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Stalemated world trade body nears choice for new leader

Herminio Blanco, Mexican candidate to head the World Trade Organization (WTO), speaks during an interview with Reuters in Mexico City Februa
Herminio Blanco, Mexican candidate to head the World Trade Organization (WTO), speaks during an interview with Reuters in Mexico City Februa

By Tom Miles

GENEVA (Reuters) - The World Trade Organization has overseen a 12-year stalemate in global trade talks. On Wednesday, it will decide whether an insider or an outsider is better placed to break the deadlock.

In Mexico's Herminio Blanco and Brazil's Roberto Azevedo, the WTO has a choice between two highly qualified Latin American trade diplomats who would bring very differing approaches to the job of replacing veteran WTO head Pascal Lamy.

Azevedo, Brazil's WTO ambassador and chief trade negotiator, has been closely involved with the trade body for almost its entire history since its creation in 1995.

Blanco, a former trade minister who negotiated the North American Free Trade Agreement with the United States and has spent the last 12 years in business, sits on the boards of a Mexican bank and a chemicals firm and advises companies on international trade.

The two are the last of a field of nine candidates hoping to succeed Lamy as director general (DG) on September 1.

As one of only two non-ministers in the race, Azevedo began as a relatively junior contender. But he was admired for his diplomatic skill, such as his success in getting the body to discuss currencies as a factor in trade - a toxic topic for some because it threatened to throw a slough of new disputes into the WTO, including simmering suspicions of China in Washington and criticisms of the U.S. policy of "quantitative easing".

Creativity is what the WTO needs from its new chief, trade experts say, because the job comes with little executive power and the director general must be able to make things happen without being able to tell the WTO's 159 members what to do.

Lamy has been unable to break the impasse in global trade talks during his eight-year tenure.

While Azevedo has pitched himself as a listener who will earn the trust of member countries by understanding their negotiating standpoints, Blanco says an outside force is needed to persuade governments to show flexibility.

The catalyst, he says, is business.

"One of the first targets has to be the United States," he told Reuters in an interview in February. "The private sector of the United States has to tell the government: You have to move in Geneva ... you have to be more reasonable in your positions, you have to get to the table and you have to negotiate."

The global trade talks that began in Doha in 2001 reached deadlock in 2011, forcing the WTO to focus on a far smaller package of trade reforms and prompting many countries to pursue bilateral and regional trade deals instead, such as the U.S.-led Trans-Pacific Partnership (TPP).

Even the smaller package of reforms - widely seen as a crucial first step - is proving hard to agree on. At the same time the WTO's global rules risk getting drowned out by the plethora of regional deals now being negotiated.

"Each candidate must give the impression that Doha is fixable, even though the post they seek can't deliver that," said Simon Evenett, professor of international trade at St Gallen University in Switzerland.

"Both must will the end without the means."

Richard Baldwin, a professor at the Graduate Institute of Geneva, said the United States was unlikely to be interested in any Doha deal until it was clear that TPP had either succeeded or failed, which was likely to take years.

"Thus one interesting question is what can the next DG do to keep the lights on in the organization and to maintain the WTO's reputation - to avoid it sliding into obscurity and irrelevance for anything other than dispute settlement," he said.

But Blanco believes the attitude towards trade has changed since Doha's demise and many countries now see it as a lever for economic growth, as shown by the ambitious plan for a transatlantic trade deal unveiled by the European Union and the United States earlier this year.

However such deviations from Doha remain contentious for many countries and if the European Union and United States are seen as backing Blanco, other WTO members are likely to organize in opposition, said Evenett.

"My money is on Azevedo winning. Azevedo has marinated in the juices of recent Brazilian protectionism, so can relate better to other WTO foot-draggers," he said. "Blanco is a true believer in liberalization, which most WTO members give only lip service to."

But Baldwin said Blanco's fresh perspectives made him a better candidate.

"The WTO needs someone to think outside the box to keep the institution alive while waiting for TPP to finish or die," he said.

(Editing by Michael Roddy)

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