REVIEW: Okonjo-Iweala needs to clear WTO’s mess before any in-roads can be made

The mandate of the World Trade Organisation (WTO) seems relatively straight-forward to achieve on the surface —to make and enforce the rules of the road for global trade and resolve problems when they arise.

However, the new Director-General of the organisation, Ngozi Okonjo-Iweala had laid out loftier objectives even before she took the helm of affairs on Monday, February 15.

According to Okonjo-Iweala in an interview granted to TIME Magazine on January 29, global trade can help ease the COVID-19 pandemic, tackle climate change and restore faith in the system of cooperation that has faltered in recent years. The WTO has a central role to play as the facilitator, Okonjo-Iweala says. “If the WTO did not exist,” she says, “you would have to invent it.”

But to get the WTO to a place where it can execute on that agenda will take some work. And the only way to get the WTO back on track, she says, is to remake the institution. “The world needs the WTO,” she said. “And the WTO needs extensive and serious reform.”

Getting to work in order to entrench equitable global trade practices

But even with Dr. Okonjo-Iweala at the helm and the renewed support of the Biden administration, the World Trade Organization, which was founded in 1995 to ensure that trade flows as smoothly and freely as possible, will face steep challenges surrounding its effectiveness as the world’s trade arbiter.

Trade negotiations, including an effort to restrain harmful subsidies given to the fishing industry, have dragged on without resolution. A key part of the organization for settling trade disputes, called the appellate body, remains crippled after the Trump administration blocked appointments of new personnel. And there are deep divisions over whether rich and poor countries should receive different treatment under global trade rules.

There is also growing consensus that the World Trade Organization has failed to police some of China’s worst economic offenses, which many in the United States consider the world’s biggest trade challenge today. And there is deep uncertainty about whether the group can be overhauled to address those shortcomings.

The Trump administration spent the last four years mostly criticizing or ignoring the World Trade Organization, ultimately weakening the institution by carrying out its most prominent trade policies outside of its boundaries. Rather than working with the World Trade Organization, President Donald J. Trump took on trading partners like China and the European Union one-on-one, deploying hefty tariffs that those governments argued contravened the W.T.O.’s rules.

President Biden is likely to take a very different approach. He has criticized Mr. Trump for alienating allies and weakening the multilateral system, and is expected to make the United States a more active player in international groups including the World Trade Organization.

“There’s much mistrust within the WTO: it’s not just between the U.S. and China. It’s between the U.S. and Europe; it’s between Europe and China; it’s between developing and developed countries,” Okonjo-Iweala said. “Bridging the gap among all these groups, I think, is something that I can really bring.”

Cleaning up the immediate mess left behind by Trump will inevitably be high on Okonjo-Iweala’s agenda.

Okonjo-Iweala said the panel is ripe for change. “There’s criticism of the appellate body, the dispute settlement system,” she said. “That needs to be taken care of and reformed to a point where all members, big and small, believe and trust in the system and can use it.”

Outline of Okonjo-Iweala’s mandate for the WTO

The former Nigerian finance minister noted that many of the countries subject to WTO rules today were under colonial rule when the current international financial regime was established after World War II. “I think multilateralism itself has been under attack for some time—and I think that attack intensified in the last four years—but it’s been under attack because these institutions like the WTO were developed 76-77 years ago,” she said. “There are questions about the rules: how does this work? Is this fit for purpose?”

This means finding ways to ensure that small developing countries benefit as much from global trade as their wealthier counterparts. “They need a level playing field,” she said.

Okonjo-Iweala further revealed that her earliest priorities will be ensuring the free flow of vaccines, medicines and medical supplies to help deal with the pandemic and aid the global economic recovery. She has vowed to push for new trade agreements on fisheries and the e-commerce industry, and called for finding “solutions to the stalemate over dispute settlement.” She also said she would prioritize updating trade rules, encouraging members to be transparent and notify one another of changes to their policies, and strengthening the organization’s bureaucracy.

Okonjo-Iweala has spent recent years as a co-chair of the Global Commission on the Economy and Climate, an initiative of former high-ranking government officials, executives, and members of civil society working to make climate change a central consideration in global economic policy. She sees working at the WTO as an avenue to further that push.

When asked about the link between climate change and trade, she said that policymakers should consider policies to address the climate implications of the logistics conducting trade—namely, how goods are transported—as well as the carbon-content of traded goods themselves. In particular, she calls for a carbon tax, which she said “could be seen by finance ministers as another way of bringing in additional revenue whilst encouraging better economic behavior with respect to climate change.”

While climate is a clear focus for Okonjo-Iweala, the response to the COVID-19 pandemic is one of her utmost priority as she commences her leadership of the WTO.

In December 2020, Okonjo-Iweala wrapped up a five-year term leading the board of GAVI, the global alliance that helps developing countries secure access to vaccines. The organization, which works to distribute vaccines for diseases like measles, pivoted quickly last year to work on COVID-19 vaccine access in the developing world.

Today, there’s a significant gap in access to the vaccines between developed and developing countries despite commitments from leaders in the Global North to support wide access.

The WTO, Okonjo-Iweala said, can help ensure that vaccines and other treatments make it across the globe by pushing back against trade restrictions designed to keep supplies at home even when they’re needed elsewhere, and by working “with other organizations to improve accessibility and affordability of vaccines, therapeutics and diagnostics.”

Thorny challenges remain as Okonjo-Iweala finds herself in the middle of a whirlwind of global disputes.

However, various policy experts and renowned economists across the world are backing her to succeed while requiring her to bridge some of the biggest divides in 21st-century geopolitics.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now