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This Week In Trade

Director-general candidates make their pitch to WTO members

Posted: July 13, 2020

Eight candidates to lead the World Trade Organization will make their initial pitches to members at a General Council meeting this week, kicking off a two-month campaign likely to be a pivotal point in the 25-year-old organization’s history.

The General Council meeting will be the candidates’ first real test in the race to lead the WTO. The initial campaign period has historically played a critical role in whittling down the list of candidates, vaulting some longshot candidates ahead of assumed frontrunners.

Each candidate will be given a chance to discuss their vision for the embattled organization. Presentations will be followed by a question-and-answer period for members to probe the candidates. The eight presentations are spanned out over the three-day General Council meeting, which starts Wednesday. The frontrunners this time are widely thought to be two African women: Nigeria’s Ngozi Okonjo-Iweala and Kenya’s Amina Mohamed. Both are widely seen as strong candidates with political bona fides. Okonjo-Iweala was the second-in-command at the World Bank and Nigeria’s longest-serving finance minister. Mohamad has been through the process before, when she campaigned for the WTO’s top spot in 2012. The former Kenyan ambassador to the WTO lost out to Brazil’s Roberto Azevêdo, who is stepping down at the end of next month. Since 2012 Mohamed has held several cabinet positions, including foreign affairs secretary. As foreign affairs secretary, Mohamed chaired the WTO’s 10th ministerial in Nairobi, Kenya.

Okonjo-Iweala and Mohamed will be competing with Egypt’s Hamid Mamdouh, a career negotiator, for continental support. Many African countries believe it is time for the WTO to be led by an African, but such campaigns have been thwarted before by divided support among multiple African candidates. Mamdouh started his career as a trade negotiator for Egypt before serving nearly 30 years in the GATT and WTO secretariats. He now works as a lawyer for King & Spalding in Geneva.

South Korean Trade Minister Yoo Myung-hee and Mexican Undersecretary for North America Jesús Seade also hope to make good impressions with WTO members this week. Yoo has held various trade policy positions at Korea’s Ministry for Trade, Industry and Economy and once served in the Korean embassy in China. Seade was Mexico’s first negotiator for the General Agreement on Tariffs and Trade as it transitioned to the WTO, which he then served as a deputy-director general.

Former British trade secretary Liam Fox and former Saudi Arabian Minister of Economy and Planning Mohammad Maziad Al-Tuwaijri were the last two candidates to enter the field. Fox and former Moldovan Foreign Minister Tudor Ulianovschi are the only Europeans in the candidate pool. Fox served as the trade secretary right after the British government created the department following Brexit. Brexit could itself be an obstacle for Fox’s candidacy, as European Union member states may be reluctant to throw their support behind a British candidate while the country negotiates its own WTO terms. The United Kingdom is a member of the WTO but must separate its commitments from the EU’s -- a messy and complicated process.

Ulianovschi is another former WTO ambassador in the mix, having represented Moldova in Geneva from 2016 to 2018 before serving as the country’s foreign minister in 2018 and 2019. Al-Tuwaijri is a WTO outsider, having held numerous leadership positions for international banks before serving as a Saudi minister.

The candidates have roughly two months to campaign before the selection process enters its third and final phase. The last phase of the process involves whittling down the list of candidates until a consensus choice emerges, and can involve several rounds of member consultations.

Responding to potential new tariffs

The Trump administration announced late Friday that it would impose 25 percent taxes on $1.3 billion worth of French goods to retaliate against France’s digital services tax -- but said the tariffs would not go into effect until next year. The deferment stems from an agreement President Trump and French President Emmanuel Macron struck in January, when France said it would not collect the tax from American companies while negotiations at the Organization for Economic Cooperation and Development on a new international tax structure were ongoing.

U.S. business groups continued to condemn France’s tax -- which they claim discriminates against U.S. technology companies -- but offered only tepid support, if any at all, for new tariffs.

“France’s unilateral and discriminatory digital services tax only adds to the headwinds facing the global economy,” U.S. Chamber of Commerce Executive Vice President and head of International Affairs Myron Brilliant said in a statement on Friday. “It’s also undermining progress toward securing a multilateral agreement in the negotiations underway under the aegis of the OECD. The U.S. remains committed to that process, and we urge all parties to reject unilateral, discriminatory taxes and return to the negotiating table.”

“While we hope to avoid any further escalation of tensions, today’s reporting follows USTR’s findings that the application of targeted, unilateral digital taxation measures -- which continue to proliferate in number and expand in scope -- deviates from established international tax norms, contributes to further fragmentation of our global tax system, and compromises predictability for businesses large and small,” Information Technology Industry Council Senior Director of Policy Sam Rizzo said in a statement on Thursday. “We continue to urge all governments participating in multilateral discussions to address the tax policy challenges arising from the digitalization of the global economy through a lasting, consensus-based solution.”

The OECD negotiations have stalled, however. Members were focused on a structure that targeted technology companies that were largely U.S.-based, leading U.S. Treasury Secretary Steven Mnuchin to tell a group of European finance ministers that the negotiations should be paused.

Kenya negotiations

The U.S. International Trade Commission’s deadline for comments for its report on the effects of removing tariffs on Kenyan products is Tuesday. The deadline comes as U.S. and Kenyan teams enter their second week of virtual trade negotiations after talks kicked off last week. A deal is expected to include a framework for U.S. technical assistance and capacity-building efforts in Kenya.

Events

  • The German Marshall Fund will host a webinar on Tuesday on the U.S. and European responses to the coronavirus pandemic that has “severely disrupted global trade.” GMFUS senior visiting fellow Elena Bryan will moderate a discussion with Economic Policy Institute President Thea Lee and German Trade Union Confederation President Reiner Hoffman.

  • The American Enterprise Institute on Wednesday will discuss whether the U.S.-Mexico-Canada Agreement can provide the boost needed to save Mexico’s economy in light of the coronavirus pandemic. AEI visiting fellow Roger Noriega will be joined by Mexican Association of Administrators of Retirement Funds President Bernardo Gonzalez Rosas; Albright Stonebridge Group Senior Vice President Antonio Ortiz-Mena, Mexico Como Vamos Director Valeria Moy, and U.S. Mexico Foundation Director Enrique Perret.

  • Chinese Ambassador to the WTO Zhang Xiangchen will discuss the prospects for WTO reform on Wednesday with the Peterson Institute for International Economics’ Anabel Gonzalez and Chad Bown.

  • The Center for Strategic and International Studies on Wednesday will host a webcast on allied cooperation on China. The panel includes Helena Kennedy, member of the UK House of Lords; Hirobumi Kayama, director of security trade control policy and economic security in the Japanese Ministry of Economy, Trade and Industry; Maria Martin-Prat, director of services and investment, intellectual property and public procurement at the European Commission Directorate-General for Trade; and Roland Paris, professor of international affairs at the University of Ottawa.

  • The Cato Institute will host a webinar on the future of the WTO on Thursday with former Appellate Body and House of Representatives member James Bacchus (D-FL) and Cato’s Daniel Ikenson, Simon Lester, and Inu Manak.

  • Former U.S. Trade Representatives Susan Schwab, Carla Hills and Michael Froman will be joined by former acting deputy USTR and Asia Society Policy Institute Vice President Wendy Cutler in a Washington International Trade Association webinar on Thursday to discuss the WTO “in a time of change.”

  • Mexican Undersecretary for Foreign Trade Luz María de la Mora will participate in a Canadian Council for the America’s webinar on Thursday. -- Brett Fortnam (bfortnam@iwpnews.com)

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