minister Kim Chulsu, is a highly respected leader who has been one of those responsible for Korea’s remarkable economic record and steady movement toward a more open economy. It also can be argued that, given the necessity of integrating the newly industrialized economies into the WTO, a candidate from a successful Asian NIE would be ideal for the position.
Mr. Kim, however, like Mr. Ruggiero, while admired among trade diplomats, is not well known to world leaders and could not — at least at the outset — command the instant attention and authority that would be given to a successful ex-president of Mexico.
Finally, Mr. Ruggiero and his handlers committed a fatal blunder during a whirlwind visit to the United States some days ago. In meetings with reporters, Mr. Ruggiero breezily stated that the election was essentially over anyway because he “had the votes” to win a majority of the WTO membership (this majority largely consists of nations-in-waiting to join the EU and relics from former European empires in Africa).
To paraphrase that great congressional philosopher, Rep. Pat Schroeder, clearly Mr. Ruggiero “just doesn’t get it.” Like the GATT, the WTO will work through consensus. In effect, this means no decision will be taken on major questions if a substantial number of nations, or a large power such as the United States, opposes it.
In the recent U.S. debate over ratification of the Uruguay Round, the strongest argument of opponents of the agreement was that the United States would find itself repeatedly outvoted by a hostile majority of small nations on important economic and trade questions.
“The way out is to select Mr. Salinas, who is clearly the most qualified candidate for the job.”—Claude Barfield
WTO supporters, led by the the Clinton administration, strongly countered this scenario with an unqualified pledge that the United States would exercise its veto on any issue hostile to U.S. interests.
In this, the first major test of “consensus” decision-making under the new regime, Mr. Ruggiero’s incredible assertion of majority rule will force U.S. officials to live up to their pledge, or face a major credibility problem and renewed warfare over the sovereignty issue.
All in all, it’s a pretty mess. The way out is to select Mr. Salinas, who is clearly the most qualified candidate for the job.
Claude E. Barfield is a resident scholar, director of science and technology policy studies, and coordinator of trade policy studies at AEI.
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