Minister Has Eye on Top WTO Post — and on Needs of the Third World : Thailand's Champion of Free Trade  
International Herald Tribune
October 10, 1998
Thomas Crampton

The forces of protectionism are mounting, particularly in the developing world, and the cause of global free trade needs a new champion, says Supachai Panitchpakdi, Thailand's minister of commerce.

Mr. Supachai, a leading political figure here and an internationally respected economist, believes he is the person for the job.

He is one of four candidates vying to replace Renato Ruggiero as director-general of the World Trade Organization when Mr. Ruggiero's four-year term ends in April. Nominations to head the Geneva-based free-trade body closed this month and selection could take place within six weeks.

"If you listen to leaders of the nonaligned countries, then you have to worry about the trends of world trade," Mr. Supachai said in an interview. "Most of them are not satisfied with the distribution of gains from trade liberalization."

Mr. Supachai said his training and background allow him to bridge the increasingly polarized views on free trade held by rich and poor nations. To prevail, Mr. Supachai, a self-confessed chess fanatic, needs to rally support from the developing world or win endorsement from the four most powerful member economies: Japan, the European Union, Canada and the United States.

Mr. Supachai has already won backing from the nine-member Association of South East Asian Nations. But his name is less well recognized in global trade circles and he tends to shun the confrontational tactics often used to conclude international trade negotiations.

The Thai strategy, so far, has been to capitalize on this soft-spoken manner by presenting Mr. Supachai as a candidate not facing any outright objections, a trade official in Geneva said.

The WTO's system of selection by consensus among the 132 member nations makes mildly acceptable candidates prevail over the more controversial.

"For this job you need an understanding of every world, first, second and third," Mr. Supachai said. "Because of this Asian crisis I have learned a great deal about how the mechanisms of the market work and developed a very keen sense of how mismanaged policies can ruin economies." The danger is a crisis-induced backlash against free trade by the developing nations that make up 80 percent of the WTO membership, Mr. Supachai said.

Although a strong believer in free trade, Mr. Supachai favors certain barriers and argues that least-developed countries get no immediate advantage by opening their economies.

"If you open an agricultural-based economy, food prices go up and the country suffers," Mr. Supachai said. "There must be an effort to finance food supplies in the early stage." Mr. Supachai also supports the widely criticized currency controls recently imposed by Prime Minister Mahathir bin Mohamad in Malaysia.

"There is some truth in what Mahathir is saying, that sometimes there has been excessive speculative movement, not based on the weakness of our economies. I see it as a temporary measure."

He added that crisis-hit countries "might have good reason to delay their liberalization commitments because they have to tackle more immediate problems of basic economic reform." Nonetheless, it is only through trade that Asian nations will gain full advantage of their currency devaluations, Mr. Supachai said.

"If you can't exchange goods, your enhanced competitive position goes to waste," he said. "Developing nations realize the benefits of free trade but question the pace and coverage. Their complaints and concerns need to be fully aired."

The future of free trade will be tightly linked to finance, Mr. Supachai said, and it requires a revision of the world economic order as divided between the World Bank, International Monetary Fund and World Trade Organization.

"Fifty years after these organizations were founded this is a new world with sovereign governments losing their autonomy in making monetary and trade policy," Mr. Supachai said. "Instead of exchange rates being subjected to change through trade policies, they are now influenced by financial flows. This is putting the donkey after the cart and requires a reconsideration of the whole set-up."

Given another chance to steer Thailand through the past year of economic crisis, Mr. Supachai said he would have concentrated sooner on financing trade and industries.

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