EDITORIAL: Appointing Okonjo-Iweala should be WTO’s first step towards reform
Global trade watchdog’s antiquated rule book needs updating to make it relevant for the modern economy
Ngozi Okonjo-Iweala, a well-known figure in international economic circles having held top positions in the World Bank and the Nigerian government, looks set to become the next director-general of the World Trade Organisation (WTO).
The widely expected appointment, which will make Okonjo-Iweala the first woman to lead the organisation, should be the first step for world leaders to reform and remodel the global trade watchdog’s antiquated rule book to make it relevant for the modern economy.
Okonjo-Iweala became the obvious front-runner after her South Korean rival withdrew on Friday and the US reversed its previous opposition to her assuming the leadership role of the body, the credentials of which as the pillar of the global economic order have taken heavy, some would say fatal, blows in recent years. Perhaps the most striking example of how the WTO has broken down is the fact two of its biggest members, the US and China, engaged in a trade war, violating the body’s rules with tit-for-tat tariffs.
Out of frustration, the WTO director-general, Brazil’s Roberto Azevedo, resigned in August 2020, a year before his term was due to expire and months before the organisation lost its ability to intervene in international trade disputes after its appellate body, which acts as the equivalent of the Constitutional Court for global trade, was left without judges in December.
There’s no denying that the US, especially with Donald Trump’s protectionist “America First” wall around the world’s biggest economy, was instrumental in paralysing the WTO because Trump repeatedly blocked the appointment of judges to the appellate body as part of a calculated plot to avoid abiding by its decisions and to continue to wage the transatlantic war.
The most notorious episode was it bowing to pressure from pharmaceutical companies to extend patents on life-saving medications in the early 2000s
But the WTO, which was embraced by dozens of developing countries when it was born in 1995, because of the potential to challenge stronger countries such as the US in front of impartial judges, has been sinking for much of the past decade.
It has failed to complete the last round of negotiations under the Doha Development Agenda, initiated in 2001. The WTO has made slow progress on a work plan that includes a range of issues such as fisheries subsidies.
It has also been under attack for being used by companies that lobbied their governments to rewrite rules. The most notorious episode was it bowing to pressure from pharmaceutical companies to extend patents on life-saving medications in the early 2000s.
Even during the Covid-19 pandemic dozens of countries imposed questionable controls on the export of face masks, protective gear, gloves and other medical supplies to mitigate shortages, strengthening the argument that the WTO is not up to the task as it faces the biggest challenge in its 25-year history. Its last notable success was the Trade Facilitation Agreement, a global accord meant to unleash trillions of rand in global trade, which entered into force in February 2017.
In Okonjo-Iweala’s own words in an opinion piece: “A moribund WTO does not serve any country’s interest. An effective, rules-based international trade system is a public good, and failure to revive it will undermine governments’ efforts to pull the global economy out of the recession caused by the Covid-19 pandemic.”
We could not agree more.
And the good thing is that it looks as if newly elected US President Joe Biden, whose administration quickly broke the WTO leadership logjam with the endorsement of Okonjo-Iweala last week, will pursue a multilateral framework rather than threaten to leave the room, as his predecessor did.
For SA, it is time to update its position on what promises to be a modern watchdog on international trade. Our position is based on the 2001 Doha Round, when the internet, let alone
e-commerce, barely existed in developing countries and issues such as climate change were not high on the agenda.
We need to tweak our agenda not only to champion the core interest of developing countries on the continent, but also to build in pressing issues in global trade, which is increasingly being shaped by the digital economy and climate change considerations.
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