Ben Muse

Economics and Alaska

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Getting down to business in the WTO DG race

Several news stories marked the start of the WTO's two month consultation process, meant to lead to a consensus among member nations on the choice of a new Director-General.

The stories
  • point to the failure of the last selection process in 1998-1999 (The WTO failed to reach a consensus on a candidate, the process was controverial and caused a lot of hard feelings, and a preoccupation with it prevented adequate preparation for the Seattle Ministers' meetings later in the year, contributing to the failure to lauch a new trade round there.),
  • give some details about this year's selection process,
  • talk about the sources of each candidate's support,
  • and notice the lack of a frontrunner.
Allen Beattie reports, in the Financial Times that "Selection of new world trade chief too close to call".

Beattie briefly describes the process,
    "Rather than a formal election, the selection process, which is due to finish by the end of May, involves repeated consultations among WTO members to try to reach a consensus. In a first stage, the chair of the WTO's general council, Kenyan ambassador Amina Mohamed, will consult members of the Geneva-based trade body over the next couple of weeks, after which at least one of the candidates is likely to drop out..."
and then quotes John Weekes, a former Canadian ambassador to the WTO, and the Chair of the General Council at the start of the last selection process, on possible process dynamics:
    “Quite a few countries have been hanging back and will only reveal their preference to the general council chair at this stage,” said John Weekes, a former Canadian WTO ambassador who is now senior policy adviser at the international law firm Sidley Austin Brown & Wood in Geneva. “There may well be some who support one candidate in one round of selection and another in the next one.” "
Tom Wright reports in the International Herald Tribune, that "For WTO members, it's 'confession' time".
    "Countries are saying little for now, but most are expected to broadly back candidates from their own regions in the first round...

    As candidates drop out, things could get more complex, said Sergio Marchi, a former Canadian trade minister and chairman of the WTO General Council in 2002. "Some candidates may be short of votes today, but on a subsequent ballot be more acceptable," he said...

    Next week, the ambassadors are supposed to winnow out one candidate, who should in theory gracefully bow out, and this process is meant to continue until a winner emerges before May 31.

    In case no consensus is reached by then, the organization has put in place a voting system to ensure that there is no repeat of last time. But it has not yet been decided how to weight the voting. Industrialized countries are uncomfortable about a one-ballot-per-member system, in which they would be outnumbered by developing countries, Marchi said."
Member countries could have voted last time, it was discussed.

During the consultations, Amina Mohamed will likely be polling delegations on their first and second choices. Keep an eye on the second choices. As candidates drop out, their supporters have to go somewhere. In 1999, Mike Moore of New Zealand was in last place in mid-January, but was one of the two finishers in July.

Chakravarthi Raghavan describes the January results ("Trade: Another term for Ruggiero?" ):
    "The new head count made public in press briefings by the WTO, (and the detailed statement of Rossier that was made available to the members, but withheld from the media, unlike the earlier two reports by Celso Lafer and Rossier Celso Lafer and Rossier conducted the consultations - Ben) brought out:

    * the Thai Deputy Prime Minister, Supachai leading with 40 first preferences, followed by 23 for Abouyoub of Morocco, 15 for MacLaren of Canada and 13 for Mike Moore of New Zealand;

    * on basis of second preferences, Moore edged forward to the top of the list with 26 votes, Supachai with 19, Abouyoub with eight and Maclaren with five.

    * while the great majority were willing to join the consensus whatever the final choice, a "not negligible number" said they would not be in a position to join automatically in a consensus if it formed around a candidate other than those for whom they have indicated a first or second preference.

    Of the 133 members, 28 (12 with offices in Geneva, and others outside) did not respond to contacts by Rossier."
At Reuters India, Robert Evans ("Haunted WTO aims to name new leader by end of May" ) briefly describes the process:
    "...three envoys will begin consulting the 148 WTO member countries on which of four candidates they would prefer as the next director general.

    The leader of the team, Kenya's ambassador Amina Mohamed who chairs the WTO's ruling General Council, told delegations on Thursday that the three aim to find a consensus around one figure in the hope of having him approved by the end of May..."
and speculates about a Lamy for Wolfowitz deal:

    "The United States -- which like all other WTO members could block any candidate by refusing consensus -- has yet to indicate which of the four it will support.

    This has led to speculation in some capitals -- but muted in Geneva where the changing dynamics of the 10-year-old WTO are better understood -- that Washington and Brussels may have done a deal involving the WTO and the World Bank.

    The speculation intensified on Wednesday when the EU gave the green light for controversial U.S. nominee Paul Wolfowitz to take over as head of the World Bank, sparking suggestions that Lamy would now get U.S. support for the WTO.

    But diplomats in Geneva said that even if the United States did back the Frenchman, a socialist committed to a liberalised global trading system, that was far from meaning he was certain to get the job.

    Some envoys suggest that any such railroading by the two top trading powers would lead developing countries, now better organised to promote their own interests than some years ago, to dig in their heels and insist on one of their candidates."
P.S. (April 1) Add these two AP stories (via BusinessWeek): "WTO leadership race enters final stretch" and "Bios of WTO leadership candidates".

The Making of the WTO Director-General, 2005, #3

With the WTO Director-General (DG) selection process about to move into a new, "consultation and consensus phase", its time to pull together the posts of the last few months. This post updates a February 15 collection of links on the WTO DG selection process: "The Making of the WTO Director-General, 2005, #2".

What does it matter

I'll accumulate "So what, why does this race matter?" posts here. Why does free trade matter? Why does the WTO matter to free trade? Why does the DG matter to the WTO? What about the General Council Chair?

The WTO is a "member-driven" organization, and, according to John Jackson, member of a recent commission on the future of the WTO, the DG position is institutionally weak: "The Director-General in a Member Driven WTO".

What does the WTO Director-General do? Here's Candidate Pascal Lamy's articulate explanation: "What does the Director-General of the WTO do?".

How are Directors-General chosen?

This post links to the WTO DG selection rules, and to a newspaper article providing a summary description of the process: "The Rules for Choosing a Director-General of the WTO".

Miles Kahler critiques the methods used to choose leaders at the World Bank, IMF, and the WTO in the Institute for International Economics book, Leadership Selection in the Major Multilaterals. The chapters can be read online (but cannot be downloaded). I learned about this from Daniel Drezner.

There have been two WTO DG contests before this one. Renato Ruggiero was selected as the first WTO DG in 1995: "How Renato Ruggiero Became the First Director General of the WTO".

A Claude Barfield Financial Times column, arguing that a WTO DG should have considerable political stature (selected from among former heads-of-state), was the subject of this post: "What Should We Look For In a WTO DG?".

Early Maneuvering

Nominations had to be made by December 31. But the race began before then. Who might have been in? Why did some drop out while other stayed in?

Early on, Jagdish Bhagwati suggested, in the Jan/Feb 2004 Foreign Affairs, that the South African Trade Minister Alex Erwin was considered a leading contender. Bhagwati's article was titled : "Don't Cry for Cancún". "...Alec Erwin, South Africa's trade minister and a favorite to become the next director-general of the WTO..." This was quickly denied.

A lot of people thought about running for DG: "People who might have run for WTO Director-General, but did not". In October, Brazilian and Uruguayan representatives met in Montevideo, without reaching joint agreement on a Latin American candidate: "Why are there two Latin Americans in the WTO race?". In December, Kenyan Trade Minister Mukhisa Kituyi almost entered the race: "There was another candidate".

And then there were four

When the sun came up on January 1, there were four candidates. Felipe Seixas Corrêa of Brazil, Carlos Pérez del Castillo of Uruguay, Pascal Lamy of France, and Jaya Krishna Cuttaree of Mauritius. Who are these men? What strengths and weaknesses do they bring to this office?

This Jan 2 survey post linked to pages with biographical information on each candidate: "Race for WTO Director-General". The Economist also surveyed the four candidates on January 7: "The Race for WTO Director-General".

Here is a report of an interview with Mauritius Foreign Minister Jayakrishna Cuttaree: "Jayakrishna Cuttaree". Here is a post on a Financial Times column that discussed Pascal Lamy: "The pros and cons of Pascal Lamy".

Alan Oxley, former Australian Ambassador to the GATT explains: "What's Wrong With Pascal Lamy". Peter Gallagher, an Australian trade consultant, discussed Pérez del Castillo and Lamy: "Advice on who to pick as the next WTO Director-General". Both Oxley's column and Gallagher's post offer much more.

Michael C. Boyer, James G. Forsyth, Jai Singh survey the four candidates, and their chances, in the February 2005 issue of Foreign Policy, "Who Gets to Run the WTO?". Very good. I learned about this from Daniel Drezner. Here's a February 19 survey of the four candidates from the International Herald Tribune: "The WTO Director-General Race Candidates".

The race itself

How do you campaign to be Director-General of the WTO? Mike Moore, a former Prime Minister of New Zealand, was DG from 1999 to 2002. He described his race for DG in his 2003 book on the WTO, A World Without Walls. This post has an extract from the book, describing the race: "What's it like to run for WTO Director-General".

The selection rules call for the presentation of the candidates to the General Council soon after the nominations end. In 2005, this presentation took place on Wednesday, January 26: "This Wednesday’s WTO General Council meeting" and "The next step in the WTO race". A group of NGOs took advantage of the General Council meeting to schedule its own "public hearing" with the candidates on the evening of January 26: "Public Hearing for WTO Candidates". And another post: "Meet the WTO Candidates".

Once the presentations were completed, the texts were posted to the WTO website, and there was a spate of stories: "WTO DG Candidates Address the General Council". In a first, three of the candidates answered questions at an NGO sponsored "public hearing" on January 26. Here is a transcript: "Minutes of Civil Society Hearing for WTO Director-General Candidates". The NGO "public hearing" was a new element in a WTO DG race; the article highlighted in this post points to it as an example of the increasing influence of NGOs: "The NGOs' New Influence".

The candidates have been running hard. Brazilian Felipe Seixas Corrêa traveled to South Africa – another G-20 member: "The Brazilian visits South Africa". South African news reports suggested that South Africa was torn between its ties with Brazil and its connections with other African countries. Its choice is described in the post "Seixas Corrêa, or Cuttaree?". In early March, he took his campaign to Washington: "Seixas Corrêa Visits Washington". In late March, China endorsed him: "China Endorses Seixas Correa".

Newsweek interviewed Pascal Lamy in late January: "Newsweek Interviews Pascal Lamy". Here's another interview from the Financial Express: "Interview with Pascal Lamy". Here is a February article on Lamy based on German sources: "Does Pascal Lamy have a good chance?". In February, Brazil became indignant about Lamy remarks about the public international public good nature of rain forests: "The Brazilians Are Not Happy With Pascal Lamy". In late-February, Lamy took his campaign to India: "Pascal Lamy Turns Up In India". In March there was a strange story about Nigerian support for Lamy "Nigeria's Position on the WTO Director-General Race".

In mid-March, the Bush Administration proposed Deputy Defense Secretary Paul Wolfowitz as the U.S. candidate for the next President of the World Bank. From that point on, there was persistent speculation about a deal between the U.S. and Europe: the U.S. would support Pascal Lamy in exchange for European support for Wolfowitz at the World Bank: "Wolfowitz for Lamy?"; "Persistent speculation on Lamy for Wolfowitz deal"; "Wolfowitz/Lamy Gossip". The blog "World Bank President" has been covering the World Bank race. It's a potentially useful reference on the inter-relationship between the two races.

Early on, Uruguayan Pérez del Castillo traveled to Australia to meet with the trade minister there: "What will Australia do?”. In early February, the Australians endrosed him. Stories about that time tied Australia's selection decision (which was said to be between Pérez del Castillo and EU candidate Lamy) to recent EU decisions on wheat subsidies "Which Candidate Will the Australian's Choose?"; "The Australians Opt for Pérez del Castillo". This post links to a set of stories on Pérez del Castillo's claims about the division of Latin American support between himself and Seixas Corrêa: "Latins for Pérez del Castillo". In mid-February Pérez del Castillo campaigned in Washington: "Perez del Castillo in Washington in February", and in mid-March, in Brussels: "Pérez del Castillo goes to Brussels". In late March, he was endorsed by New Zealand: "New Zealand Endorses Perez del Castillo". Pérez del Castillo was nominated by a moderate government; in the Spring, a government of the left came to power. Would it continue to support him: "Will Uruguay's New Socialist Government Continue to Back Pérez del Castillo?"?

Mauritius Foreign and Trade Minister Jaya Krishna Cuttaree sought support among the Indian diaspora: "Cuttaree plays the ethnic card". The Cuttaree campaign has a web site: "Jaya Krishna Cuttaree" (I learned about this from Daniel Drezner). Cuttaree got the endorsement of the Southern Africa Development Community (SADC): "Endorsements for Jaya Krishna Cuttaree". In early March, Cuttaree was in Brussels: "Jaya Krishna Cuttaree Visits Brussels". In mid-March he attended the G-20 developing country meetings in New Delhi ("Cuttaree goes to New Delhi"), where he thought he found Indian support: "Cuttaree and India". However, this later story from Mauritian sources expresses frustration over India's failure to back him: "India, Mauritius, and the WTO Director-General contest". Here is an early post linking to, and quoting from, an Indian column surveying the candidate-set from the Indian point-of-view: "An Indian View of the WTO-DG Candidates".

The Choice

At the end of March, start of April, the selection process changed. Candidates were no longer just making themselves known, now the General Council would begin a process of consultation, meant to lead to consensus around a single candidate: "Change of Pace Coming in the WTO Director-General Race".

On March 30, on the eve of this process, the odds on the candidates were available from the bookmaker, Ladbrokes: "Here are the odds on the WTO DG candidates:".

The Transition

What is involved in settling in to the office? Mike Moore of New Zealand, was selected for DG in 1999. His book on the WTO, A World Without Walls, sheds light on some of the problems he faced: "You Win the WTO DG Race. What Do You Do First?".

Last updated March 30, 2005

Here are the odds on the WTO DG candidates:

For what its worth, from the bookmaker Ladbrokes (via this March 30 story in - "Uruguay's Castillo Is Top Contender for WTO Job, Ladbrokes Says" ):
    " ``Castillo looks like the compromise candidate, but I expect the odds on Lamy to shorten,'' said Warren Lush, a spokesman for Ladbrokes in London. ``We're expecting to take some more money soon, but they're the only two to have had much backing so far.''

    Four candidates are competing for the four-year job that starts Sept. 1. Perez del Castillo, 60, a former ambassador to the WTO, is quoted at 5/4 odds, meaning a $5 wager would yield a profit of $4. Lamy's odds are 5/2, with Brazilian ambassador Luiz Felipe de Seixas Correa and Mauritian Foreign Minister Jaya Cuttaree both at 4/1. .."
The story also notes that the WTO ambassadors (the General Council) "meet tomorrow in Geneva to discuss the selection process."

Cuttaree and India

Mauritian WTO candidate, Jaya Krishna Cuttaree, has angled for India's backing, as a representative of another developing country, as a citizen of nearby country with economic connections to India, and on the grounds of ethnic ties ("Cuttaree plays the ethnic card").

He was present at the G-20 meeting of developing countries in New Delhi in mid-March, where he lobbied for support (The Financial Express, March 19, "Race for WTO D-G post hots up" )
    "NEW DELHI, MARCH 18: Competition for the post of the World Trade Organisation (WTO) director general is intensifying with Mauritius claiming India’s support for the coveted chair. Speaking to mediapersons on the sidelines of the G-20 ministerial meeting in New Delhi on Friday, Mauritian candidate Jayen Cuttaree said that top leaders of the ruling United Progressive Alliance (UPA) have promised to support his candidature.

    Commerce ministry officials, however, said that India was yet undecided on whether it should support Mauritius or Brazil. “We want to support Mauritius as we are politically close. At the same time we are also keen on Brazil as it has emerged as a sharp negotiator forwarding the cause of developing countries,” an official said.

    Former EU trade commissioner Pascal Lamy, who is the EU candidate for the DG’s post, too, was in New Delhi last month to lobby for India’s support. Giving his arguement on why developing countries should support him, Mr Cuttaree said that there was an increasing feeling among developing countries that their concerns have not been taken on board at the WTO.

    At the same time, developed countries too were showing political will to take care of devepment issues along with trade, he said. “My job would be to act as a bridge between developed and developing countries,” he said.

    On the issue of attempts made by some developed countries to divide developing countries on the basis of their level of developement, the Mauritian minister said that he did not believe in such categorisation. “If India and China become stronger it is good for us as they will pull other developing countries with them,” he said."
(l' of Mauritius, March 22, "Successful Lobbying for WTO Directorship"):
    Jayen Cuttaree’s campaign to become the new director of the World Trade Organisation (WTO) seems to be going well. Last week, he paid a visit to the president of the Indian Congress Party, Sonia Gandhi, who gave the guarantee that she supports his application for the post. In about a week, the WTO general council will start its first consultations with the member states. Jayen Cuttaree appears to be among the favourites though former EU commissioner Pascal Lamy is a serious contender."

New Zealand Endorses Perez del Castillo reports (March 29) that New Zealand has endorsed Uruguayan Carlos Perez del Castillo for WTO Director-General: " NZ backs Castillo for WTO post".

The Director-General in a Member Driven WTO

The WTO is a member driven organization - decision making authority is vested in its General Council of national ambassadors, and is jealously guarded. The Director-General position is not clearly defined in the treaties setting up the WTO, and is not, institutionally, very powerful.

The relationship between the Director-General and the General Council came up in a recent American Enterprise Institute discussion on the WTO:
    "WTO Director-General Dr. Supachai Panitchpakdi's three-year term will be coming to an end this year amid serious institutional structure problems, according to the board. With a new director-general to be chosen by the members of the WTO in the coming months, the board asserts that it is important and timely to address these challenges.

    "The way the system treats its officials, its secretariat, and its director-general is nothing short of disgraceful," Jackson
    [John Jackson, a Georgetown University law professor] said.

    Jackson explained that the mantra of the organization, that it is "member-driven," tends to be an excuse for ambassadors to "flex their power muscles and to prevent adequate operation of the secretariat and the director-general." "
Future challenges for WTO" (UPI via the Washington Times)

The panel's topic was the January "Sutherland Report" on the future of the WTO. Jackson was one of the co-authors of the report. The report devotes a chapter to the role of the Director-General and the Secretariat. Here are some extracts:
    "...for some years, the mutual confidence between delegations and WTO staff has been less obvious than in the past...The deeper problem appears to be a view that, in a "Member-driven organization", the Secretariat's role must be solely one of support, not of initiative or even of institutional defense of the WTO system...
    The role of the Director-General is not defined in the Marrakesh Agreemetn. Article VI(2) calls on the Ministerial Conference to appoint the Director-General and "adopt regulations setting out powers, duties, conditions of service and term of office...". aside from determining conditiosn of service, this mandate has never been fulfullied...
    There is the question of the Director-General's duty to manage the Secretariat. In recent years, there has been a tendency towards micro-management by Members, particularly through the Budget Committee..."

Wolfowitz/Lamy Gossip

Speculation about a Wolfowitz for Lamy trade abounds: Here's a UPI item via the March 28 Washington Times "UPI Hears..."
    "...The only person outside his immediate Washington circle with whom Bush shared his plan to appoint Deputy Defense Secretary Paul Wolfowitz to run the World Bank was his closest ally, Tony Blair. Bush consulted Blair a month before the Wolfowitz name first surfaced -- but Blair kept the secret from his own Cabinet... Above all it has infuriated Gordon Brown, the powerful Chancellor of the Exchequer and Blair's most jealous and most dangerous rival. Brown... takes the way Blair kept Bush's little secret as a personal slight... Brown also thinks Blair was very dumb not to hold out for a big fat favor in exchange for his support for Wolfowitz. After all, the French and Germans have told Bush that they will swallow Wolfowitz -- but only if Bush accepts former European Union trade commissioner Pascal Lamy as the next head of the World Trade Organization. Funny, but Bush doesn't yet seem to have shared the news of this bargain with his own Cabinet, nor with Congress. Will the deal hold?"
Developing countries are a majority of WTO nations, they have a lot at stake in trade negotiations, they think fairness requires that the Director-General be from a developed country, and they think they were denied their opportunity in 1999. A developing country coalition could prevent consensus around a given candidate.

I'd guess that many developing countries would react badly to an apparent backroom North Atlantic deal, with U.S. support for Pascal Lamy exchanged for European support for Wolfowitz.

In 1998-1999, a deadlock between developed and developing country candidates for Director-General led to a prolonged contest, a failure to reach consensus around any candidate, and a lot of anger. The preoccupation with the race interfered with the preparations for the meeting of WTO member country trade ministers in Seattle, and contributed to the failure of those meetings. The start of the current round of trade negotiations was delayed for two years.

Another bad outcome may be possible if the speculation about a Wolfowitz/Lamy deal turns out to be right. I'm not sure the speculation is right. But, if Pascal Lamy is going to win, and his tenure is going to be productive, it will help if he can win in a way that minimizes the antagonism of developing countries. I don't think that road runs through Washington first. If there is a deal, it would help if implementation were contingent on Lamy's demonstrated ability to attract significant developing country support.

Minor revisions 3-29-05

Perez del Castillo in Washington in February

I didn't catch it at the time, but Uruguayan candidate for WTO Director-General, Carlos Perez del Castillo campaigned in Washington in February: "Benefits of Market Access Should Guide Trade Negotiators in 2005, Not Specifics, Top Trade Official Says"

Old Testament Outsourcing

"Moses and Outsourcing" via "Newmark's Door" and ultimately Mikhail S. Kouliavtsev.

India, Mauritius, and the WTO Director-General contest

Mauritian's are perplexed about India's failure to endorse Mauritian Foreign Affairs and Trade Minister Jaya Krishna Cuttaree for the WTO Director-General position.

It comes out in this March 24 report on a visit by the Indian Prime Minister to Mauritius: "Agreement to expand air services during PM's visit to Mauritius" In among the descriptions of various economic agreements under discussion during the visit, there's this
    "Mauritius, however, is peeved at India cold-shouldering its candidature for the WTO Director General's post. Despite its close political links and common kinship and its open support to India at all international fora, New Delhi has not given any commitment so far to the candidature of its Foreign Minister Jaya Krishna Cuttaree for the top WTO post. "We have always vociferously supported India, by name," lamented the official."

Change of Pace Coming in the WTO Director-General Race

The pace of the WTO Director-General selection process should change next week.

The WTO adopted procedures for selecting Directors-General in 2002: "Procedures For The Appointment of Directors-General".

Following the procedures, the candidates were nominated in December, given an opportunity to make a presentation to the WTO General Council in January, and spent the last two months campaigning for office.

The final decision has to be made three months before the term of the current Director-General ends. Since his term ends at the end of August, the decision has to be made by the end of May.

During the last two months, the procedures require consultations among the members of the General Council (the Council of the ambassadors to the WTO), facilitated by the Council's Chair (and selected assistants), aimed at bringing about a consensus decision in favor of one of the candidates.

The procedures describe how it should work:
    "17. The Chair, with the assistance of the facilitators, shall consult all Members, including non-resident Members, in order to assess their preferences and the breadth of support for each candidate. The ultimate aim of the consultation process shall be to identify the candidate around whom consensus can be built. In order to do this, it may be necessary to conduct successive consultations to identify the candidate or candidates least likely to attract such a consensus.

    18. The outcome of the consultations shall be reported to the membership at each stage. It is understood that the candidate or candidates least likely to attract consensus shall withdraw. The number of candidates expected to withdraw at each stage shall be determined according to the initial number of candidates, and made known in advance. This process shall be repeated in successive stages on the basis of a revised slate of candidates each time, with the aim of establishing consensus around one candidate.

    19. At the end of the final stage of the consultative process, the Chair, with the support of the facilitators, shall submit the name of the candidate most likely to attract consensus and recommend his or her appointment by the General Council."

We'll see. This is delicate work for the Chair. The Council has to be brought to settle on one of the four candidates by consensus. The Chair can't be unduly assertive in eliciting this choice, and can't be seen as pushing any candidate.

The last time the WTO tried this (under somewhat different procedures) things went wildly awry. The Council failed to reach a consensus, split the term between two candidates, angered many members, and contributed to the wreck of the WTO Ministers' meeting in Seattle.

The winnowing process begins next week.

The WTO web page on the race is here: "WTO Director-General selection process".

Persistent speculation on Lamy for Wolfowitz deal

Since the Bush Administration selected Paul Wolfowitz as its choice for the President of the World Bank, there has been persistent speculation that the Administration would support Pascal Lamy as Director-General of the World Bank in exchange for European support for Wolfowitz.

Here are a couple of stories that mention this in passing. Marie-Louise Moeller reports for SwissInfo, "EU seeks talks with Wolfowitz" and Aine Gallagher reports for Reuters, "Europe Buries Qualms Over Wolfowitz".
    ""...The realpolitik of the situation is that in all likelihood Mr Wolfowitz will be appointed as chairman of the bank," Irish Finance Minister Brian Cowen told a news conference after a summit of European Union leaders in Brussels on Wednesday...

    Others at the summit indicated there would be no objections to Wolfowitz's nomination, which comes at a time when Europe is seeking to heal rifts with the Bush administration and wants U.S. backing for former EU Trade Commissioner Pascal Lamy's bid to head the World Trade Organisation..."
The Reuters story points to another potential tradeoff: "Few obstacles for Wolfowitz in World Bank campaign".
    "Many European officials are fuming privately, diplomatic sources say. The sources said European angst has remained unexpressed in large part because many countries have candidates in the running for top international posts.

    Britain, Norway and the Netherlands are vying for the helm of the U.N. Development Program, which has an annual budget of nearly $3 billion. Meanwhile, the European Union has nominated former EU trade chief Pascal Lamy of France for the top job at the World Trade Organization, which comes open in August."
There has been a fair amount of speculation that the U.S. may back Pascal Lamy. Much of it has centered around the close working relationship Lamy had with former US Trade Representative (USTR) Robert Zoellick. More recently a possible Wolfowitz/Lamy exchange has been bruited. Lamy is certainly extremely capable, and has the necessary WTO background.

But here are some counterarguments:
  • The articles cited above suggest that many European states will already back Wolfowitz. Unless this is due to US commitments already privately made, to back Lamy as a quid pro quo, it doesn't sound like the US will have to back Lamy to get Wolfowitz.

  • Lamy and Zoellick worked well together. But Zoellick isn't USTR anymore. As Deputy Secretary of State he has a much wider range of issues, and won't be the lead on US trade negotiations.

  • Lamy is a French Socialist. There may be ideological objections within the Administration.

  • An apparent Lamy for Wolfowitz exchange, placing a European as Director-General of the WTO, would create enormous antagonism among the developing countries that have been pressing more and more insistently for a leadership position at the WTO.

  • The US has traditionally objected to WTO Directors-General from large European nations. Under the GATT, most DGs were from smaller European states. In the 1994 selection campaign, the US backed Mexican President Carlos Salinas, and did not agree to the selection of an Italian candidate until there was no alternative - and even then, not readily. There were no European candidates in 1998-99.

China Endorses Seixas Correa

Taiwan's The China Post reports that China has endorsed Brazilian Luiz Felipe de Seixas Correa in the WTO Director-General race: "China supports Brazilian candidate to lead WTO? "
    " China on Wednesday threw its support behind Brazil's candidate to lead the World Trade Organization....

    "China supports Brazil's ambassador to the World Trade Organization Luiz Felipe Seixas Correa to run for the post of WTO's director-general," the government's Xinhua News Agency said, citing Commerce Ministry spokesman Chong Quan."
Here's a report from Xinhuanet, "China supports Brazilian candidate to run for the WTO chief"
    "...It is the first time that China expresses its support to a candidate for WTO director-general.

    According to Chong, China has informed the decision when Commerce Minister Bo Xilai's met with visiting Brazilian Vice Foreign Minister Clodovaldo Hugueney Monday in Beijing..."
and the Associated Press, via BusinessWeek, "China supports Brazilian candidate for WTO".

Revised March 23, 2005

Cuttaree goes to New Delhi

Jaya Krishna Cuttaree took his campaign for WTO Director-General to New Delhi this week: WTO offers best protection for developing countries: Mauritius FM"

He talked about the importance of multilateral trade negotiations to developing countries:
    "Mauritius says only a rule-based trading system like the World Trade Organisation (WTO) would offer the best protection to the rights of developing and poor countries.

    Mauritius Foreign Affairs Minister Jaya Krishna Cuttaree said trade liberatlisation with sustainable development in focus would be able to bridge the divide between the developed and the developing nations.

    "The major players have the option of negotiating bilateral free trade areas and choose with whom they want to deepen integration. We do not have such options," said Cuttaree in an interview to ANI."
India still hasn't chosen its candidate:
    "India has not so far opened its cards openly in favour of Mauritius in the world trading body. New Delhi is weighing the options of its cultural and political relations with Port Luis and economic advantages of supporting EU's former trade commissioner Pascal Lamy. Cuttaree however, is hopeful that New Delhi will go with Port Luis. "
Cuttaree is campaigning hard:
    "Cuttaree, who arrived in New Delhi after a brief visit to Bangladesh to seek Dhaka's support to his candidature, is leaving to Colombo tomorrow."

Wolfowitz for Lamy?

Bush wants to Paul Wolfowitz to be President of the World Bank. The Europeans are unenthusiastic, but one of the experts quoted in this Bloomberg story ("Wolfowitz Nominated to Be Next World Bank President") suggests the French may go along if the US accepts Pascal Lamy as head of the WTO.
    " ``The French will accept the candidacy of Wolfowitz without enthusiasm,'' said Dominique Moisi, deputy director of the French Institute for International Relations in Paris. ``They will ask something in return,'' such as the appointment of Pascal Lamy at the head of the World trade Organization."

Pérez del Castillo goes to Brussels

Uruguayan WTO Director-General candidate, Carlos Pérez del Castillo, was in Brussels Tuesday (3-15) addressing the European Parliament's Trade Committee.

The EU is committed to Pascal Lamy of France, but the Trade Committee has invited the other three candidates to state their cases. This may matter because, during the consultation process by which the candidates are selected, second choices are often important.

The southern South American press service, MercoPress, reports:"WTO leadership candidate makes case to EU"
    "...He said the next WTO chief should be able to guide current world trade talks to get a deal that ‘‘reflects the interests of all members,’’ implying that former EU Trade Commissioner Lamy would not do so.

    He added that the other two candidates — Jaya Krishna Cuttaree, the foreign affairs and trade minister of Mauritius, and Luiz Felipe de Seixas Correa, Brazil’s ambassador to the WTO — did not have broad enough backing.

    Pérez del Castillo said he would ensure poorer countries get more flexibility in delaying implementation of trade rules, which he said often did not take into account the needs of developing economies.
    Pérez del Castillo said last November the top job should go to either a Latin American or an African.

    He said neither continent had been given a chance since the creation of the WTO a decade ago — or since its predecessor, the General Agreement on Tariffs and Trade, began in 1948.

    He said he was in favor of ensuring a drop in tariffs and duties in all areas of trade, leaving no room for protected sectors like services or agriculture, which have been sensitive points of contention in the current trade round..."
Here's another report from "MEPs to hear all WTO Candidates, despite backing Lamy".
    "...The Uruguayan candidate urged the EU to "harness all efforts" to ensure a successful conclusion to Doha round - opened in 2001 - in Hong Kong this year, but warned that expectations should be lowered.

    "I wouldn't call it a development round", he said...

    If victorious, Mr Castillo said he would not carry out thorough reforms in the organization, which Mr Lamy criticized as being "medieval". "There are things the WTO can do and there are things the WTO cannot do and should not do", he stated, advocating instead for more work to be carried out in the Geneva headquarters instead of high-profile ministerial summits.

    Drawing attention to the "need to improve the WTO's image before the public view in general", he assured that, if victorious, his door "will always be open" to NGOs..."

Light blogging

I apologize for the light posting recently. A busy period at work won't leave much time for blogging for a few more days.

Seixas Corrêa Visits Washington

Brazil's representative to the WTO, and its candidate for WTO Director-General (DG), Luis Felipe de Seixas Corrêa, has been spending the week in Washington.

On Monday, he met with the acting US Trade Representative, Peter Allgeier, and expressed his confidence of ultimately getting US support:
    "A Brazilian diplomat says he is confident of U.S. support of his campaign to lead the World Trade Organization, although the Bush administration has yet to endorse a candidate.

    Luiz Felipe de Seixas Correa, Brazil's ambassador to the WTO, met on Monday with Peter Allgeier, the acting U.S. trade representative.

    "I don't think that anyone can be elected to ... head the WTO without the will of the United States," Mr. Correa told Reuters news agency. "Obviously, if I did not think I could get the support, I would not be campaigning..." "
He spoke to the U.S. Chamber of Commerce, and the Brazil-U.S. Business Council, on Tuesday.

Jaya Krishna Cuttaree Visits Brussels

Mauritian WTO Director-General (DG) candidate Jaya Krishna Cuttaree held a press conference during a visit to Brussels this week.

This has to be one of the best covered events of this WTO DG campaign. We have reports from Reuters ("Poor nations' WTO candidate says betrayed by Europe" ), Stefania Bianchi for Inter Press Service of Johannesburg via ( "Trade: Poor Countries' Man Makes a Strong Case" ), Agence France-Presse via Tribune de Geneve ("Mauritian WTO candidate digs at EU rival"), and the Associated Press ("Cuttaree says EU shouldn't vie for WTO post"),

Bianchi's report is the most comprehensive. Cuttaree discussed his platform:
    "Jaya Krishna Cuttaree, the African, Caribbean and Pacific countries nominee to head the World Trade Organisation says he will fight for a "rule-based multilateral trading system" to protect the world's poorest countries if he assumes the role later this year.

    Mauritian foreign affairs minister since December 2003, Cuttaree says he will push for a free trade system and also give the poorest countries a voice in global trade negotiations if he becomes director general of the Geneva-based trade body...

    ...Cuttaree says the WTO must have a "deliverable development dimension", and is strongly advocating a WTO agenda which provides for "operational special and differential treatment in favour of developing countries" to ensure that these countries make "meaningful gains" from trade liberalisation."
and his surprise when the EU backed Pascal Lamy:
    "Cuttaree says it is unfortunate that the EU and the ACP group who enjoy a special trading relationship will be "pitted against each other" in the race for the top post.

    "I was disappointed to learn that Lamy is also going for the post. It was a complete surprise to me. I always thought that the EU-ACP relationship was based on the strengths and weaknesses of each other and I expected the EU to support us in this. Although the EU has the power to control the WTO I don't think that this will help the Doha Development Round," he said."
and campaign tactics:
    "But Cuttaree has not ruled out alliances with fellow developing world candidates if the vote does not go his way.

    "I have spoken to Latin American representatives and we all agree that if we want a leader from a developing country, then at a certain point we will have to form some developing country coalitions," he said."
Bianchi passes on speculation on which countries support which candidates:
    "The group of 79 ACP countries say they are overwhelmingly behind Cuttaree's candidacy...

    But Cuttaree will face tough competition from the contenders from the developing world who each have their own supporters. Del Castillo is already reported to have won the support of Australia, New Zealand and Singapore, while Correa said earlier this month that he is confident he will win the all-important U.S. endorsement."

Developing Nations Object to Immediate Supachai UNCTAD Appointment

Evelyn Leopold reports for Reuters that developing nations have raised concerns about the appointment of WTO Director General Supachai Panitchpakdi to head the United Nations Conference on Trade and Development, when his WTO term ends: "Developing states delay naming new head of UNCTAD"
    "Developing nations on Tuesday delayed the appointment of a Thai economist to head a United Nations trade agency, objecting to his background as director-general of the World Trade Organization, diplomats said.

    The U.N. General Assembly was scheduled on Tuesday to approve Secretary-General Kofi Annan's nomination of Supachai Panitchpakdi, a banker and former Thai deputy prime minister, to lead the Geneva-based U.N. Conference on Trade and Development, known as UNCTAD.

    But Jamaica, as head of the Group of 77 developing countries, which now has 133 members, asked for a month's delay so nations could further consult their respective governments.

    "There are serious concerns that the person who has been proposed by the secretary-general is coming from the WTO, which has a culture totally different from UNCTAD, an organization to help developing nations," Algeria's U.N. ambassador, Abdallah Baali, told reporters..."

How To Write A Better Paper For Class

Brad DeLong's advice: "Advice on Paper Writing"

Nigeria's Position on the WTO Director-General Race

Here's an interesting story by Joseph Ushigiale, published in the Lagos daily, This Day: "WTO: Interest in Deputy D-G Slot Threatened" (via

In summary, Ushigiale says:

The Nigerians negotiated a deal with the French, to support Pascal Lamy for WTO Director General in exchange for the appointment of a Nigerian to one of the four Deputy Director General (DDG) positions. On January 15, the Nigerian President sent a memo to his Commerce Minister approving the deal.

The Commerce Minister passed the approval on to the Ministry's Director of External Trade, Mr Y. F. Agah, on January 17. Mr Agah is then alleged to have delayed forwarding the approval for six weeks:
    " took a presidential query on the seeming delay in conveying the presidential backing to provoke Agah into forwarding the directive to Geneva on March 1, 2005.

    Agah is alleged to have delayed the presidential backing for self preservation purpose, as he is in direct line of benefitting from Nigeria's inability to clinch the deputy general position as a trade representative to the world body...

    ...Meanwhile, Agah has already received Mr President's approval to proceed to Geneva, as Nigeria's Trade Representative to the WTO, WIPO and UNCTAD with effect from April 1, 2005."
During the delay, the story asserts, Lamy gained a lock on the WTO Director-General position. As a result, Nigeria is seen as having failed to follow through on the deal, and it's support is seen as "irrelevant." Some other African country may get the DDG position now.

I don't know enough about Nigerian politics to comment on the plausibility of this story. I don't understand why Agah would benefit personally if a Nigerian failed to get the DDG position.

This is the first news story I've seen referring to Lamy's inevitability. The first formal consultations with the membership are still several weeks away.

If I've read the story right, it implies that a DDG position currently in the hands of a Frenchman was to be given to a Nigerian in return for the DG support ("...a Nigerian Deputy will succeed the French national at the expiration of his tenure..."), but there is currently no French DDG. There is a Kenyan DDG.

Where Is Our New USTR

The United States Trade Representative (USTR) is the chief U.S. trade negotiator.

Robert Zoellick filled the positon capably in Bush's first term, but has since moved to the State Department as Rice's deputy.

One of Zoellick's deputies, Peter Allgeier, was appointed as Acting USTR in mid-February. But "Acting" is not the same as "actual." The administration has known for many weeks that it would need to fill this position.

Gregg Robb (at MarketWatch) points to the delay, and the problems it may cause:
"Bush delays naming new top trade negotiator"
    "The White House has yet to nominate a new U.S. Trade Representative since Robert Zoellick left the post last month to become deputy secretary of state, and analysts are beginning to debate how much harm is being caused by the delay.

    At the moment, the consensus is that the slowness in naming the new top trade negotiator for the United States is a growing problem, but not a crisis.

    "The absence of a USTR is hurting us and crippling us from moving both the multilateral and the bilateral agenda forward," said Nao Matsukata, former director of policy planning for USTR and now chair of Strategic International Business Practice at Hunton & Williams.

    "It is critical for us to put a USTR in place to show we're serious about moving forward on the trade liberalization agenda," he said..."
Sebastian Mallaby, in the Washington Post, points out that the administration has also, so far, failed to come up with a credible candidate for the head of the World Bank: "Clueless On the World Bank". And it's known for years that that appointment would be coming up. What is the status of administration thinking on the WTO Director General choice?

Bush Administration Challenge to Cotton Subsidies

The Bush Administration's February budget proposals included cuts in agricultural subsidies.

Dan Morgan reports on the Administration's challenge to cotton subsidies, in Tuesday's Washington Post: An End to Days of High Cotton?".

Morgan notes that the challenge to cotton is a challenge to a "core GOP constituency":
    "A Bush administration proposal that would cut billions of dollars in subsidies to big cotton growers has struck at a core GOP constituency, setting off a battle in Republican congressional ranks that pits budget cutters and prairie-state populists against traditional agricultural interests...

    ...As part of its 2006 budget proposal, the Bush administration would trim benefits for growers of most staple crops, including wheat, corn and soybeans. But economists and officials say the hardest hit would be the big producers of cotton in Republican strongholds of Texas, Mississippi, Arkansas, Tennessee, Alabama and Georgia. Large-scale operators in California and Arizona would also be affected..."
Later he discusses the size of the subsidies, and their distribution among recipients:
    "... Agriculture Secretary Mike Johanns, former governor of the major farm state of Nebraska, said one reason the administration came to believe that subsidies should be limited is that "very large sums of money were going to a very few."

    Two-thirds of the nation's 2.1 million farmers receive no subsidies, either because the crops they grow are not eligible or because they are too small and marginal to qualify. In the case of cotton, the proportion of federal aid going to large operators is unusually lopsided. One percent of those receiving subsidies collected 28 percent of the money paid out between 1995 and 2003, according to the Environmental Working Group. In Mississippi, seven farms out of 10 receive no subsidies.

    Nevertheless, large cotton farmers say they need the aid to cover high costs and compensate for depressed world prices.

    About $16 billion of the $103 billion in farm subsidies paid out between 1995 and 2004 went to cotton growers, according to the Environmental Working Group. But in the past several years, the cotton industry has become the largest recipient, according to USDA figures, because the aid increases as world prices drop...

    ...It costs an average 65 cents for a farmer in the United States to produce a pound of cotton; the adjusted world price in late February ran less than 40 cents. This has made U.S. cotton growers unusually dependent on the government. A program called "Step 2" essentially subsidizes cotton exports and protects home producers from foreign competition.

    Step 2, which has cost taxpayers more than $2 billion since 1990, pays a rebate to textile mills that buy U.S. cotton when foreign cotton is cheaper. Brokers who sell U.S. cotton abroad for less than what they paid at home can get the government to reimburse them for the difference.

    By taking advantage of a raft of federal subsidies and legal loopholes, cotton farmers can boost their income to more than 70 cents a pound -- double the recent world price. Given this dependence, the stakes for the cotton industry in the coming battle are high. Without the safety net, some analysts contend, many of the 25,000 U.S. cotton growers would switch to crops such as soybeans or vegetables or quit farming..."
It's hard to see a national security interest in cotton subsidies:
    "But Grassley [Senate Finance Committee Chairman Charles Grassley R-Iowa] has made clear that cotton lobbyists have a tough fight this year.

    "We have a farm program for two reasons, and cotton doesn't fall into either. One is food security for the American people and the other is national defense," Grassley said. "Napoleon said an army moves on its stomach. I can't eat cotton."

The WTO Director-General Race Candidates

Paul Geitner provides an overview of the WTO Director-General race in the International Herald Tribune on February 19: High stakes in race to head the WTO .

This is a nice article, with a lot of background, and reports on interviews with all four candidates.
Seixas Corrêa
    "Seixas Corrêa stressed that he was not running as an individual, but as the representative of Brazil, which emerged at the 2003 Cancún meeting as a powerful voice for big but still developing economies in the world in a fresh grouping known as the Group of 20. "You cannot separate the person from the country," he said.

    He also makes no bones about the fact that Brazil believes that, with the top jobs at the International Monetary Fund and the World Bank securely in the hands of the West, it should cede the WTO to a developing country candidate "for reasons of balance."

    That sort of perceived advocacy, however, may grate on others and render him unacceptable for a post that is supposed to represent all members equally, trade experts say."
Jaya Krishna Cuttaree
    "Similarly, Cuttaree of Mauritius is seen by those handicapping the race as a long shot despite probable backing from the most countries, mainly in Africa, the Caribbean and the Pacific. Those countries are usually viewed as eager to preserve some preferential treatment they enjoy from Europe as former colonies - an advantage other WTO members consider unfair, and counter to the concept of free trade."
Cuttaree objected to this free trade reference in a subsequent letter to the editor: "Heading the WTO".
    "Heading the WTO

    I was recently pegged in your pages as a "long shot" candidate for director general of the World Trade Organization with a background - I'm from Mauritius - that may lead some to question my commitment to free trade ("High stakes race to head the WTO," Feb 22). I wish to make very clear that I have a strong - and longstanding - commitment to free trade.

    The backing of my candidacy by WTO member countries from Africa, the Caribbean and the Pacific, would not connect me to an antitrade position. Presuming that I may be antitrade because of where I come from would be unfair and an inaccurate conclusion to draw from my record.

    I am wholeheartedly committed to the underlying principles of the World Trade Organization. I have devoted my life to achieving the integration of my country and region into the global economy. I have worked for a strengthened WTO that accommodates the interests of all of its members. In recent years, my role as a bridge-builder between the rich and poor countries at the level of the WTO has helped to move toward the successful completion of the Doha round of talks on international development.

    An effective and equitable multilateral trading system is in the general interest of every member.

    The kind of politically sensitive issues that are on the WTO agenda today, along with the developmentally diverse character of the membership, call for a candidate who, above all, understands the role that a constructive process of negotiation and compromise must play in the international economic order.

    Jaya Krishna Cuttaree, Port-Louis, Mauritius The writer is the minister of foreign affairs, international trade and regional cooperation of Mauritius."
Returning to Geitner's article: Carlos Pérez del Castillo
    "That leaves two front-runners: del Castillo from Uruguay, who has trumpeted his support not only from Latin America but also big free-traders like Australia and New Zealand, and Lamy, a Frenchman backed by the entire, 25-nation EU.

    Del Castillo, who was in Washington this week making speeches and meeting members of Congress, stresses his insider status from a long career in Geneva.

    "I think I can get on with things since I have the credentials, the knowledge and commitment to be working on Day One," he said. "I feel very competitive."

    While he insists the campaign is not a "confrontation between candidates from the north and the south," he also highlights his first-hand knowledge of developing country issues as an asset."
Pascal Lamy
    "That grates on Lamy, who pointedly notes that the job description makes no reference to nationality.

    "The EU is not the bad guy," he said, pointing to initiatives he undertook as trade commissioner - often at great political cost - in everything from putting the EU's sacred farm subsidies on the block to increasing market openings for the poorest countries and improving access to medicines.

    "I took a number of hits, notably from my home member state, because of the way I ran notably the agriculture side of the negotiation," he said. "So if the question is whether I can distance myself from a constituency, just look at the track record."

    Lamy also benefits from his relatively high-profile and close personal relationships, not least with his good friend and sometimes jogging partner Robert Zoellick, whose promotion from U.S. trade representative to deputy U.S. secretary of state was approved by the Senate on Wednesday.

    "Influence is something you have to earn and make bit by bit," Lamy said. "And I think it's something which I reasonably know how to do."

    Whether he gets a chance to do so depends on how much members are willing to overlook his more controversial associations with Europe, which has a penchant for including environmental factors in trade decisions, and a hard-core resistance to genetically modified crops." "

Interview with Pascal Lamy

Amitit Sen of India's Financial Express interviewed WTO Director General candidate Pascal Lamy, during the latter's recent visit to New Delhi: "The Monday Interview: Pascal Lamy. ‘Developing countries must feel that they own the (WTO) system’".
    "As EU trade commissioner, you promoted EU’s cause at the WTO. Now, as one of the contestants for the DG’s post, you will be required to take the interests of all countries into consideration. How difficult will this be for you?

    The criteria for selection of DG lays great emphasis on experience. And there is no way to get experience other than being a trade negotiator. Everybody begins with fighting a corner. However, there is a big difference between fighting a corner and fighting the system. It requires a change in mind-frame. I, as EU commissioner, have already walked part of the road. In the EU system, you start with the national corner and then move to the EU corner. For example, in agriculture, I would not have agreed to zeroing of export subsidies if I had been fighting for the French. So, I think, I already know how to factor in larger interests.
Periodically negotiations among the large number of WTO countries become difficult. At these times, a subset of the countries, hopefully representative of the different interests in play in the issue, will carry out a separate negotiation, and try to hammer out a position that may generate a consensus in the larger group. These are called "green room" negotiations. There is actually a green conference room in WTO headquarters which has given the name to this general procedure. Green room negotiations have been controversial in the past, and Lamy was asked about them.
    "The approach of arriving at decisions through greenrooms has been criticised on the grounds that it is too exclusive. Your comments.

    In some sense, a group like the greenroom is necessary. You have to test the possibility of convergence of agreements on a number of topics. It cannot be done in a room with 150 ministers. The problem is not with the room. It is one element in the process of convergence. If transparency is ensured, and if people who interact in the greenroom also interact with their constituencies, it works.

    In July last year, we reached an agreement as there were people speaking for the G-20, G-90, G-33, G-10, the US and the EU. There was actually a much improved process in place. This sort of a gathering is unavoidable in a consensus-building process. The question is whether these representative groups can pre-frame the line of negotiations with their constituencies."

Time Required to License (and End) a Business, China vs. India

    "Indian bureaucracy continues to slow things down. According to a World Bank “Investment Climate Assessment” published last November, it takes 89 days to secure all the permits needed to start a business in India, compared with 41 in China. Insolvency procedures take ten years, compared with 2.4 in China."
From a new Economist survey on India and China: "The Tiger in Front"

Anti-dumping by Developing Countries

The use of anti-dumping laws to restrict imports is increasing, and the increase is taking place in developing countries rather than developed countries.

The following WTO data comes from a recent report by the Swedish National Board of Trade ("The Use of Antidumping in Brazil, China, India and South Africa - Rules, Trends and Causes"):

The authors caution that the "measures in force" data "must be read with caution as the reporting of antidumping measures in force is given by individual countries and vary in quality."

When goods are sold in a foreign country for less than they are sold at home, the goods are said to be dumped.

Anti-dumping laws attempt to identify dumping that harms domestic industries that compete with the imported goods, and to offset it with tariffs on the "dumped" goods.

There are all sorts of tricks that can be played in measuring and comparing foreign and domestic prices. Anti-dumping is easily abused, and is often exploited by domestic industries that want to reduce competition from imports.

The trade agreements underlying the WTO regime provide a set of rules to regulate member nation anti-dumping laws, and to limit abuse. These rules could be reformed to help prevent a wider range of abuses. The WTO's anti-dumping rules are on the table now, as part of the Doha Round of negotiations. The U.S. is not an advocate of refrom.

But maybe it should be. Other countries can use anti-dumping measures to restict import competition as well as we can. In fact, as shown above, the use of anti-dumping measures has been growing in potential markets in recent years.

Among the Swedish Board of Trade report's findings:

    • "Since 1995 there is a general upward trend in both initiations and in the number of anti-dumping measures in force by developing countries. Of the four countries examined in this paper - Brazil, China, India and South Africa - India and China are among the new users of antidumping. Brazil and South Africa, on the other hand, have for a long time been traditional users. India is the largest user in relation to its imports.

    • The four countries examined targets developing countries to a lesser extent than industrialised countries do.

    • For all four countries rapid tariff reductions and increased market access during the 1990’s partly explain the increasing anti-dumping usage. In China and India an increase in imports might also explain the increased use of antidumping.

    • In India and South Africa especially, firms that have enjoyed a monopoly-like situation in their home markets prior to liberalisation have applied for antidumping protection post-liberalisation. In India antidumping petitions are often made by a one single domestic producer with a market share of above 90%.

    • The retaliation motive could also explain the use by these countries of antidumping, since these countries, especially China, are also frequent targets of antidumping investigations.

    • The EU is second only to China as the most frequent target of antidumping measures. As developing countries are increasing their imports from the EU they are also increasing their use of the antidumping instrument. There is thus a risk that the use of antidumping will affect European exports negatively.

    • Within the context of the Doha Round it is likely that the countries that consider themselves to be primarily targets of antidumping rather than users, among them Brazil and China, could agree to stricter rules.

    • The continued use of the antidumping instrument by industrialised countries undermines the good faith negotiations on special and differential treatment."
The information about the Swedish Board of Trade study via Trade and Law Centre for Southern Africa

Endorsements for Jaya Krishna Cuttaree

Lekopanye Mooketsi reports for Mmegi (a newspaper in Botswana) on the activities of the Southern Africa Development Community (SADC).

SADC is an international organization of Southern African countries, whose objective is to relieve regional poverty. Its 14 members are Angola, Botswana, République Démocratic du Congo (DRC), Lesotho, Malawi, Mauritius, Moçambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe

Among other things, SADC has endorsed Jaya Krishna Cuttaree for Director General of the WTO: " SADC approves expenditure for 2005/06 "
    "The SADC candidate for director general of the WTO, Jaya Krishna Cuttaree, the Minister of Foreign Affairs and Regional Cooperation of Mauritius, has also been endorsed as the preferred candidate for the African Union, the African Caribbean, Pacific and Asian countries.

    [SADC executive secretary Prega Ramsamy - Ben] said despite adverse media reports from the Western media, the SADC region is confident that the candidate will emerge victorious, given the large body of support already declared and the candidate’s wide experience in WTO matters."

The Line Standers of DC

A "line standing" industry emerged as an adjunct to lobbying in the Washington, D.C. of the early 1990s. Libby Copeland describes the business in today's Washington Post: "The Line Starts Here"
    "...Waiting 10, 20, 30 hours outside the House or the Senate, holding a place in line so some well-pressed lobbyist can sit upfront at a congressional hearing and bat eyes at all the right people -- this is democracy, or something like it. ..

    We're talking public hearings, but John Q. would have trouble getting into many of them if he ever showed up. He'd be too far back in line, assuming he didn't have $35 an hour to pay a line-standing company, or the gumption to play line-stander himself...

    ...A line-standing company may pay a worker $10 an hour, $15 if he's a manager. He's holding a spot for a lobbyist or lawyer or legislative assistant whose sleep is much more valuable, who wants the luxury of showing up half an hour before the hearing. Some of the clients just want into the hearing room; others are very particular about getting good seats...

    ...There's a lot of turnover in the line-standing business, but there are also people who've been doing this, off and on, for 10, 15 years. (Line-standing companies have been around since at least the early '90s.) It's seasonal work, based on when Congress is in session, and it's last-minute and usually at most three days a week, since members like to take long weekends. But over the years the old-timers have gotten to know the halls of government well. They know the tunnels and the shortcuts, which hearing rooms are bigger than others, and which ones will be a squeeze.

    Some of this institutional knowledge was honed during the glory days of line-standing. Before Sept. 11, 2001, the line-standers say, there was less supervision on the part of Capitol Police, and competition was fierce. Smart line-standers would bypass their colleagues by entering the office buildings through less-used entrances. There would be dashes through underground tunnels, sometimes ending with headfirst dives, or so the lore goes. One company went so far as to recruit college track runners.

    Nowadays, there's no running. Everyone goes in the same entrance. The order of the line is sacrosanct...

    Line-standing companies tend to go by abbreviations (CVK, QMS, CSC, JEH), which makes them sound at least as obscure as most federal agencies.

    The people who run these companies are often bad-mouthing one another, and when they're not doing that they're copying one another. Some of the bosses have recon people, who sweep past the line-standing hub in the days before a hearing to see if any rivals have set up shop. If things get tight and there aren't enough bodies, some bosses have been known to recruit homeless people -- or at least, so says the competition...

    ...Hearings are sometimes shown in overflow rooms or on the Internet, but for many lobbyists, a virtual presence is not good enough. If lobbyists want to network, they'd better be in the room. If they want to take notes comfortably, they'd better be sitting. If they want to be noticed by staffers, they'd better be sitting up front. There are subtle cues to notice, like who's whispering excitedly to whom. There is cachet...

    ...With 30, 20 minutes to go, everyone gets out signs that say the names of the companies they are waiting for. The lobbyists approach, scanning the signs..."
Revised March 2, 2005

ABARE's Guide to the Doha Agricultural Negotiations

The Australian Bureau of Agricultural Economics (ABARE) has a good introduction to the interests in play in the Doha Round agricultural negotiations, in its March issue of Agricultural Commodities: "WTO Trade Negotiations. Principles and Politics Affecting Agriculture" (by Ivan Roberts, Roneel Nair and Andrew Jacenko).

On reason it'll be hard to reduce developed country farm subsidies - the transitional gains trap:
    " can be observed that, once established, agricultural protection is very difficult to phase down or eliminate. A primary reason for this is what was termed by Tullock (1975), the ‘transitional gains trap’. Tullock examined why many government programs do not seem to help farmers more than temporarily and concluded that the support was capitalised into fi xed farm assets, primarily land. Over time, when farms were sold, the price refl ected expectations of two streams of income, one from the market and one from the government support. If support were withdrawn, however, the value of the farm and the wealth of the purchaser would fall.

    Governments are reluctant to be seen to be responsible for adversely affecting the wealth of constituents, and those affected by the removal of support would exert as much political pressure as possible to prevent it. Consequently there is a strong propensity for support to become institutionalised, and in some societies it is even
    rationalised as necessary and desirable."
Here's one rationalization:
    "In recent years there has been a trend toward using the concept of the ‘multifunctionality’ of agriculture as a reason for continuing to protect agriculture. Under this concept, agriculture is considered to have qualities of value to societies that are well beyond the provision of food and fibre as reflected in prices for agricultural products. Those qualities include such things as the value of rural landscapes, the cultural importance of maintaining a farming way of life and agriculturally based rural communities and various environmental benefi ts attributed to farming.

    These arguments have been most widely used in western Europe, where much is made of the importance of the European system of farming. In Japan the concept has been taken even further, with links being drawn between agricultural protection and the prevention of flooding of major communities.

    Such arguments depend on the limitations of using priced values alone as indicative of societal values, with the implication that unpriced values are strongly positive and warrant government support policies. They tend to downplay negative unpriced values such as pollution from highly supported intensive agriculture and loss of native habitats as a result of agricultural development."
The United States Department of Agriculture's Economic Research Service (ERS) has an article on "Farm Programs, Natural Amenities, and Rural Development" (by David McGranahan and Patrick Sullivan) in the current issue of its house journal Amber Waves .

McGranahan and Sullivan cast doubt on at least one of the tenets of multifunctionality, the visual appeal of farming landscapes, at least among the U.S. population:
    "...Studies of landscape preferences have found that people rate landscapes with open vistas and groves of trees more highly than those with either few trees or complete forestation. Except for farmers, who have a professional interest, people tend to rank landscapes dominated by farmland relatively low in appeal (although above developed land). Cropland in particular tends to have relatively little variation and to be inaccessible to the public."
This is an interesting article more generally, raising questions about the significance of agricultural support for the economic development of rural counties:
    "Do farm program payments boost the vitality of rural communities? We might suppose that, by maintaining farm incomes, these payments allow participating farms and their households to remain viable and to continue purchasing local goods and services. Thus, these payments may help sustain the local economy and its population base... Yet, despite decades of farm program payments, economic researchers have been unable to establish that these payments help sustain farm-based communities. Many areas that have consistently garnered high payments from farm programs have lost population decade after decade, even during periods when most other rural areas were gaining population.

    Recent ERS research on the differences in population change between counties receiving high government payments and other rural counties found that these differences were associated with several nonagricultural factors. In particular, natural amenities—temperate climate, a mix of forest and open space, lakes—are highly correlated with population and employment growth, and these amenities are relatively scarce in agricultural areas with substantial farm program payments. Other factors, such as remoteness from major cities and sparseness of settlement, also limit the ability of these areas to attract new residents and nonfarm businesses. In short, the constraints on economic growth in these areas are less related to agricultural jobs and income than to geography and landscape. Farm programs, as they are currently structured, do not address the causes of long-term population decline experienced by many farming communities."
Thanks to the New Economist for the "heads up" on the ABARE article:New Economist: Doha - What's it all about?

Try Doing Business in This Environment

Arkady Ostrovsky reports on the difficulties faced by small businesses in today's Russia, in the Financial Times : "Investment dries up as rule of law seeps away in Russia" .

The national government's looting of Yukos has created a precedent that's being followed at the local level:
    "...At the top end of the spectrum is Yukos, the oil giant that has been dismantled by the state and had its assets re-distributed in favour of former members of Russia's security services who claim they are protecting state interests.

    That case has attracted media attention but hundreds of thousands of tiny Yukos affairs are going on all over Russia.

    Nikolai Gavrilov, a former prosecutor and the president of Samara's Centre for Legal Rights, which helps businessmen fight corruption, says: "Everything that is happening in the capital feeds through to the regions.

    The attack on Mikhail Khodorkovsky (former Yukos chief executive) demonstrated to local authorities that if you can do it to him in Moscow, you can do it to everyone in the regions." "
Here's an example of what goes on:
    "Ms Ananyeva and her business partner should count themselves lucky: while they have probably lost their investment, Maria Voronina, the 54-year-old owner of a small art gallery in the centre of Samara, almost lost her life. The gallery, which she converted from an abandoned Soviet canteen for $50,000, has been open since 1992. But a few months ago several burly men turned up asking to be shown around. "They talked among themselves about opening a casino here," she explains. "They asked me to sublet the space but I refused."

    Ms Voronina discovered a few weeks later that the gallery had been put up for sale. "I went to the mayor's office and told them that they can't do that, that I would complain."
    That night she came home late after seeking advice from some lawyer friends. Three men in black were waiting outside her house. One put a gun to her head, the other two started to kick her. Some hours later she woke in a puddle of blood, heavily concussed..."
It shouldn't be a surprise that "businessmen in the Samara region are investing less than they used to: last year the growth rate of domestic investment halved from 5.1 per cent to 2.6 cent."

Early TV

Geitner Simmons, at Regions of Mind, describes the early days of TV, in the U.S. and Nazi Germany: "Watching TV in 1940" .

Will Uruguay's New Socialist Government Continue to Back Pérez del Castillo?

Last October, the Uruguayan left won national elections - Socialist Tabaré Vázquez was sworn in as President today.

This story from the New York Times places the left's victory in Uruguay in the context of a continental move to the left: "With New Chief, Uruguay Veers Left, in a Latin Pattern" . Here's the Time's story on the inaugural ceremonies: "Leftist Chief Is Installed in Uruguay and Gets Busy on Agenda".

The second Times' story reports on the new administration's first actions. The Times' doesn't report on the administration's attitude towards Uruguay's candidate for Director General of the WTO.

The Uruguayan candidate, Carlos Pérez del Castillo, was nominated by the preceding centrist government. As Michael C. Boyer, James G. Forsyth, and Jai Singh reported for Foreign Policy ("Who Gets to Run the WTO?"):
    "Uruguay’s new leftist government, led by President-elect Tabare Vazquez, will assume power on March 1, and it is rumored that it may decide to back the Brazilian candidate, Luiz Felipe de Seixas Corrêa, who is more closely aligned with the leftist trend away from neoliberal economics and free trade."

The Tiffin Carriers of Mumbai

From John Palmer at Eclectic Econoclast "Factor Substituion: the Tiffin of Mumbai"