Global Trade-Chief Race Slows as U.S., EU Split on Finalists

(Bloomberg) -- The U.S. and Europe are heading for a clash over their preferred candidates to lead the World Trade Organization as the selection of the first woman to run the referee of global commerce enters a pivotal phase.

The European Union is inclined to support Nigeria’s Ngozi Okonjo-Iweala and may sign off on that position by early next week, people familiar with the process said. Other observers say the Trump administration is leaning toward South Korea’s Yoo Myung-hee. Meanwhile, China’s preference and those of other major economies like Brazil and India remain unclear.

The WTO plans to name a new director-general next month to replace Brazilian Roberto Azevedo, who stepped down from the job at the end of August -- a year before his term ended. He was the sixth consecutive man to lead the 25-year-old organization.

The process is still fraught with political uncertainty. The U.S. election in two weeks may usher in a new administration that alters America’s plans for the WTO, which President Donald Trump has blasted as a tool for globalists who allowed China’s economic rise to go unchecked. If Trump wins, his aides have indicated plans to continue to reshape the WTO with a narrower scope to resolve trade disputes.

“We shouldn’t dismiss the possibility that this could end in a deadlock and that an outcome will have to wait for the U.S. election and what the next administration decides to do,” said Rufus Yerxa, who served as deputy director-general of the WTO from 2002 to 2013 and now heads the National Foreign Trade Council, a Washington-based business group representing U.S. companies.

U.S. Trade Representative Robert Lighthizer declined to comment.

While few countries are saying publicly which of the two women they support, the process requires a consensus of the WTO’s 164 members, meaning a single nation could block either Yoo or Okonjo-Iweala. Muddling the picture even further are trading alliances from Africa to Asia strained by three years of tariff wars and protectionist sentiment only heightened by the Covid-19 pandemic.

Yoo has struggled, for instance, to secure support from Japan, both a trading partner and rival of South Korea. Deteriorating trade relations between the two export powerhouses weighed on Yoo’s campaign initially and remain an important consideration in the last phase of the race.

In an interview on Friday, Yoo acknowledged that she might have an uphill battle. “Everybody loves an underdog story,” she said. “I believe I have earned members’ trust through my hard work, sweat and perseverance and sincerity. I will continue to do that.”

The EU had an important role in shaping the previous round of the race, when the 27-nation bloc selected both Yoo and Okonjo-Iweala to be its preferred candidates for the final stage. That effectively sank the candidacy of Kenya’s Amina Mohamed, who had been viewed as an early front-runner in the race.

Since the shortlist was trimmed to two earlier this month, both Yoo and Okonjo-Iweala have been working behind the scenes to shore up support. Among the bargaining chips they can offer to nations that endorse them: jobs for their citizens as one of four WTO deputies director-general.

Okonjo-Iweala, who served twice as Nigeria’s finance minister and once as foreign minister, has positioned herself as an outsider -- one who has never worked at the WTO or led a trade deal negotiation. Last week she called for a return to “a multilateral system. Let’s strengthen that -- that is what will serve the world and let’s do less of the bilateral spats that we see,” said in a virtual panel discussion Thursday.

Okonjo-Iweala has strong support from groups including the 55-member African Union, the Economic Community of West African States and the Organization of African, Caribbean and Pacific States. If those endorsements hold, Okonjo-Iweala will have secured votes from most of the African continent.

But Okonjo-Iweala is viewed by people familiar with Lighthizer’s thinking as being too close to pro-trade internationalists in Washington like Robert Zoellick, the former USTR and World Bank president. Okonjo-Iweala, who served as a senior executive under Zoellick at the World Bank from 2007 to 2011, was a candidate to replace him when he stepped down in 2012.

Lighthizer is a longtime WTO skeptic, and people close to him say he would prefer to see a more technocratic candidate like Yoo, South Korea’s trade minister and a 25-year veteran who has helped expand her country’s commercial network through bilateral accords with China, the EU, the U.K. and the U.S. He knows the Korean from having worked with her on the renegotiation of a trade agreement early in the Trump administration.

Still, William Reinsch, the Scholl chair in International Business at the Center for Strategic and International Studies, said “I would be very surprised if they decide to block either of them.”

It remained unclear whom China supports.

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