Washington Insider-- Monday
WTO Fight Over Director General Position
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Judge Blocks USDA End Of Farm Labor Survey
USDA's September 30 announcement that it was suspending data collection and release of its Farm Labor Survey has been blocked by U.S. District Judge Dale Drozd of the U.S. District Court for the Eastern District of California.
United Farm Workers (UFW) union and the UFW Foundation brought the suit, charging USDA did not follow the Administrative Procedures Act in suspending the FLS which is used by the Department of Labor to set minimum wages for guest workers under the H-2A program.
The groups said the end of the FLS survey could mean that the Adverse Effect Wage Rate (AEWR) for H-2A workers could revert to federal or state minimum wage levels to the detriment of workers as those are lower than the AEWR rates. It is not clear whether USDA will appeal the action.
Brazilian President Says Commodity Imports Taking Place As Domestic Prices Rise
Brazil is importing staple commodities like soybeans as the country if facing rising domestic prices, according video comments on social media from President Jair Bolsonaro. "We are importing soy now because the price is going up," Bolsonaro said, but did not mention any specific amounts. Market chatter has indicated the volume of soybean purchases is not large, with reports mentioning at least one cargo sold last week.
USDA's Export Sales report for the week ended October 22 showed no U.S. soybean sales to Brazil, but did list 5,920 metric tons of wheat, taking total U.S. export commitments to Brazil to 529,158 metric tons, all of it shipped.
USDA also shows outstanding wheat sales of 100,000 metric tons for 2021/22 to Brazil. U.S. export commitments of rice to Brazil are at 115,250 metric tons.
Bloomberg is citing the American Journal of Transportation to report that World Trade Organization members are confronting the reality that the future of the Geneva-based institution is now in the hands of the American electorate.
Trade officials in capitals around the world are evaluating their options following the Trump administration's decision Wednesday to block the appointment of Ngozi Okonjo-Iweala as the WTO's next director-general. The U.S. is backing South Korean trade minister Yoo Myung-hee despite overwhelming support from other countries for Okonjo-Iweala, a Nigerian former finance minister who also holds U.S. citizenship.
Some officials are concluding that if President Trump loses the presidential election Nov. 3 they should postpone the selection process until after Joe Biden is inaugurated on Jan. 20. A Trump win would give U.S. Trade Representative Robert Lighthizer fresh momentum to re-engineer oversight of global trading rules and the WTO has been his nemesis for years.
“The U.S. election is obviously pivotal now,” said Rufus Yerxa, president of the National Foreign Trade Council in Washington and former WTO deputy director-general. “Where the WTO General Council takes this depends on whether they're in another brutal showdown with Lighthizer or can afford to wait him out and make a deal with a new U.S. administration.”
Lighthizer issued a strong statement of support for Yoo, signaling no wiggle room in the American position.
According to people close to Lighthizer, he views Okonjo-Iweala, a longtime top official at the World Bank, as being too ideologically aligned with internationalists like Robert Zoellick, a former USTR from the Bush administration who worked with her when he was president of the Washington-based bank.
“Minister Yoo is a bona-fide trade expert who has distinguished herself during a 25-year career as a successful trade negotiator and trade-policy maker,” the USTR's office said in a statement. “The WTO is badly in need of major reform. It must be led by someone with real, hands-on experience in the field.”
Molly Toomey, a spokeswoman for Okonjo-Iweala, responded by saying, “WTO members wouldn't have selected a DG who is missing any skills or qualifications.”
For WTO members, there are few desirable options if President Trump emerges victorious in next week's vote. Most are unwilling to back Yoo, who decided not to withdraw from the race after the WTO's selection panel named Okonjo-Iweala the candidate most likely to attract consensus support from the WTO's members.
Okonjo-Iweala “clearly carried the largest support by members” and “clearly enjoyed broad support from members from all levels of development and from all geographic regions,” WTO General Council Chairman David Walker, who is from New Zealand, said in a statement on Wednesday.
It's possible that members could force a resolution to the impasse by holding a vote to select the next WTO director-general by a qualified majority. Okonjo-Iweala would likely win such a vote but that path would be unprecedented and harmful for the consensus-oriented WTO.
WTO decisions are made by a consensus of its 164 members, which means a single country can stall to pressure others.
A core tenet of Lighthizer's approach to international trade is his desire to defend America's national sovereignty over trade policy. So any move by WTO members to go against U.S. interests could provoke a sharp response from Trump, who has threatened to withdraw from the WTO entirely.
Advisers in the Biden administration, meanwhile, have advocated for greater engagement with U.S. allies and to strengthen multilateral institutions like the WTO.
“Reaffirming, strengthening our core alliances and partnerships with democratic countries is probably (Biden's) leading international priority,” said Tony Blinken, a foreign policy adviser for the Biden campaign during a recent webinar hosted by the U.S. Chamber of Commerce. “We've got to repair trade and economic relations that have been in disarray.”
Wednesday's setback came after Okonjo-Iweala secured the support of the European Union, Japan, and much of Africa and Latin America.
“The resolute global majority and that of the Council to propose Dr. Okonjo-Iweala to be the new DG of WTO speaks to the overwhelming global consensus supporting her candidature,” Ebba Kalondo, spokesperson to African Union Commission Chairperson Moussa Faki, said in a statement Thursday. “We trust that this global consensus will prevail.”
China said it supported the outcome of the WTO process, and the EU reiterated its commitment to remain engaged.
To avoid a prolonged stalemate, members will work until Nov. 9 to try to reach a consensus. Meanwhile, some WTO staff paused for a dose of levity on Thursday as a tongue-in-cheek reminder circulated saying that four deputies director-general were still running the organization.
So, we will see. USTR has long been critical of the WTO and the United States has frequently used what it called a “Get Tough” policy that relied heavily on tariffs—and has faced strong criticism from trading partners as a result. In the current U.S. election fight, both sides have pushed “buy American” policies, so the immediate outcome of the election may make less difference than some expect. However, trade policies are highly important to U.S. producers who should watch closely as trade policy debates emerge in the coming months, Washington Insider believes.
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