WTO appoints Nigeria’s Ngozi Okonjo-Iweala chief amid calls for reforms in multilateral trading system

Dr Ngozi Okonjo Iweala
Dr Ngozi Okonjo Iweala

Members of the World Trade Organization (WTO) on Monday agreed by consensus to appoint Nigeria’s Ngozi Okonjo-Iweala as the organization’s seventh director-general.

After taking office on March 1, Okonjo-Iweala will become the first woman and the first African to serve as the chief of the 26-year-old global trade body, which has been leaderless for almost six months after Roberto Azevedo stepped down on Aug. 31, 2020.

The appointment came as the world’s multilateral trading system is grappling with a myriad of challenges ranging from reform pressures to rising protectionism and a pandemic-induced recession.

“In recent years, the multilateral trading system has been going through difficult and challenging times. But, in my view, the world now needs, more than ever, a reinvigorated WTO,” Okonjo-Iweala underlined in her campaign speech.

The appointment of the new WTO chief by consensus has been widely seen as a positive sign that the multilateral trading system could be restored in a constructive manner and gain further momentum.

Applauding the “timely” appointment, China’s Ambassador to the WTO Li Chenggang said, “the collective decision made by the entire membership demonstrates a vote of trust” not only in Dr. Okonjo-Iweala herself, but also “in our vision, our expectation and the multilateral trading system that we all believe and preserve.”

“Dr. Okonjo-Iweala, who over the years set major records of economic reforms in Nigeria as minister of finance, and later minister of foreign affairs, will excel in her new position and validate the global mandate of repositioning and strengthening the multilateral institution for the greater good of all,” Nigerian President Muhammadu Buhari said.

In a statement, Buhari voiced confidence that Okonjo-Iweala’s track record of “integrity, diligence, and passion for development will continue to yield positive results and rewards to mankind” as she takes up another “onerous task of service to the world and humanity.”

WTO spokesperson Keith Rockwell said the next year or two will be a window of opportunity for multilateralism, and that WTO members should seize it in order to achieve some tangible positive results. “I think we need to take advantage of this opportunity, and deliver something for the people of the world, because I think they’re counting on us,” Rockwell said.

The urgent need for sweeping reforms, especially those of the organization’s three major functions of dispute settlement, multilateral trade negotiations and trade policy monitoring, is posing a challenge for Okonjo-Iweala. The reform process may involve painful, comprehensive and large-scale restructuring and reorganization. The WTO’s dispute settlement body is currently paralyzed because it does not have enough judges.

The Appellate Body, considered as the supreme court for global trade disputes, is supposed to have seven judges and needs a minimum of three to function.

The U.S. administration under former President Donald Trump blocked the nomination of new judges, leaving the Appellate Body unable to hear new disputes. In an interview with Xinhua in August 2020, Okonjo-Iweala viewed fixing the still paralyzed dispute settlement system as one of her top priorities.

“If you have a rules-based organization, you must have a place where rules are arbitrated and that’s what happens with the dispute settlement system. So restoring that will be a top priority,” she said.”The dispute settlement system is about bringing countries back into compliance.

There needs to be some hard thoughts about what can be accomplished there, and not some short-term fix,” said Simon Evenett, professor of international trade and economic development at the University of St. Gallen, Switzerland.

Last year, the European Union and other WTO members set up a temporary arbitration system that allows them to overcome the current paralysis and solve trade disputes among themselves.

“The world has moved on. The question is whether trade diplomats can leave their comfort zone and embrace the realities of 21st century technological and geopolitical rivalry,” Evenett said.

“The WTO rules need to be updated to 21st century issues,” said Okonjo-Iweala, enumerating the areas such as digital economy, green economy, women and trade, as well as small and medium-sized enterprises as some of her priorities as the new director-general.

However, Pascal Lamy, president of the Paris Peace Forum and a former WTO director-general, underlined the member-driven nature of the organization. “It depends mostly on the members agreeing to update the WTO rulebook, and only marginally on the director-general. They decide, not her.”

Azevedo has previously argued that the WTO is “an anchor of predictability and certainty in a fast-changing global economy.”

For his successor, another major challenge is to ensure the free flow of global trade, maintain the stability of the global trading system and promote the sustainable recovery of the global economy.

In October 2020, the WTO forecast a 9.2-percent plunge in the volume of world merchandise trade for 2020, followed by a 7.2-percent rise this year.

At the same time, the International Monetary Fund (IMF) warned that renewed waves and new variants of the novel coronavirus would continue to weigh on the global economy.

Meanwhile, some countries have escalated protectionist measures during the pandemic out of concern over the domestic supply of medical material and other necessities.

“There are very weak rules in terms of export controls. On the other hand, there is a lot of flexibility in the area of intellectual property, which will be important when the vaccine is developed,” Evenett said.

Okonjo-Iweala vowed to ensure that the multilateral trading system and the rules of the WTO are “conducive to making medicines and medical supplies accessible to the countries that need it.”

She also stressed the importance of “bridging the divide,” such as the digital gap between developing and developed countries, in achieving a more sustainable and inclusive global recovery.

“I think this can be done in concert with other organizations such as the World Bank, regional development banks … and with the IMF, to see what we can deliver to support in bridging this divide,” she said.

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