Stephen Lynch is a former press adviser to the Conservative Party, and a former Brexit adviser to the Law Society of England and Wales.
Ladbrokes slashed the odds of Liam Fox becoming the next head of the World Trade Organization (WTO) from 33/1 to 10/1 after he became one of five candidates to make the next round. The next Director-General of the WTO will be decided by all 164 member states reaching consensus, in a process Fox describes as a cross between the Eurovision Song Contest and a Papal conclave.
Before this week, the UK media had been ignoring this election – as the MP for North Somerset continues clocking up his air miles and Zoom call minutes in pursuit of trade’s top job.
One of two female candidates from the African continent, Dr Ngozi Okonjo-Iweala, formerly Nigeria’s Finance Minister, and an international development expert, is still thought to be the favourite. The other shortlisted nominees are from nations of Kenya, Korea and Saudi Arabia.
Speaking to Dr Fox’s supporters and those with unique insight into the process, it is clear he has a much better chance than he has been given credit for so far. The man just loves free trade, and anyone who listens to him speak about it cannot deny his expertise and enthusiasm.
Conceding that there won’t be a consensus on specific reforms, Fox is calling for a recommitment to basic principles of free trade (e.g. Most-Favored-Nation clauses and transparency) He’s pledged to empower women and have proper diversity and seniority in his top team – favouring talented, challenging people around him over compliant, supine yes-men and women. On policy, Fox wants to address dispute resolution and fisheries disputes (sound familiar?)
His candidacy has many strengths. He has strong support from many parts of the world, particularly the Commonwealth. He has a compelling vision for modernising and reaffirming multilateralism.
He is the only candidate nominated by a developed country and, with his connections to US Republicans in Washington, Fox is the only plausible director-general who could persuade a re-elected Trump administration to persevere with multilateralism and recommit to the international, rules-based system.
Except for Hungary breaking ranks, the European Union members reportedly are voting as a bloc to prevent Fox’s appointment (in their latest attempt to sabotage the UK from prospering after leaving its orbit and acquis communautaire).
The EU will not be Fox’s most ardent admirer, but as a trading bloc renowned for ruthlessly pursuing its self-interest the EU, and UK, will lose irrevocably if the United States exits the WTO and continues its disconcerting retreat into isolationism and economic nationalism. The EU has already sided with Beijing in forming a rival, workaround WTO dispute body without the US. This could become a trend which leaves the UK in a foreign policy quandary.
Critics of Fox’s candidacy frequently say he will fail on the launchpad because the EU will never support him – neglecting to mention that the previous Director-General, Roberto Azevêdo, managed to win without their support last time.
Fox is a credible champion of free trade and its benefits for consumers. The WTO’s difficulties call for an experienced, battle-hardened politician, not a technocrat. A reset is required if the organisation is to be held in higher esteem with organisations like the United Nations and International Monetary Fund.
As a founder member of the WTO, member of the UN Security Council and chair of the G7 summit next year, the UK has an important global role to play, as the risk increases of the growing protectionist agenda in Europe and the US.
In an ideal world, Fox would have been able to continue in post at the Department of International Trade (DIT) during this process. He was broadly considered to have done a difficult job extremely well at DIT, and one wonders if his initial sacking from Boris Johnson’s Government may make a difference in subsequent rounds.
As Secretary of State, Fox ensured that DIT had a presence in over 100 countries with 4000 staff, overseeing a record level of British exports as the UK prepared to implement its independent trade policy for the first time in over 40 years. This was no mean feat, given the UK’s lack of direct experience in the highly technical field of trade, and with no collective Whitehall memory.
In his tenure, the UK also became the number one country in the EU for foreign direct investment (FDI), and third in the world behind China and the US.
Stephen Bush at the New Statesman saw fit to praise Fox for surprising detractors of Theresa May’s administration by managing to roll over so many of the UK’s existing trade deals with essentially the same terms the EU bloc managed to negotiate.
Issues that the new DG faces
The organisation faces numerous crises, and the new DG will have their hands full with the escalating US-China rivalry and accompanying trade disagreements. For example, China has yet to meet the WTO’s requirements for industrial subsidies.
Dispute resolution is also a key issue as the Appellate Body (the WTO’s court) has not sat since December 2019 due to the United States’ blocking action. For his part, Fox says Washington has done this “out of extreme frustration” over their “absolutely valid” concerns about the WTO taking so long to issue rulings and for becoming too political.
Tariffs continue to rise as the WTO has failed to secure a multilateral agreement despite members agreeing to lower tariffs on information and communication technology goods. Japan and India, major economies both, are currently in dispute on this very issue.
The forthcoming US elections also add to the general uncertainty. If Trump is re-elected, he may withdraw the US from the WTO altogether. Having been paralyzed since the end of 2019, the WTO has had to witness the President run rampant against America’s trading partners – determining tariff rates and sabotaging the WTO’s work.
In a second term, the weight of economic power may in time overthrow the powers of international laws. This result is a return to the “law of the jungle” where investors withdraw, the economy loses momentum and millions of jobs could be lost.
The Economist said rightly in July the coming months will reveal the “disconnect between the candidates’ ambitions and what the institution can achieve.” The truth is the new Director General will still be bound and limited to the rules and constraints set out by members.
At the Geneva press conference to formally set out his candidacy, Liam Fox’s microphone was muted as he began his persuasive, polished pitch for the role. Let’s hope that isn’t a metaphor for the country now it’s taken an independent seat at the WTO for the first time. The world’s free-trading countries are counting on the UK speaking loudly and clearly as it joins them at the table.
Fox said at this presser that the new DG must not over-promise, that the world was in an even more difficult place on trade than during the financial crisis – and that it was going to get worse before it got better.
The former Tory leadership contender is used to running as an outside bet, and carries the scars of previous political battles. EURACTIV aptly described the WTO as captainless, and in troubled water with no land in sight. This is not a time for a novice, and with any luck its members will hand the tricky assignment to the tried and tested skipper.