Written for and originally published in IISD Trade and Sustainability Review, Volume 1, Issue 2, March 2021.
The search for a new World Trade Organization (WTO) director-general is over after months of uncertainty. With the withdrawal of Yoo Myung-hee on February 5, only one woman is left standing: Ngozi Okonjo-Iweala. She is both the first woman and the first African in the role.
Okonjo-Iweala is an impressive candidate: raised in Nigeria, a graduate of Harvard with a doctorate from the Massachusetts Institute of Technology and a 25-year career at the World Bank, she rose to the highest levels of the hierarchy there, and was then, twice, minister of finance in Nigeria.
In the initial flurry of candidacies, detractors claimed she lacked the necessary trade experience for the job. What the criticism missed was that her experience offers so much more. After all, there are hundreds of trade experts in the WTO secretariat already. What the new director general needs above all is consummate negotiating skills.
“Tailor-Made for Feminist Leadership”
The job is tailor-made for feminist leadership: lead from behind (it is a member-driven organization); look for unlikely alliances; build out from the middle until there is a big enough bloc either to ignore or bring in the extremes; know when to push, and who, and when to let the arguments ripen a little longer; know when to call the national capitals or go on a speaking tour, and when to focus on the roomful of people that can bring the text all but to completion. Challenge vested power, keep personal ego to a minimum, and remember you are in public service.
It is not a job for the faint of heart, but the breadth of OkonjoIweala’s experience and her reputation bode well.
The new director general will take office amid tremendous uncertainty and change. The global pandemic has shut down economies around the globe, triggering a sharp rise in hunger and unemployment. Governments are spending public money at unprecedented rates, while many developing countries are starting to seek debt renegotiation because, for many, the pandemic has curtailed primary sources of foreign exchange (tourism, oil, foreign remittances, and overseas development assistance).
The United States Is Now Less of a Headache
One of the bigger headaches for the previous director-general was the United States. Joseph Biden’s victory in the presidential race has ushered in a new administration that has publicly declared its commitment to renewed and more constructive engagement with multilateralism. This is welcome.
But the new WTO chief should note that the Biden Administration has also made strong commitments to act on climate change, improve working conditions, support environmental justice, and end social and racial exclusion. The new administration is acutely aware of the urgency of its domestic agenda and the repairs needed to U.S. democratic institutions. A flurry of executive orders in the first days of Biden’s presidency showed the intended direction, and among the domestic policies in negotiation are proposals to spend significant sums of public money in the domestic economy, and the “Buy American” initiative to favour goods substantially made in the United States.
The policies will challenge the economic orthodoxy that has informed so much of the rhetoric heard at the WTO and reflected in the organization’s agreements and dispute findings.
The challenge to the way things were is not limited to the United States. Another concrete example comes from Switzerland, where, on March 7, citizens voted in a referendum on a proposed trade agreement between the European Free Trade Association (an intergovernmental organization of Iceland, Liechtenstein, Norway, and Switzerland known as EFTA) and Indonesia. The accord contains something new: the promised tariff reductions for Indonesia’s palm oil are conditional on compliance with principles of sustainability.
What Challenges Does the EFTA–Indonesia Trade Deal Face?
The idea sounds simple, although the practice will be complex. Analysis from Elisabeth Bürgi at the University of Bern raises some of the challenges. For instance, the EFTA market is valuable, but relatively small. Indonesia’s main trading partners are China and the members of the Association of Southeast Asian Nations bloc.
Diverting more sustainable palm oil production to EFTA will not necessarily improve standards more broadly in the market. The agreement proposes to give financial and technical assistance to Indonesia to help the sector comply with the new standards, but the amount of money involved is left unspecified. The new trade deal does not attempt to impose sustainability criteria on financial service providers, which leaves banks and investors from EFTA member states free to continue funding the destruction of Indonesian forests.
Conditional market access also poses clear threats to developing countries’ economic autonomy and inclusion.
For all the devilish details, the harbinger of change is indisputable: trade agreements are entering a new era. Citizens want more from their governments on trade. The social and economic inequalities that have deepened so significantly in recent years have triggered demand for more effective taxation, better protection of decent wages and working conditions, and implementation of polluter-pays principles to regulate the continued systematic destruction of natural resources and ecosystems.
How Can the WTO Tackle Public Hostility Toward Trade?
Imports and exports both play an important role in almost every economy. Economic integration is a fact of modern life. Yet trade and trade agreements are not popular. The power of trade accords is often exaggerated in public debates—sometimes by the same governments that negotiated them. It can be convenient to blame an apparently external force. It is also true that trade policy can be misunderstood, including by heads of state.
Yet, there are reasons for public antipathy to trade. One reason is the now extreme lengths to which secrecy dominates the negotiations. This means too little information circulates, resulting in mistrust. Trade policy is also kept strangely isolated from other areas of government.
For the WTO to realize its lofty mission of sustainable health and prosperity for all, it is crucial that governments acknowledge the interaction of trade with other systems—economic, social, and ecological. The resistance of rich country governments to the proposed waiver on WTO intellectual property rights protection to secure universal access to a COVID-19 vaccine suggests that at least some WTO members do not yet understand the urgent need to strengthen the trade body’s capacity to engage in global governance, rather than continue as a favourite redoubt of a narrow, if powerful, set of economic interests.
It’s Time for a New Trade Agenda
The new director general of the WTO will need an open mind and plenty of grit. A new trade agenda is long overdue. That agenda will define a role for the WTO in tackling the great challenges of our times, above all, in mitigating climate change and better preparing for adaptation, given the climate-related turbulence ahead. The agenda will need to centre on international cooperation, including both the inequalities in existing economic relationships and the unevenly distributed consequences of climate change.
International economic policies of the last decades, including trade policies, have generated highly concentrated market power and wealth, to the detriment of both well-functioning markets and accountable government. The new agenda should be less concerned with how to increase a member’s exports and dictate another country’s economic choices, and more focused on how best to protect sustainable production, distribution, and consumption.
The WTO is ready for a new phase of existence, one that is more adaptive, better at listening, more willing to experiment, less orthodox in its economics, more inclusive in its politics, and more respectful of the public it was founded to serve. Ngozi Okonjo-Iweala, you have the floor.
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