News: Trump threat looms over WTO chief

Monday, July 8, 2024

Trump threat looms over WTO chief

Jul 08, 2024

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QUICK FIX

— If Donald Trump is reelected in November, that could imperil WTO chief Ngozi Okonjo-Iweala’s chances of serving a second term, spectators in Geneva say.

— Businesses across North America are on tenterhooks as Canada targets companies with a 3 percent digital services tax.

— The steel and aluminum industry is pushing to expand Section 301 tariffs on China to third countries. This comes as senior U.S. officials hint at plans to crack down on Mexico’s potential role in evasion.

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Driving the day

Director general of the WTO Ngozi Okonjo-Iweala sits next to Meghan, Duchess of Sussex.

WTO Director-General Ngozi Okonjo-Iweala at an event on May 11, 2024 in Abuja, Nigeria. | Andrew Esiebo/Getty Images

WHISPERS IN GENEVA: The prospect of a second Donald Trump presidency could hurt Ngozi Okonjo-Iweala’s chances of serving another term as director general of the World Trade Organization.

Okonjo-Iweala, whose current term ends in August 2025, has not confirmed whether she wants to spend four more years leading the increasingly dysfunctional WTO. But the looming possibility of a Trump win this November is undoubtedly on the minds of senior officials — and it could come up as WTO ambassadors gather for a retreat today to discuss how to improve the group’s decision-making process.

“I think everyone is pretty much aware of the difficulty Ngozi will face if Trump wins,” former WTO spokesperson Keith Rockwell said. “That might have seemed far-fetched a year or two ago, but it doesn't seem so far-fetched right now.”

Neither the Trump campaign nor the Biden administration confirmed to POLITICO whether they would support a second term for Okonjo-Iweala.

Will history repeat itself? Back in 2020, then-U.S. Trade Representative Robert Lighthizer came out against Okonjo-Iweala’s first bid to run the WTO during the last stage of the selection process, throwing his support behind retired South Korean trade minister Yoo Myung-hee. Okonjo-Iweala was finally selected in 2021 after Joe Biden became president.

Trump’s former ambassador to the WTO, Dennis Shea, said he thought the former president would once again try to block Okonjo-Iweala from the role, if given the chance.

“We said we would not join the consensus in support of her appointment in 2020 and I have seen nothing that would suggest that position would change,” Shea said, emphasizing that he was expressing his own opinion and not speaking on behalf of the Trump campaign.

A Geneva-based trade expert, who was granted anonymity to candidly discuss the situation, said they believe the director general “will wait until the outcome of the U.S. election to take a decision.”

“I think it will be unlikely for her to seek a second mandate if Trump is elected. I don’t think it will be good for the image of Dr. Ngozi to be the director general for four years, while she won’t be able to do anything,” the expert added.

Keep in mind: As a practical matter, the president of the United States does not unilaterally decide who leads the WTO. But long-established procedures encourage members to come to unanimous agreement on the leadership position, potentially giving Trump the ability to block a second term for Okonjo-Iweala.

Under the group’s rules, the WTO must begin the selection process for its next director general nine months before Okonjo-Iweala’s term ends, meaning before Nov. 30. That would be less than four weeks after the U.S. presidential election.

Doug and Camille Gijs have more (for Pros!)

CLASH AT THE WTO: At a WTO meeting, China formally accused the U.S. of violating trade rules with its plan to raise tariffs on electric vehicles, solar cells, semiconductors and other goods over the next 18 months. The U.S. defended the move, saying China had not addressed concerns about forced technology transfers. Pros can read more here.

Understand 2024’s big impacts with Pro’s extensive Campaign Races Dashboard, exclusive insights, and key coverage of federal- and state-level debates. Focus on policy. Learn more.

Around the World

CANADA DIGS IN ON DST: Industry that operates in North America is keen to learn more about Canada’s digital services tax, after Canada’s Parliament passed Bill C-59 and brought its plans closer to reality.

Canada’s federal finance department is expected to publish explanatory notes for the contentious tax in the “coming days,” according to a senior government official.

Industry view: “Although Canada’s DST is now in force, key implementation details remain subject to further regulatory action,” said Jonathan McHale, vice president of digital trade at the Computer & Communications Industry Association. “The opaque process by which the law was brought into force have cultivated confusion and uncertainty.”

Retaliation fears: The Business Council of Canada — which also represents Meta, a large U.S. company impacted by the new tax — issued a statement urging the federal government to reconsider.

“It puts our country at risk of retaliatory trade action from the United States, our most important trading partner,” the Council said.

Reminder: The DST applies to companies that earn at least €750 million (C$1 billion) in annual international revenue — and targets multinational digital companies that earn more than C$20 million in revenue from Canadian users with a 3 percent tax on Canadian revenue.

Pro’s Zi-Ann Lum has more.

A message from the International Rescue Committee (IRC):

REGULATORY REVIEW

ON TARIFF ACTION BEYOND BEIJING… Steel and aluminum associations are calling on USTR to expand trade restrictions to third countries accused of enabling the circumvention of U.S. antidumping and countervailing duties.

The industry groups submitted remarks in response to USTR’s request for public comment on its proposed Section 301 tariff hikes. The Biden administration in May announced tariff increases on aluminum and steel products as part of its four-year review of the tariffs Donald Trump imposed on hundreds of billions of dollars worth of Chinese goods.

Reminder: Senior administration officials have signaled that the 2026 review of the USMCA could be used to address so-called loopholes that supposedly enable Chinese products to enter the U.S. via Mexico duty-free.

“We urge you and your colleagues to seriously consider the application of Section 301 tariffs to aluminum-intensive products imported into the United States from third countries that incorporate Chinese-origin aluminum,” said the Aluminum Association.

The American Iron and Steel Institute, which represents North American steel producers, also pressed for an expansion of restrictions to better protect domestic industry from China's trade practices.

“Section 301 duties on steel products should apply to all steel products where the original raw steel was melted and poured in China, regardless of the country of final processing,” AISI said. "Such a revised rule of origin for the Section 301 tariffs on steel products will more accurately reflect the impact China is having on the global steel market.”

POLITICO AND WELT EVENT TUESDAY 7/9: Join POLITICO and WELT for a roundtable discussion on July 9 with the top defense officials in NATO countries that share a border with Russia, including Estonia, Latvia and Lithuania. These are the crucial officials tasked with armoring these front-line states against Vladimir Putin’s aggressive expansionism. We will discuss how they are adapting to this new period of danger and explore the future of the NATO alliance and their relationship with the United States. Register here.

SPECIAL EVENTS

Danielle Fumagalli was named acting assistant USTR for Japan, Korea and Asia-Pacific Economic Cooperation affairs, according to an announcement. Fumagalli served as deputy AUSTR in the same office.

TRADE OVERNIGHT

— OP-ED: The strange future after a second Trump term, per POLITICO Magazine.

— NATO needs to look toward the Pacific because of current realities, Jens Stoltenberg says, per POLITICO.

— Latin American WTO members suggested changes to the structure of ministerial conferences and preparatory work, according to a WTO communication dated July 2.

— American allies fear Biden is finished and can’t beat Trump, per POLITICO.

— Singapore endures more port delays as 90 percent of container ships arrive late, per Sourcing Journal.

— Europe's top cognac makers to attend China meeting on anti-dumping probe, source says, per Reuters.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and ahawkins@politico.com. Follow us @POLITICOPro and @Morning_Trade.

A message from the International Rescue Committee (IRC):

The International Rescue Committee’s polling confirms what we have seen in our work - Americans support Ukrainian refugees and want to help them thrive in their new communities. This American spirit extends globally with the continued support for humanitarian aid to people inside Ukraine, as over 14 million people in the country still rely on humanitarian assistance and over 10 million remain forcibly displaced. This week world leaders should listen to its citizens, mobilize the international community and prioritize civilians to deliver long-term stability inside Ukraine and across the toughest humanitarian crisis around the world. Take action in supporting the IRC’s work inside Ukraine, Sudan, Gaza and around the world by visiting http://rescue.org.