Supply Lines: The WTO leadership race

Supply Lines
Bloomberg

This week the World Trade Organization received the first official nominee to be its next director-general: Mexican trade veteran Jesus Seade.

Seade has an impressive resume as the Latin American nation's lead negotiator for the United States-Mexico-Canada Agreement, a former WTO ambassador, and his country's top moderator during the Uruguay round, which led to the creation of the WTO.

Seade is the first of what is expected to be a steady tide of candidates interested in the WTO's top post, including:

  • Arancha Gonzalez, Spain's foreign minister
  • Phil Hogan, the European Union's trade commissioner
  • Eloi Laourou, Benin's ambassador to the United Nations
  • Hamid Mamdouh, an Egyptian attorney at King & Spalding
  • Peter Mandelson, former U.K. politician and former EU trade chief
  • Amina Mohamed, Kenya's cabinet secretary for sports, culture and heritage
  • Ngozi Okonjo-Iweala, Nigeria's former finance minister

It's certain that more names will emerge between now and the July 8 deadline to submit nominations. Less certain, though, is the idea that WTO members will actually select a new leader before the current chief, Roberto Azevedo, steps down on Aug. 31.

That's because the process to nominate a new WTO chief faces some serious constraints:

1. The Covid-19 pandemic. The outbreak has reduced attention on WTO matters in most capitals that are either fighting the health crisis, the economic impact of their lockdown policies, or both.

2. A history of broken deadlines. The race to nominate a new WTO chief is scheduled to conclude in less than three months instead of the usual six-month timeline. Logistically and politically, that's a tall task during such extraordinary times.

3. The U.S. veto threat. The WTO requires all its members to agree to the confirmation of the organization's director-general. That means the Trump administration — which recently weaponized its veto power over appellate body nominations — wields yet another lever to undermine an organization it remains deeply skeptical of.

In the event that WTO members are unable to rally around a single candidate in less than three months, it's still possible they could select one of the WTO's four deputy directors-general to serve as an interim caretaker.

Of the four deputy directors-general, one is Chinese and another is American and are likely to be vetoed by Washington or Beijing. Odds are that WTO members will select either Yonov Frederick Agah of Nigeria, or Karl Brauner of Germany to ensure the organization's lights stay on until members select a new WTO chief.

But even then, the WTO will lack the necessary political leadership needed to advance the reform of an organization confronting the most dire crisis of its 25-year existence. All WTO trade negotiations are frozen, the WTO dispute process is hobbled and even the WTO's regular work is flagging. 

Next week trade delegates return to hold their first face-to-face meetings in Geneva since March and a string of important dispute rulings are due — including a widely anticipated arbitration ruling in coming weeks that will determine the extent to which the EU can retaliate against U.S. aircraft subsidies to Boeing. 

If the ruling favors Airbus, it will almost surely draw the wrong kind of attention from President Donald Trump, America's self-described Tariff Man, during an already perilous time for the WTO.

Bryce Baschuk in Geneva

Charted Territory

Recent indicators suggest that global trade is on track to fall more in 2020 than it did during the global financial crisis, partly owing to the disruptions the coronavirus pandemic has caused to international travel and global value chains, according to the World Bank's latest economic forecasts.

Today's Must Reads

  • China's grip | Interviews with nearly a dozen government officials and analysts in the Asia-Pacific region show that any broader effort to restructure supply chains is little more than wishful thinking so far.
  • Take aim | The EU steel industry lashed out at the bloc's trade authority for failing to slash import quotas in a planned revamp of them, saying producers risk going bust.
  • Soy dissent | Argentina is nationalizing one of the world's top soy suppliers in a move that'll ring alarm bells in markets and among investors in the country.
  • Lockdown damage | German exports plunged at a record pace in April when economies around the world shut down to contain the coronavirus.
  • River boating | The new Saga Dawn liquefied natural gas tanker shuttling between Singapore and Humen in eastern China is a sign that the fastest-growing fossil fuel is reaching markets once thought inaccessible.
  • Barley in reach | Australia's farmers are on a mission to find fresh buyers for their barley, and are targeting bigger exports this year even after the country's top customer, China, slapped tariffs of about 80% on the grain.

On the Bloomberg Terminal

  • Contain yourself | The shipping-container market outlook remains dire amid protracted supply disruptions against the backdrop of a global recession, according to Bloomberg Intelligence.
  • Far off | A no-deal Brexit outcome is gaining ground again as the fourth negotiating round in June ended in stalemate and an extended transition period for the U.K. to leave the EU beyond December appears unlikely, writes Bloomberg Intelligence.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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