Ngozi Okonjo-Iweala is the new WTO chief, but let’s not get carried away

The director-general’s powers are limited, so don’t expect miracles. And don’t blame her if problems stay unresolved

Ngozi Okonjo-Iweala at WTO

By Peter Ungphakorn

Now that Ngozi Okonjo-Iweala has been confirmed as the next director-general of the World Trade Organization (WTO) it’s tempting to see light at the end of the tunnel for the troubled negotiating forum and guardian of the resulting agreements.

First woman director-general. First African. Finally, someone at the helm after almost a year effectively without a leader. All those headlined proclamations are true. The excitement is justified, to some extent.

Even the fact that she eventually received consensus support after months of deadlock is significant. It signalled the United States’ return to multilateralism in trade. The new Joe Biden administration has overturned the US block on her appointment, ending the periodic obstruction of WTO work by then-President Donald Trump and his US Trade Representative, Robert Lighthizer.

WTO news on the director-general selection
● The process
● The 2020/21 candidates
● Ngozi Okonjo-Iweala’s biography as presented to the WTO
● Her statement to the General Council, July 15, 2020
● Her acceptance statement to the WTO General Council, February 15, 2021
● Her statement at her first General Council meeting, March 1, 2020

Dire WTO General Council meeting shows scale of Okonjo-Iweala’s task
New WTO head’s first statements sail close to the wind
US lifts objections that deadlocked the WTO over its next director-general
Is the World Trade Organization choosing a saviour? Or a butler?

That says more about the US than about Okonjo-Iweala.

Even so, her appointment has little impact on the real substance of WTO work that bothers the US — dispute settlement, some aspects of negotiation, China and India. By joining the consensus on a new director-general the US is making a symbolic gesture. We cannot assume that the problems highlighted by the US’s concerns will soon be solved. The chances have improved. Perhaps the mood too. But there’s still a long way to go.

Okonjo-Iweala’s selection was finally approved by consensus today (February 15, 2021), by the WTO’s membership meeting as the General Council. By dropping its objection, the US ended almost four months of deadlock.

Her term is from March 1, 2021 to August 31, 2025, lengthened to allow it to end, following tradition, in the summer break. Otherwise it would have been shortened by the deadlock and because Azevêdo’s announcement forced the search to extend into the autumn. Normally, a second four-year term is allowed.

One of her priorities will be to work with members on economic and health consequences of the COVID-19 pandemic, the WTO said.

“Our organization faces a great many challenges but working together we can collectively make the WTO stronger, more agile and better adapted to the realities of today,” she said in her acceptance statement.

The WTO is not in good shape, but what can the WTO director-general do? Legally, she is the head of the Secretariat. The Secretariat’s job is secretarial, to assist the work of the members. And it’s the members who are the WTO. They are the WTO’s decision-makers. That makes the director-general the servant of the members.

Real life is more nuanced than that. WTO members have chosen a high-powered director-general, a former finance minister, senior executive of the World Bank and now chair of GAVI, the vaccine alliance that is at the centre of global efforts on COVID-19 vaccines.

That means they are expecting her to have clout, to be an influential mediator in their work, huddling with groups of ambassadors and sometimes ministers in the informal consultations that can move WTO work forward.

She does not have a strong background in trade, so they are expecting her to learn fast. WTO decision-making can get blocked on some pretty esoteric technicalities.

They are expecting her to help broker compromises at a higher, more political level. But only when the time is ripe. The last thing they want is for her to tell them what to do — that would destroy any director-general’s relationship with the members.

They are not expecting her (or any other director-general) to sort out every glitch as they struggle to find meaningful decisions for the COVID-postponed ministerial conference in the coming year or two. For that they rely on the ambassadors or other trade diplomats who chair the talks on each subject.

They are expecting her to manage the Secretariat effectively so it can provide essential technical support for their work, which makes this an interesting time for the WTO’s civil servants. All new directors-general enjoy a honeymoon period, including among their staff.

The members are expecting her to be their public face, reviving confidence in the WTO, persuading politicians around the world — including in their own governments — that the multilateral trading system is valuable, and that compromises are worth making so trade can be more compatible with modern global needs: sustainability, and the lengthening agenda that the members themselves have set.

That last point about confidence and persuasion is critical. The WTO’s member governments chose Okonjo-Iweala for a reason. But delivering what they are calling for is down to them, not her. It’s those governments, not the director-general, who have to identify the workable trade-offs and to be prepared to give and take, and if necessary deal with clashes of domestic interests, in order to reach decisions that have proved so elusive.

Expecting her to do that for them is unfair on her. But she can contribute to a better understanding of what is needed in capitals around the world.

When members do find a breakthrough, it’s often away from the WTO, such as when the US and India agreed on a compromise in an agricultural issue in 2014. That was then brought that back to the WTO. On big headline conflict, such as over China, the solutions will probably come from Washington, Beijing or Brussels first, before they reach Geneva.

Ngozi Okonjo-Iweala at WTO
Public face: Okonjo-Iweala may need to revive faith in the WTO | WTO, Jay Louvian
ChallengesBack to top

Okonjo-Iweala arrives at a WTO facing unprecedented challenges. Morale in the Secretariat and the delegations is at its lowest since the WTO was created out of the General Agreement on Tariffs and Trade (GATT) 26 years ago. The pandemic has not helped.

On the plus side, the WTO is still working well on low-profile but important and often technical tasks which still keep international trade flowing smoothly with few or no hitches.

That, after all, is the primary objective of the WTO — to help trade flow as freely as possible, with as little conflict as possible.

The problems are indeed serious. The mistake is in assuming they tell the whole story.

Those involved in trade can be confident that governments’ policies are largely within predictable and stable boundaries.

The vast majority of trade measures introduced by governments comply with WTO agreements and pass almost unnoticed. Some $20 trillion in goods and services is traded annually with little or no trouble in pandemic-free times.

The WTO continues to be used to discuss and resolve the few measures that do cause problems. As a result, only a miniscule number of these end up as WTO legal disputes.

This is an unglamorous achievement that never hits the headlines. Few directors-general pay it much attention, even though it’s at the core of what the WTO is supposed to do. It could receive more attention both from the WTO chief and the media.

The WTO’s purpose is free-flowing trade. How is it doing?
Overlooked: the WTO is successful in keeping trade flowing freely but reform is also needed. Source: here

During the COVID-19 pandemic, the Secretariat has also increased its monitoring role, compiling a large amount of useful information on governments’ responses that affect trade, with briefing papers on specific topics. The WTO has considerably improved transparency in trade policies around the world, but there’s still room to do more.

It’s the problems that have attracted attention, and they are indeed serious. The mistake is in assuming they tell the whole story.

Appeals are no longer possible in dispute settlement. Negotiations are stuck even on issues such as fisheries subsidies which are crying out for a solution. The chances of updating the agreements to cover climate change and modern trading practices look bleak.

Controversies rage over the status of more advanced developing countries, including China and India (see this proposal, and this). Members are searching for a response to the large setbacks caused by COVID-19. Even the good work on transparency and peer review needs strengthening.

Individual members increasingly wrangle outside the WTO over issues that its agreements struggle to handle, such as between the US and China and other countries.

In the WTO they have failed to agree on what appeared to be a no-brainer: a WTO-wide agreement to exclude the World Food Programme’s humanitarian purchases if governments decided to restrict exports.

But — and this cannot be emphasised enough — the solutions do not lie with the new director-general. They lie with the members themselves.

If there is any chance that the members are willing to move, then the WTO needs a director-general who can inspire them and help them find inventive solutions. But nothing more than that.

To claim that she can solve these problems, would be unfair on her. Because if members remain deadlocked — as they are likely to be without serious re-thinking in capitals — the director-general cannot be blamed.

February 18, 2021 — correcting description of length of her term

Image credits:
Okonjo-Iweala at the General Council and press conference, July 15, 2020 | © WTO, Jay Louvian

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU

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