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YONELA DIKO: Ngozi Okonjo-Iweala and the WTO in the era of Trump

OPINION

Nigeria’s former Finance Minister and former World Bank official, Ngozi Okonjo-Iweala, who is now the chairperson of gavi, a vaccine-finance agency, is still the most favoured candidate to lead the World Trade Organization (WTO), despite the latest veto by the United States, which is said to prefer Yoo Myung-hee, South Korea’s Trade Minister.

South Korea is a US ally and its existence and sustainability as a state, faced as it is by an existential threat from its northern neighbour, North Korea, has always singularly depended on the United States.

A WTO director-general from South Korea, at least in the warped Trump’s America view, would be much more easy to influence and push than a director-general from an African state like Nigeria.

The US also sees itself as having lost much ground to China on influencing African affairs, at least since the years of George W Bush, so an African director-general of the WTO would naturally be seen by the US, much like how they view the World Health Organization (WHO) director-general Dr Tedros Adhanom Gebreyesus, as more aligned to China than the US.

WTO'S MEASURED SUCCESS

The WTO, since its inception in January 1995, has been instrumental in levelling the trade playing field, expanding the global economy, job creation and development. Global income has been raised by as much as $510 billion after its creation.

The main aim of the WTO, from the Uruguay Round to the Doha Round, has been to provide increased market access for goods and services for all its members. The Doha Round was particularly focused on increasing that access for developing countries. It is estimated that when the latest round is concluded, global GDP will increase by $150 billion.

Unfortunately, there have already emerged country-to-country and regional free trade area agreements that are being done outside the WTO, bringing into question whether the organisation is still a viable platform for multilateral trade agreements.

CHALLENGES

The global trade and bargaining organisation has been plagued by challenges in the recent past. As with all global organisations, from the United Nations to the WHO, the WTO is also facing the Trump backlash and reversal of internationalism as a tool for global relations.

The US has accused the WTO of overreach, with the role of WTO’s dispute resolution body, the Appellate Body, being accused of being at war with domestic trade law. This, of course, means Trump’s America would like all decisions of the WTO to favour the US.

In that regard, the WTO has a lot at stake in how the November elections pan out. If Trump wins, the new WTO director-general may face her most difficult job yet, and the WTO as an entity may well completely collapse in her hands.

Then there is China. A global power of the last few years whose treatment at the WTO as a developing country is causing much consternation among developed nations. Its position as a developing country means China can take much longer to lower its tariffs and subsidies. Given its economic muscle and growing importance for international trade, other countries are not happy about China continuing to be classified as a developing country.

The other sore point has been China's long-standing troubling trade practice of demanding foreign companies give up their patented technology as a condition to doing business and trading in China. Naturally, the US and EU have chastised the WTO for not reining in China on these business practices.

China's economy is also driven by state-owned companies in the main. This means heavy industrial practices which violate WTO rules on tariffs and subsidies. China's economic model is hardly a fully fledged market economy, making international synchrony and alignment with world standards of trade liberalisation difficult.

Trump has refused to let China continue the free ride of the international markets while it does not seem transparent and open to other countries. This has resulted in a reversal of trade liberalisation as Trump has made it his mission to fight China's trade practices. The result of this has been the US-China tariffs war, which has been the story of 2019 into 2020 and the WTO has seen its work of many years being destroyed by two bulls fighting and sucking others in.

If Joe Biden wins, there may well be a progressive reform of the WTO which does not let China get away with all the WTO advantages, but none of the responsibilities, without rocking the boat.

The WTO, more so than other global organisation, is strangled by the power of global players like the US, the EU and China and in many ways, their satisfaction becomes priority otherwise the entire system could collapse. Today, with a delinquent president like Trump, the entire global trade system is under threat.

As a result, the WTO is involved in what’s called plurilateral negotiations, which is really a 'let's go with those who are going' approach which ultimately leads to nowhere if the big economic players are not involved.

Most importantly, decisions take years to be made in the WTO because of the system it has adopted. WTO decision-making is dependent on member states, and not an independent executive, which makes it vulnerable to powerful member states. Then there must always be a consensus for decisions to pass and this can go on for years.

It may be time to rethink the entire functionality of WTO. This puts critical things like climate change on the back foot.

WAY FORWARD

Every international organisation today is seen through the prism of the US-China contest and with Trump at the helm, it’s only going to get worse.

Ngozi Okonjo-Iweala's singular task then is to force the WTO members to see the world through the prism of the developing and least developed countries. Anything that is not in the interest of the least developed among members of the WTO must be rejected and abandoned, from which ever member, even the most powerful.

China is a $19 trillion economy, second only to the $24 trillion US economy. China cannot be classified as a developing economy by any measure. Okonjo-Iweala has no reason to defend this and China must play by the rules like all developed countries.

In the end, she must push for a solid WTO executive that has the power to take decisions and run the WTO independently of its powerful and mostly selfish members.

There is much work to be done!

Yonela Diko is the spokesperson of the Minister of Human Settlements, Water and Sanitation. He writes in his personal capacity.