Supply Lines: An early WTO front-runner

Supply Lines

Champagne receptions at lakeside villas. Rosé luncheons at the Intercontinental Hotel. Even during a pandemic, the feting of Geneva's trade diplomats continues apace.

Last week the eight candidates to lead the World Trade Organization wined and dined delegates and made their case for why they're the best person to right a sinking ship.

One by one the candidates explained their vision for fixing the WTO's moribund negotiating function, its paralyzed dispute settlement system and the various other ailments that have sidelined the world's foremost arbiter of trade.

At the close of the week there was a general perception that Kenya's nominee, Amina Mohamed, is the early front-runner.

She checks many of the boxes that delegates say they are looking for in the next WTO director-general, a job never held by a woman. She's a former WTO ambassador, an ex-trade minister and a previous chair of a WTO ministerial conference.

She's fluent in the WTO's procedures and legal texts and she personally helped negotiate the WTO's most recent package of multilateral agreements. She also hails from sub-Saharan Africa's third-largest economy, from a continent that's pursuing more free trade with the world.

Veto Power

But the first phase of the WTO's selection process isn't about deciding who has what it takes — it's more about deciding who doesn't. And the inside track might not be the best position to win a job that some capitals believe is better suited for a politically connected outsider.

Though each candidate will continue their campaigns until Sept. 7, some are destined for elimination. You can put Saudi Arabia and Moldova's candidates in that category, according to some delegates. While they both have impressive resumes, this probably isn't their moment to lead the WTO.

It remains unclear how many candidates will be bumped off in the first cut — some say three, some say four. At this point the viability of any candidate largely depends on their ability to avoid the dreaded veto.

The WTO operates on the basis of consensus and the final candidate should, in all likelihood, have the support of the WTO's 164 members. That's no easy feat because nations can withhold their support for any reason — like, say, a bitter economic fight between Japan and South Korea that dates back to World War II.

Entertaining trade diplomats at fancy Geneva restaurants like the legendary Perle du Lac certainly won't hurt a candidate's chances — but it won't do a thing to resolve epic geopolitical fights like Qatar's feud with Saudi Arabia and Egypt or Europe's lingering resentment over Brexit.

In short, the next phase of the WTO's director general race is all about power politics — and for some candidates, it's just not meant to be.

Bryce Baschuk in Geneva

Charted Territory

Despite their economic ties, Australia is increasingly willing to risk its diplomatic relationship with China to check Beijing's assertive foreign policy.

Today's Must Reads

  • Red-tape jackpot | Companies are rushing to acquire the means to file new customs paperwork for goods moving between the U.K. and European Union starting in January. Meanwhile, post-Brexit trade deal negotiations are making no progress.
  • Out of China | Japan's government will start paying its companies to move factories out of China and back home or to Southeast Asia. Separately, a report showed Japanese exports fell by more than 20% for a third straight month.
  • Apple harvest | Apple assembly partner Pegatron is making preparations for its first plant in India, adding to a large influx of foreign tech investments in the country this year. Luxshare Precision Industry is acquiring Wistron's iPhone production business in China, potentially becoming the first mainland company to win a coveted role assembling the device during U.S. trade tensions.
  • Food supply | Thailand is turning to a less-traveled path to bypass supply-chain roadblocks and deliver perishables to China, its biggest customer in Asia.
  • Nothing personal | India's decision to levy a tax on companies offering digital services in the subcontinent is not aimed at any particular country. The decision has been conveyed to U.S. trade officials.
  • Inventory issues | American consumers are finding their once-endless array of apparel choices are quickly disappearing. There's disruption everywhere — from manufacturing and shipping delays to store closings and plummeting consumer demand — and merchants are desperate to avoid accumulating piles of hard-to-sell items.

On the Bloomberg Terminal

  • Weathering recession | Kansas City Southern should emerge from the pandemic more profitable and financially stronger since it has fully embraced precision-scheduled railroading.
  • Sluggish demand | Japan's trade deficit shrank a little less than expected in June — exports and imports both continued to plunge but there was a little bit more resilience in the latter.
  • 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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