Supply Lines: Hunt for Hogan’s heir

Supply Lines
Bloomberg

The European Union may struggle to match the stature of departing trade chief Phil Hogan — and not just because he literally towers over most allies and adversaries.

Hogan, 60, resigned late Wednesday amid a public outcry over attending an Aug. 19 dinner in his native Ireland that broke the country's rules to fight the coronavirus. Known as "Big Phil" in Brussels for his 6-foot-5-inch height, he was also a dominant policy figure in nine months as EU trade commissioner.

In a 27-member club where top jobs like his are jockeyed for and filled based on a Byzantine combination of nationality, party affiliation and experience, Hogan was proof that such a system doesn't always come at the expense of competence.

His five-year stint as EU agriculture commissioner from 2014 to 2019 was reason enough for European Commission President Ursula von der Leyen to hand him the trade portfolio when she took office in December. As farm chief, Hogan had helped the bloc forge landmark tariff-cutting agreements with Japan and the Mercosur group of Argentina, Brazil, Paraguay and Uruguay.

In political terms, Hogan also fit the bill for the broader trade portfolio because he was the first member of Europe's Christian Democrats to take on the job (other than on a caretaker basis) in 20 years. Liberals from Sweden and Belgium and Socialists from the U.K. and France held the post in the interim.

Unity in Crisis

The Christian Democrats are the EU's biggest political family and include German Chancellor Angela Merkel. At a time of heightened global commercial tensions triggered by everything from greater U.S. protectionism to pandemic-induced shocks to supply chains, Hogan bolstered the bloc's unity and weight in trade matters.

Last week he proved icy Brussels-Washington trade relations could start to thaw with officials including U.S. Trade Representative Robert Lighthizer, whose middle name is Emmet — after the Irish patriot of the late 18th and early 19th centuries called Robert Emmet.

Hogan and Lighthizer on Friday announced a surprise deal to eliminate EU tariffs on goods including American lobster, barely a blip in the overall trade relationship in dollar terms but valuable enough politically for President Donald Trump to sound like a winner. It was a long way from late 2019, when Hogan irked U.S. officials by accusing them of protectionism and criticizing Trump's "America First" trade doctrine.

Now, von der Leyen has her work cut out finding a replacement for a key member of her team. While the Irish government is responsible for nominating a new commission appointee from the country, von der Leyen will decide on the person for the trade portfolio.

Regardless of who the next appointee from Ireland is, she might opt to give the trade role to one of the remaining 25 commissioners now handling other policy matters. At the moment, there's no obvious pick in that group.

Whoever gets the job will face serious challenges ranging from the EU's post-Brexit ties with the U.K. and China's commercial rise to a high-profile dispute with the U.S. over aircraft subsidies and deadlock at the World Trade Organization. So von der Leyen can't afford to pick unwisely.

Jonathan Stearns in Brussels

Charted Territory

China increased its purchases of U.S. goods in recent months, and with signs that soybean purchases may also rise as the election nears, that may be enough to salvage the trade deal even if it won't reach what it promised, according to Bloomberg calculations based on Chinese Customs Administration data.The U.S. Department of Agriculture's forecasts paint a similar picture.

Today's Must Reads

  • Sinking ships | Orders for new ships worldwide have fallen to a two-decade low as carriers grow more reluctant about such long-term investments amid new environmental rules, a pandemic-induced economic slump and the difficulty securing financing.
  • Christmas cheer | Although exports are a declining share of China's economy, its factories still rely heavily on global consumer demand. So holiday season orders are being closely watched.
  • Cleaner living | Walmart has cut 230 million metric tons of greenhouse gases out of its supply chain in the past three years, putting the world's largest retailer on track to achieve its 2030 emissions goal.
  • Truck stop | India's oil-product demand is set to slump to a five-year low this financial year, with a bleak outlook for diesel consumption as the nation's truck operators idle vehicles and consider cutting the size of their fleets.
  • Food link | A freezone in Dubai has established an agricultural trading platform to connect Indian farmers with food companies in the United Arab Emirates, as the Gulf Arab country seeks to enhance its food security amid disruption of supply chains caused by the coronavirus.
  • Coffee trail | Starting Tuesday, customers buying coffee at Starbucks stores across the U.S. will be able to use a code on the bags to find out where their beans came from and where they were roasted. A reverse code will be given to farmers so that they can finally track their produce. 

On the Bloomberg Terminal

  • Poor signs | High-frequency data shows a deepening drop in trade. The volume of goods arriving at U.S. ports in the four weeks through August 13 is down 9% from January levels, Bloomberg Economics says.
  • Legal ruling | The Commerce Department must revisit U.S. duty levels on certain imports of steel pipe from South Korea, in part because its finding of a "particular market situation" for the Asian country is lacking, the U.S. Court of International Trade said.
  • 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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