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World Trade Organization (WTO) Director-General Roberto Azevedo arrives for the General Council at the WTO headquarters in Geneva, Switzerland, on Dec. 9, 2019.

DENIS BALIBOUSE/Reuters

The World Trade Organization’s director-general Roberto Azevedo stepped down on Monday, leaving the already-damaged global watchdog leaderless as it faces the biggest crisis in its 25-year history.

As the WTO’s influence seeps away, rising international tensions and protectionism during a COVID-19-induced slowdown, most obviously between China and President Donald Trump’s U.S. administration, make reform of global trade rules evermore urgent.

“This is indeed a new – though alas not unsurprising – low point for the WTO,” said Rohinton Medhora, president of the Centre for International Governance Innovation. “The organization has been directionless for some time, several years in fact, and will now be functionally leaderless.”

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In particular, the WTO appeals court, which rules on international trade disputes, has been paralyzed by Washington’s blockade on the appointment of new judges.

Mr. Azevedo, a Brazilian, is heading for a job at PepsiCo Inc. and eight candidates are vying to replace him.

In 1999, a four-month gap leadership vacuum was widely seen as damaging, and guidelines to prevent a repeat envisaged the 164 members selecting a temporary replacement from among four current deputies. But Washington’s insistence on its candidate prevented agreement, leaving a vacuum that will last for months.

U.S. ELECTION

In theory, a winner should be selected by Nov. 7, under an agreed elimination process that seeks to have a new director-general appointed by consensus.

In practice, trade sources say the uncertainty around the presidential election on Nov. 3 in the United States, which has not said publicly which candidate it prefers, could delay matters further. The 2021 budget, poised to be set at the end of the year and which Washington might question, could also be a hurdle.

The Trump administration says the WTO, which took almost 20 years to broker its first global agreement, has failed for years to hold China – the world’s second largest economy after the U.S. – accountable for unfair trade practices. It also says the wider WTO tariff system is unfair to the U.S.

Mr. Trump has even suggested quitting the WTO, although no firm plans have been announced.

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Peter Ungphakorn, a former WTO staff member who now writes blogs on trade, said there was a risk of a similar “messy selection” of the next full-time chief, citing trade tensions and members’ unwillingness to compromise over the acting director-general.

In theory, day-to-day operations can be handled by the deputies, including the director-general’s key role of selecting panelists to adjudicate on trade disputes.

Negotiations to reduce fishing subsidies in particular are supposed to conclude by the end of the year.

But David Tinline, a former adviser to Mr. Azevedo, noted that the red-tape-cutting Trade Facilitation Agreement had needed Mr. Azevedo’s interventions to get over the line in 2013.

“What we are not going to have is that galvanizing force of the DG [director-general] pushing people to solve specific problems,” Mr. Tinline said.

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