The WTO Secretariat under new Leadership
On 1 March 2021, Dr Ngozi Okonjo-Iweala from Nigeria took office as the seventh Director-General (DG) of the World Trade Organization (WTO). She is the first woman and the first African to serve as DG of the WTO. Her term of office (which is renewable) will expire on 31 August 2025. Her appointment comes at a time when the multilateral trading system faces major challenges, compounded by an upsurge in restrictive measures implemented in response to the COVID-19 pandemic, and a steep decline in global trade. The 12th Ministerial Conference (MC12) has been delayed at least until end-2021 and the Appellate Body (AB) of the WTO cannot function because the Trump administration refused to cooperate in the appointment of new AB members.
What is in store for the WTO and the multilateral system it embodies? Some are of the view that the WTO must be “transformed” and that there must be a “reconstruction” of the world’s trade architecture. Others emphasize the need to restore the broken trust amongst the member states of the WTO and to update global trade rules to cope with 21st century realities and priorities.
The new DG faces many urgent tasks, and they fall in different categories. Since the WTO is a member-driven arrangement, her main challenge is to mobilize support for workable solutions and incremental progress. There are immediate challenges to be tackled such as the push for a waiver by the TRIPS (Trade Related of Aspects of Intellectual Property Rights) Council to suspend patents and other intellectual property rights on COVID-19 vaccines and related health products. Several African governments as well as many Least Developed Countries in South East Asia now support this initiative, proposed by South Africa and India in October 2020. A breakthrough early in her term will be a morale booster.
The internal functioning of the WTO presents another challenge. Governance issues are a concern; as a result of the poor compliance and notification record now seen in the WTO. The WTO also faces challenges of a more systemic and long-term nature. Many developing WTO members (African countries in particular) want a revival of the Doha Development Agenda (DDA). This will be very difficult. It is unlikely that the DDA will be taken on board again by the whole membership as the complete package of reforms and new commitments envisaged in 2001 when this agenda was adopted. The world has moved on and most developed countries have little appetite for the multilateral reforms as then formulated. They see more urgent new needs such as rules for digital trade, fishery subsidies, more transparency regarding China’s domestic measures and subsidies. However, the legitimacy of the WTO might be at stake if the most urgent needs of developing nations are not accommodated. Dr Ngozi Okonjo-Iweala is aware of the dangers for the WTO of a rich-poor divide. Her first official visit was to Nigeria.
The election of President Biden introduces an important new factor and a sign of hope. He has said that his administration will work with the new DG and pursue joint solutions. President Trump favoured unilateralism and accused the WTO of being incapable of dealing with the alleged unfair trade practices of China. He also refused to cooperate in the appointment of new AB members. President Biden has a different approach and has been described as a strong supporter of multilateralism. Washington may become an important ally of the new DG. However, there are limits when it comes to United States’ concerns about China’s compliance with the WTO rule book.
The new American stance is a positive development but not a guarantee that urgent WTO reforms, to the satisfaction of all important players, are on the cards. The Biden administration will also bring its own agenda. When Vice President Kamala Harris recently spoke to Dr Okonjo-Iweala by phone, a variety of topics such as health, technology, the environment, and human rights were mentioned. These are important issues and anchors of President Biden’s international policy. However, this agenda will not meet with China’s support, at least not if human rights concerns become linked to surveillance of China’s domestic practices. It may make WTO reforms more intractable.
The world needs a forum such as the WTO. In its 25 years of existence, it has helped to remove barriers to trade for both goods and services and reduced the threat of trade wars. This is the forum where new multilateral trade agreements can be negotiated, disputes can be resolved in a rules-based and transparent manner, and domestic measures impacting on trade must be notified. All these important functions are presently under pressure. One of the explanations is that the conditions under which China joined the WTO have since changed and so has China’s global role and power.
New needs and technological developments such as e-commerce and digital trade must be accommodated as part of the disciplines covered by the WTO legal instruments. To keep playing its vital role, the WTO must not only keep pace with many dynamic developments for which multilateral disciplines are required, it must also resolve the obstacles in the way of finding a new consensus.
This will be difficult. The WTO is a member-driven organization and its 164 members (with about 20 new membership applications in the pipeline) take decisions on the basis of consensus. But the consensus rule can cause delays and deadlocks. The member states are at different levels of economic development and have unique needs.
It will not come as a complete surprise if the WTO of the future will include the co-existence plurilateral arrangements for specific matters alongside the multilateral agreements. The conclusion of regional and bilateral trade agreements shows no sign of slowing down – they are a substantive feature of international trade regulation. As major WTO negotiations have stalled in recent years, many countries have turned to bilateral or plurilateral trade discussions and arrangements. The real WTO challenge may be to design procedures and linkages for horizontal interaction.
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