Financial Times (London, England)

May 14, 2005 Saturday
London Edition 1

SECTION: WORLD NEWS; Pg. 9

LENGTH: 704 words

HEADLINE: Lamy to head WTO as rival withdraws

BYLINE: By ALAN BEATTIE, RAPHAEL MINDER and FRANCES WILLIAMS

DATELINE: LONDON, BRUSSLES and GENEVA

BODY:


Pascal Lamy, the French former European Union trade commissioner, will become the next director-general of the World Trade Organisation after his remaining rival withdrew from the race yesterday.

The man who once described WTO negotiations as "medieval" will now face the task of making its procedures work in the face of slow progress in the Doha round of global trade liberalisation talks and as a critical meeting of trade ministers in Hong Kong looms in December.

Carlos Perez del Castillo, Uruguay's former WTO envoy and the other remaining candidate from the original four, conceded defeat yesterday after a third round of consultation of the organisation's member countries showed Mr Lamy ahead.

Mr Lamy's strongest opponents, Latin American banana-growing countries such as Costa Rica, which suspect he favours their Caribbean competitors, signalled yesterday they would drop their objections.

Barring a last-minute hitch, he will be confirmed within two weeks and will replace the incumbent, Supachai Panitchpakdi, in September.

Few doubt Mr Lamy has the ability to run large and complex institutions like the WTO but there is a question over whether his policy predilections make him the right man for the job.

Sir Peter Sutherland, chairman of Goldman Sachs International and himself a former WTO director-general, says Mr Lamy is an excellent choice. "Among other talents, Pascal is an excellent bureaucrat and diplomat who knows how to run organisations," Sir Peter said yesterday.

A product of the French grandes ecoles and the French finance ministry, Mr Lamy was chief aide to Jacques Delors, former president of the European Commission, and was himself appointed EU trade commissioner in 1999. In that position he strengthened his reputation as a hard-working technocrat able to master complex dossiers quickly.

The marathon runner also earned from the start of his Brussels career militaristic nicknames such as "the Exocet missile", because of his direct style and reputation as a taskmaster. But opinions are divided on the strength of Mr Lamy's commitment to open trade and free markets.

A French socialist by origin, Mr Lamy nonetheless supported an agenda of economic liberalisation, his supporters say. "There was some disquiet about the political choice of a French socialist handling trade and market-opening negotiations," says a Commission official. "We quickly found out that the idea that he would take orders from Paris was completely misguided."

Mr Lamy built a strong working relationship with Robert Zoellick, his then US counterpart and the US spoke warmly of his WTO candidacy.

Others, however, say there are some tensions and hostages to fortune that Mr Lamy will have to address. Trade diplomats in Geneva note that some countries privately expressed objections to his candidacy because of his allegedly "protectionist" views on such issues as linking trade to worker rights and the environment.

"He has a credibility gap to make up," said one WTO ambassador from a country that backed Mr del Castillo.

Mr Lamy recently annoyed Brazil by appearing to argue that the Amazon rainforest - a battlefield for Brazil's struggle to combine environmental protection with expanding agricultural exports - should be protected by the international community, remarks Mr Lamy later said were misinterpreted.

Last year he also alarmed free traders by toying with the idea of allowing individual countries to decide with whom they should trade on the basis of shared standards rather than international rules.

On the positive side, Mr Lamy's background means he may find himself ideally placed to champion freer trade among rich countries. Sir Peter said: "The real challenge that the WTO faces is no longer the anti- globalisation movement but rising protectionism in Europe and the US."

In any case, how much real influence Mr Lamy will have on the direction of trade negotiations remains to be seen. Trade experts point out that the WTO director-general has few formal powers in an institution that is genuinely "member-driven", and tends to facilitate negotiation rather than hand down executive orders.

As Mr Lamy recently told the FT: "The director-general is not a magician but he has an ambiance-creating role."

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