Mari Pangestu the best candidate to lead the WTO

Authors: Hal Hill, ANU, and Maria Monica Wihardja, CSIS and UI

An international election process arguably more complex than the recent deliberations in the Vatican is about to get underway.

The then Indonesian trade minister Mari Pangestu attends the Informal Trade Minister Dialogue on Climate Change Issues as part of the UN Climate Change Conference 2007 in Jimbaran on 8 December 2007. Dr Pangestu is a candidate for director-general of the WTO for the period 2013–17. (Photo: AAP)

Over the next few weeks, the 159 ambassadors to the WTO in Geneva will assemble to elect a new director-general for the period 2013–17, starting 1 September 2013.

Effective leadership of the WTO has rarely been so important. The global trading system is in disarray. And the post-war trend toward an increasingly open and liberal trading system is under challenge as never before. The last global trade deal, the Uruguay Round, was signed in April 1994. Its successor, the Doha Round, was launched in November 2001, but progress has stagnated.

Countries are losing faith in the international rules of the game, and are resorting to protectionism; this could well degenerate into beggar-thy-neighbour strategies if the global economic recession continues. At the very least, the proliferation of so-called free trade deals (FTAs) — which are often anything but free — is undermining the earlier momentum of decisive unilateral liberalisations, especially as there is little prospect of these FTAs collapsing into a plurilateral round of global liberalisation.

So, the next head of the WTO faces the truly daunting task of re-energising an essentially moribund process and restoring the international community’s faith in the multilateral system. The next director-general has to be a person of the highest intellectual calibre, who understands both the analytics of international economics and the complexities of trade policy negotiations, and who combines a crusading, reformist zeal with high-order diplomatic skills. It would also help a great deal if that person could bring along a strong and broad-based constituency of likely supporters. Since developing countries still tend to be the most sceptical about the merits of a liberal trade system, an articulate reformer from the ‘South’ will almost certainly be more persuasive. Ideally, a reformer from one of the 13 countries (the ASEAN+3 group) that will shortly sign on to the ASEAN Economic Community’s radical trade liberalisation agenda would be able to use the agreement as a springboard for a broader global deal.

Among the five remaining candidates for the position, the real stand out is Indonesia’s Professor Mari Pangestu. Dr Pangestu is the sole female candidate. She also scores top marks on four important criteria. First, she is an eminent academic economist, with a PhD in international economics from the University of California and a string of important publications. Second, she has extensive high-level government experience as Indonesia’s trade minister from 2004 to 2011, a time when Indonesia’s infant democracy and strongly nationalist sentiment in the wake of the 1997–98 Asian financial crisis posed a number of key challenges to the development of Indonesian commercial policy. But Dr Pangestu held the line effectively. Indeed, one only has to look at what has happened to the country’s trade policy, especially for agriculture, since she moved on. She is also Indonesia’s current minister for tourism and creative economy.

Third, Dr Pangestu is a great communicator who understands local and international policy processes from both inside and outside government. In addition to her government and academic service, she also headed Indonesia’s (and arguably Southeast Asia’s) leading think tank, the Centre for Strategic and International Studies, which has served the country and its neighbourhood well as an effective bridge to the outside world. Fourth, an Indonesian voice would carry real weight. It is the dominant — albeit low-profile — leader in the 10-nation ASEAN grouping, and through it, the incipient ASEAN Economic Community. This region covers a population of around two billion people. A strong Indonesian voice could bring along the support of this large and influential group of countries, and reach out to sceptics elsewhere in the South, including members of the Organisation of Islamic Cooperation, of which Indonesia is the most populous member.

The election process has already commenced, and the good news is that Dr Pangestu is through to the second round. On 11 April, four candidates withdrew from the race after a consultation meeting between the WTO ambassadors of the nine candidates and the ‘Troika’ (chairs of the General Council, the Trade Policy Review Body and the Dispute Settlement Body). This leaves five candidates remaining in the race: Mexico’s Herminio Blanco, Brazil’s Roberto Azevedo, New Zealand’s Tim Groser, South Korea’s Taeho Bark and Dr Pangestu. The election will continue to be a consensus-based process unless there is a deadlock, in which case there will be a vote. One potential criticism of this process is that it lacks transparency. Presumably there will be some backroom deals where the remaining candidates will bargain for the support of developed countries, developing countries and the least-developed group, rather than just individual votes.

Clearly, the major task of the WTO ambassadors is to elect the most capable person. But the WTO would also benefit from having a woman as its leader, not to mention someone from a major emerging nation. Dr Pangestu ticks every box.

Hal Hill is the HW Arndt professor of Southeast Asian economies at the Crawford School of Public Policy, the Australian National University.

Maria Monica Wihardja is a researcher at the Centre for Strategic and International Studies, Jakarta, and a lecturer at the Department of Economics, University of Indonesia. She is also Associate Editor at the East Asia Forum Indonesia desk.

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  • Ken Ward

    This post serves indirectly as a reminder of what a patchy record SBY has in ministerial appointments. His shunting of Mari Pangestu out of the Trade portfolio into that of Tourism in 2011, reportedly because she was too strongly anti-protectionist, was one of his least wise decisions. This month, having known for a long time that Agus Martowardoyo might be moving to Bank Indonesia, he failed to have a permanent successor for the Finance portfolio ready to take over when Agus stepped down, which he has now done. Instead, SBY has appointed Economics Coordinating Minister Hatta Rajasa as acting Finance minister. Hatta, who had an inglorious term as Transport minister several years in which he blamed a sharp rise in transport accidents on ‘saboteurs’, is by way of being father-in-law to SBY’s son, Ibas, the secretary-general of the president’s scandal-ridden Democrat Party. There is thus a whiff of nepotism about Hatta’s appointment. Worse still is the fact that Hatta is chairman of PAN, the National Mandate Party once led by Amien Rais. Just twelve months before the 2014 parliamentary election, SBY has thus put a party leader in an additional potentially lucrative post.