Washington Insider-- Thursday

Searching For A New WTO Leader

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

USTR Outlines Plans On Seasonal, Perishable Vegetables

The Office of the U.S. Trade Representative (USTR) has laid out the plans the administration plans to take relative to imports of seasonal and perishable produce, including senior-level government-to-government discussions with Mexico over the next 90 days “to address U.S. industry concerns regarding U.S. imports of Mexican strawberries, bell peppers, and other seasonal and perishable products.”

USTR will also request the International Trade Commission (ITC) initiate a Section 201 safeguard investigation on imports of blueberries and will work with domestic producers for ITC to monitor and investigate imports of strawberries and bell peppers, a move that could enable an expedited Section 201 global safeguard investigation later this year.

The Commerce Department will set up a program for outreach to Southeastern growers of seasonable and perishable fruits and vegetables to help them understand trade remedy laws and processes and set up a channel for them to provide information on unfair subsidies to foreign producers and exporters of these products, including those in Mexico.

USDA will boost outreach to producers of seasonal and perishable fruits and vegetables on existing USDA programs, develop a marketing promotion strategy for those crops domestically produced and open conversations with key federal partners to better understand how imports of those products are utilized to enable criminal activity.

The three agencies will set up an interagency working group to monitor the situation and USTR said this does not rule out “additional actions and investigations by the Trump administration” to support these producers. The effort comes after two public hearings USTR held in August on the situation.

Commerce Postpones Preliminary, Final Determinations in Fertilizer Case

The Commerce Department will delay the preliminary determination in the countervailing duty (CVD) investigation of imports of phosphate fertilizer from Morocco and Russia until no later than November 23, with a final determination to follow within 75 days.

The original preliminary determination deadline was September 21, but law allows for a delay if Commerce determines it is needed or the petitioner in the case makes a timely request to postpone the preliminary determination.

The petitioner — The Mosaic Company — submitted its request August 20, saying “additional time is needed for {Commerce} to analyze fully the questionnaire responses, issue supplemental questionnaires as appropriate, and prepare an accurate preliminary determination.”


Washington Insider: Searching For A New WTO Leader

In a development that is mostly under the press radar, Bloomberg is reporting that a campaign to lead the World Trade Organization during the most turbulent period of its 25-year existence is now under way. The contest is playing out against the backdrop of a pandemic, a worldwide recession, the U.S.-China battle for trade supremacy and the American presidential election. However, the development “also could offer an opportunity for the U.S., the European Union and other nations to reshape the organization.

The Geneva-based WTO's mission of economic integration is under threat from protectionist policies around the globe and without reform it risks being sidelined during the biggest economic crisis in a century. The world's largest economies agree that the organization must evolve to address the shifts in technology and in the global trading system that have occurred since 1995.

If members can align behind a candidate committed to modernization it could break bureaucratic logjams and help unleash a wave of global growth at a time when it is needed most. If no such candidate can be found, the WTO risks further receding into irrelevance.

The WTO's appellate body, the main forum for settling worldwide trade disagreements, lost its capacity in December 2019 to rule on new disputes. That resulted from a U.S. refusal over the previous two years to consider any nominees to fill vacancies on the panel. WTO members can still bring disputes to the trade body and receive an initial ruling but that can be appealed into legal limbo. The U.S. imposition of hundreds of billions of dollars worth of tariffs against China, and use of the WTO's national security loophole to levy duties on steel and aluminum, have also weakened the organization.

The chairman of the WTO general council launched a selection procedure in June to confirm the trade body's next director-general. The council is endeavoring to narrow the field of eight candidates by holding confidential consultations with each of the WTO's 164 members. These consultations, known as “confessionals,” will be conducted by the WTO's three highest-ranking delegates, known as “the troika” which will hold three rounds of consultations and gradually narrow the field by identifying the candidates who are “least likely to attract consensus” and asking them to step down. The goal is to choose a consensus candidate by Nov. 7.

WTO rules require candidates to have “extensive experience in international relations, encompassing economic, trade and/or political experience; a firm commitment to the work and objectives of the WTO; proven leadership and managerial ability; and demonstrated communications skills.”

Member governments hope the next director-general can persuade members to complete much-needed reforms of the organization. Trade officials in Geneva broadly argue that the next leader should have sufficient personal authority and capability to marshal broad support around the WTO's reform agenda. That means strong consideration should be given to candidates who have, at the very least, some experience as a minister, Bloomberg says.

In addition, there is a strong push among Geneva trade delegates to select a woman leader for the first time. However, several free-trade advocates like Wendy Cutler, vice president of the Washington-based Asia Society Policy Institute, argue that WTO members should try to avoid placing gender constraints on the selection process.

The successful candidate must also thread a narrow diplomatic needle and steer clear of efforts that displease either the U.S. or China – whose bitter conflict over a growing array of issues including technology and the pandemic is testing their fragile economic truce.

The U.S. administration has actively sought to undermine the WTO's ability to function, saying it has infringed on American sovereignty and enabled China to become a big economic player globally at the expense of U.S. jobs and manufacturing. Adding to the unpredictability factor, President Trump is up for re-election in November, so American tolerance for a candidate who looks too favorably on China might be tested.

Meanwhile, China has engaged in a multi-year campaign to expand its diplomatic influence by installing key personnel at the top levels of international decision-making bodies.

The WTO will remain leaderless until members select a permanent director-general – because member governments failed to choose an interim caretaker prior to the departure on Sept. 1 of the former DG. The WTO's four deputy directors-general are jointly overseeing the organization's housekeeping matters. If WTO members are unable to select a leader by consensus, a vote requiring a qualified majority could be held as a last resort – an unprecedented step in the organization's 25-year history.

So, we will see. The Internal U.S. fight over trade policy is far from over and likely will continue to be prolonged and bitter—and should be watched closely by producers as the campaigns emerge and are debated, Washington Insider believes.

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