The World Trade Organization Needs A Comprehensive Restructuring Under The New Leadership

Dr. Ngozi Okonjo Iweala's new role as the Head of the WTO is inspirational in its ground-breaking nature. Her tenure has the potential to transform the organisation and make it more representative.

Dr. Ngozi Okonjo Iweala had initially emerged as the candidate of choice for the position of the Director-General (DG) of the World Trade organization (W.T.O.) according to the consensus of all the WTO member states, except United States under the Trump administration. One of the great achievements of the new Biden administration is to join the consensus that eventually paved the way for her final selection as the Director-General of the W.T.O. It is a great feat because, since 1995 when the W.T.O. was created, this is the first time an African is becoming the DG, and also the first time a woman would lead the organization. Now that her tenure has started on 1 March 2021, a comprehensive restructuring of the organization is essential.

The member states of the W.T.O. are comprised majorly of developing countries, which are further regrouped into developing and least-developed countries. These members would need the organization to look into issues where they believe the rules are stacked against them. This may entail the repeal of certain laws, re-negotiation of certain terms, and enjoyment of certain privileges. All of these would require diplomacy, strategy development and a strengthened oversight function to ensure correction of age-long anomalies. As witnessed during the Trump administration, the rise of ultra-nationalism and the relegation of trade liberalization to the background became his dominant trade policy strategy. The debate about the importance of free trade was a dominant discussion during the Trump administration. Those in favor of the Trump’s strategy opined that trade liberalization which often include removal of duties and levies, was hurting the American economy.

Former President Trump was all for renegotiation of trade deals and the promotion of “Buy American” goods. He strongly believes the W.T.O has lost trade dispute settlement credibility, which egged him on to impose tariffs on goods from China, Mexico and the European Union. Because of the incorrigibility of Trump and his aversion to the internal mechanism of the Organization for dispute resolution, other countries were left with no choice than to retaliate.  The W.T.O. would need to devise better ways of dealing with such infractions and come up with the best way of nipping them in the bud. Although, America has a current president that is pro-trade, pro-market, and  pro-growth, global trade may record another round of retrogression should another anti-globalist person like Mr. Trump becomes the President; which is why a strong co-ordinated strategy that can dwarf anti-liberal and anti-globalist policies are of the essence.

The complaint against China as being a closed economy that disallows trade liberalization must be looked into scrupulously. Many members don’t think China has opened its economy for trade liberalization more so with its ‘Made in China 2025’ policy.  Former President Trump often talked about the unfairness in China’s trade practices that include theft of foreign intellectual property, high tariffs, and rigged regulations favoring Chinese Companies. There are more than 43 cases against China since 2001 that it joined the W.T.O.  These allegations have intensified certain fears by anti-globalists in the U.S. and other parts of the world that unprecedented growth rates recorded by China would correspondingly lead to the economic fall of the U.S. That needs to be allayed through the enforcement of transparent trade practices on members administered and supervised by the W.T.O. This would make global growth assume a positive-sum game.

The least developed economies have been argued for by economists like Dani Rodrik that free trade doesn’t benefit them as it does to the developed economies. And for the very fact that their economies are still at infancy stage make it disadvantageous for them. Therefore, the use of trade protection mechanism to urge economic diversification shouldn’t be resisted by the W.T.O. because a mechanism such as tariff protection was also used by the now developed economies during their development phase. Therefore, denying these economies such and obligating them to play by the same rules will continue to badly hurt their economy. Although it is incontestable to say that rising labor productivity and trade globalization may have negatively disrupted industrial growth for economies that are just beginning industrialization phase, the need for thorough assessment to identify prospective sectors that can help to engineer sporadic development must be the priority of such economies. Therefore, global trade can yet reach another unprecedented feat through new reforms to be spearheaded by the W.T.O.

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