With a critical component of the international trading system at risk of collapse, a New Zealander has been tasked with helping to avert crisis. Sam Sachdeva speaks to David Walker about the task ahead of him.
Taking on a key leadership role in the World Trade Organisation’s disputes process, at a time when the system faces a seemingly existential threat, seems a poisoned chalice at first glance.
But David Walker’s appointment as chairman of the WTO’s dispute settlement body is also an opportunity for both him and his home country, New Zealand, to help shape the international trading system at a time when the need for change is as great as ever.
Speaking to Newsroom from Geneva, Walker says the appointment is “a great personal honour,” but also a boon for New Zealand.
“It reflects the confidence of one’s colleagues, and it also reflects the reputation that New Zealand has as a longstanding supporter of the system.”
Walker has been New Zealand’s permanent representative to the WTO since 2017 – the second time he has held the role, after an earlier stint from 2009 to 2011.
The career diplomat is no stranger to difficult tasks, serving as New Zealand’s lead negotiator on the contentious Trans-Pacific Partnership trade deal.
“He’s [Walker] faced a number of similar challenges over his career, but this one is a pretty hard job, it has to be said.”
Stephen Jacobi, a former New Zealand diplomat and executive director of the NZ International Business Forum, describes Walker as “a classic trade negotiator,” but is clear about the task ahead of him.
“They never say never, and I think he’s faced a number of similar challenges over his career, but this one is a pretty hard job, it has to be said.”
That challenge is to resolve disagreement about the work of the WTO’s appellate body, which hears appeals from members unhappy with the original decision of a disputes panel, before it ceases to function.
The United States has been particularly critical of both the disputes process and the organisation in general, accusing it of siding with China on a number of trade-related complaints.
Dennis Shea, the US Ambassador to the WTO, told Reuters judges had “strayed” from their own rules and needed to return to the role they had when the appellate body was formed in 1994.
US blocks judges
The appellate body is normally made up of seven judges, but that number has slowly been whittled down due to the US blocking new appointments over its concerns.
The panel is now down to three members – the bare minimum needed to function – and will be rendered inquorate by the end of the year unless the US lifts its effective veto.
In addition to his role on the dispute settlement body, Walker was earlier this year appointed by the WTO General Council’s then-chairman Junichi Ihara as a facilitator to address the specific problems with the appellate body.
The appeals body is only one part of the way in which the WTO deals with trade grievances, he says.
“Disputes are being brought and they’re being resolved all of the time…not all panels are appealed, so if there is no appeal, then the issue of the appellate body doesn’t really come into play in the first place.”
Fear of death by paralysis
However, some trade observers fear that the effective death of the appeals process would paralyse the system, allowing countries to flout dispute rulings due to the inability to challenge them.
That could be particularly damaging for New Zealand, with Jacobi pointing to a potential post-Brexit dispute over how the UK and EU might split up their tariff rate quotas for Kiwi exporters.
“You would effectively be back into the situation you had before the WTO was set up, whereby a losing party could effectively decide to block the outcome of a dispute, and I don’t think anybody wants to go back to that.”
“It’s not completely an academic interest for us – David has to operate in this role now in an even-handed way to try and get a solution.”
Walker is quick to downplay the worst-case scenario, saying there is a desire from WTO members to find a solution that everyone can agree with.
“You would effectively be back into the situation you had before the WTO was set up, whereby a losing party could effectively decide to block the outcome of a dispute, and I don’t think anybody wants to go back to that.”
While a number of countries share American concerns, there has been a sense of frustration in some quarters about US unwillingness to engage with the reform process.
“We need them to be actively involved in finding a solution, presenting constructive ideas – I’m not sure that’s happening in Geneva,” Jacobi says.
Walker is more positive, saying there have been a number of discussions on the issues raised by the US, although he concedes “there are some quite tricky issues that we haven’t really got down to yet”.
“This is really the first time that the membership as a whole has said, ‘Well OK, we need to sit down and try to see if we can come up with some solutions here’, so it’s a bit of a new dynamic and members have been quite constructive.”
Walker delivered an initial report on the issue to the WTO’s general council last week, and will produce a follow-up for its next meeting in early May, when he hopes members will be “well down the track” to finding a solution.
There are broader concerns about the state of the organisation, however.
‘Reform of WTO and law needed’
The last ministerial conference, in late 2017, concluded with no major agreements signed off, leading Trade and Export Growth Minister David Parker to describe the event as “a lot of money spent on not a lot of progress by a lot of countries”.
“The bigger problem is the international trading system has been rather taken for granted,” Jacobi says.
“The inability to conclude the Doha round for example and to bring some of the rules in the WTO up to date, and the inability to continue the reform process are all really playing out now, so it’s a collective problem.”
He believes reform is needed not just with the appellate body, but the body of WTO law it is designed to uphold, change that would require a significant amount of political will.
“It does take a long time to build consensus for multilateral results in the WTO and people are getting increasingly impatient with the lack of progress.”
Walker argues that the earlier 2015 conference was “highly successful” from New Zealand’s perspective, with the elimination of agricultural subsidies, but acknowledges people’s concerns.
“It does take a long time to build consensus for multilateral results in the WTO and people are getting increasingly impatient with the lack of progress.”
That is why some countries took matters into their own hands, pushing ahead with plurilateral agreements on issues like e-commerce without the consent of all 164 members.
More significant changes could be needed, however, and Walker is likely to end up in a position where he can help guide the way; the chair of the dispute settlement body usually graduates to the top role at the general council.
