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This Week In Trade

WTO to narrow director-general list to two this week as campaigning continues

Posted: October 05, 2020

The World Trade Organization is expected to name the final two candidates for its director-general position this week, cutting three more hopefuls from the original list of eight nominees.

The three women vying for the position -- Nigeria’s Ngozi Okonjo-Iweala, Kenya’s Amina Mohamed, and Korea’s Yoo Myung-hee -- are seen as the frontrunners, while the United Kingdom’s Liam Fox and Saudi Arabia’s Mohammad Maziad Al-Tuwaijri are viewed as longshots.

The second round of consultations concludes on Wednesday and the troika of WTO committee chairs is expected to announce the two final candidates on Thursday or Friday. The second round of consultations concludes on Wednesday and the troika of WTO committee chairs is expected to announce the two final candidates on Thursday or Friday.

The next WTO director-general will inherit an embattled organization that has found itself in the center of a broader U.S.-China conflict. Okonjo-Iweala acknowledged the two countries present a challenging situation, but one that paled in comparison to her own life experiences.

“Would you be more scared if your mother was kidnapped and held to ransom with a demand that you resign your job publicly on television -- or else you would not see her alive -- or if you said to the U.S. and China, you have to bridge your differences?” she said in an interview with The Daily Telegraph. “It’s going to be a tough task but you can’t compare it with what I’ve had to go through.”

Okonjo-Iweala’s mother was kidnapped in 2012 while her daughter served as Nigeria’s finance minister. She was released five days later.

The former World Bank official also touted her ability to address the COVID-19 pandemic via trade policy, calling herself “the only candidate working at the intersection of public health and trade.” Okonjo-Iweala serves as the chairman of Gavi, an alliance set up by the Bill and Melinda Gates Foundation to improve access to vaccinations around the world.

“The WTO has to be part of the solution to the Covid-19 pandemic,” she said. “The WTO has rules on how, in a public health emergency, you can invoke the possibility for countries to license products and produce them to make them more affordable and accessible.”

Liam Fox also is making a last-second effort to garner support. Sitting for an interview with India’s Livemint, the former trade secretary touted his political clout as needed in the DG slot. “[The WTO] does not have the political weight needed to be able to deal with some of the blockages in the trading system,” he said. “At the moment, most of those blockages are political not technical which is why having an elected politician with international experience brings a set of skills that will be of great use to the members at the moment.”

Fox also emphasized that development -- a key priority for India and other developing countries -- cannot be separated from the broader trade agenda. “I am afraid we can no longer make this artificial divide between trading agenda and development agenda,” he said when asked about whether the Doha round agenda has been placed on the backburner as members concentrate on other issues. “The question therefore becomes how do we help ensure development of the global trading system is in line with our responsible development agenda so that everybody benefits from growth in global trade.”

On the issue of special and differential treatment, Fox said it was the responsibility of members to ensure they need such flexibilities for the least amount of time. “S&DT was there as a bridge between today’s state of development and the state of development required to be able to implement all the rules,” he said. “It is not there to be a perpetual exception to the rules. So while countries have a right to expect that to be maintained, they also have a responsibility to ensure that they are able to not require S&DT in the shortest time available because it is a distortion in the trading system.”

Tax talks continue

Negotiators working on an alternative to the proliferation of digital services taxes will meet on Thursday and Friday, though the chances for a yearend deal that would deter U.S. tariffs are dwindling, as key decisions likely will be put off until after the U.S. elections. The Organization for Economic Cooperation and Development’s Inclusive Framework members will meet this week to discuss progress on two pillars of negotiations: a new nexus that would allow countries to tax companies doing business in their jurisdictions even if the companies do not have a physical presence there; and a global minimum corporate tax.

A new taxing nexus is seen as an alternative to digital services taxes. The U.S. has threatened to impose tariffs on France for its digital services tax and the Office of the U.S. Trade Representative is conducting 10 other Section 301 investigations into taxes being considered or imposed, including the European Union’s plans. The U.S. deferred taxes on French goods until the end of the year pending a deal at the OECD, which now seems unlikely. There is no timetable for the conclusion of USTR’s ongoing investigations, but some industry sources believe findings could be announced soon.

But the upcoming U.S. election has delayed key political decisions, including the allocation of a new taxing nexus and other fundamental concepts. Inclusive Framework members this week are hoping to advance technical work and, possibly, announce a new public consultation to solicit stakeholders’ opinions on the work conducted to date.

Another 301

USTR on Friday launched a Section 301 investigation into Vietnamese timber imports and currency practices. USTR Robert Lighthizer accused Vietnam of using illegal timber in products exported to the U.S. Vietnam also might be devaluing its currency as a means of making its exports more competitive, according to USTR.

The American Apparel & Footwear Association was unhappy with USTR’s announcement. “Citing the negative impact of the administration’s tariffs on imports as a result of other Section 301 investigations, the association urged the administration to refrain from sowing further supply chain disruption during the COVID-19 pandemic,” it said in a statement on Friday.

Many companies have shifted their supply chains from China to Vietnam in light of the administration’s extensive tariffs on Chinese products, AAFA President and CEO Steve Lamar said in the statement. “Imposing new punitive tariffs on imports from Vietnam would cause extreme disruption, directly threatening those investments and increasing prices for hard-working American families at the register or costs on the supply chains that directly support millions of U.S. jobs,” he said.

“This is not the time to impose new costs on U.S. supply chains, particularly on those job creators who are still recovering from the impacts of the COVID-19 pandemic,” Lamar continued. “Further, new punitive tariffs could make it even harder to source the personal protective equipment that our communities need to safely regrow the economy.”

ITC hearing on FTAs

The International Trade Commission will hold a virtual hearing on Tuesday and Wednesday to inform its annual report on the economic impact of trade agreements. A broad range of witnesses will testify, including representatives from the U.S. Chamber of Commerce, Public Citizen’s Global Trade Watch, the National Foreign Trade Council, the AFL-CIO, the Coalition of Services Industries, the Information Technology and Innovation Foundation, and a host of others.

Events

  • The Atlantic Council on Monday will host a discussion on economic ties between Brazil and the U.S. Deputy Commerce Under Secretary for International Trade Joseph Semsar will deliver pre-recorded remarks. Brazilian Assistant Deputy Minister for Foreign Trade and International Affairs Yana Dumaresq is also scheduled to appear, among others.
  • The Peterson Institute for International Economics’ Anabel González will host an episode of “Trade Winds” on Wednesday to discuss the impact of the global pandemic on food supply chains and WTO reform. She will be joined by Joe Glauber, a senior research fellow at the International Food Policy Research Institute and former U.S. chief agricultural negotiator at the WTO and Sherman Robinson, also a senior research fellow at IFPRI and a nonresident fellow at PIIE.
  • The University of Nebraska’s Yeutter Institute on Friday will host a panel on whether there is a future for the WTO’s Appellate Body. Nebraska international trade law professor Matthew Schaefer will moderate a discussion between University of Miami associate law professor Kathleen Claussen and University of California, Los Angeles law professor Richard Steinberg. -- Brett Fortnam (bfortnam@iwpnews.com)

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