2020 DG nomination, MC12, Perspectives, World Trade Organization

Perspectives: Ngozi Okonjo-Iweala’s impossible job

Ngozi Okonjo-Iweala seemed confident on appointment as director-general that her leadership could reverse the decline of the World Trade Organization.  This was wildly over-optimistic. The WTO’s director-general could offer realistic leadership by articulating a more compelling vision for global trade rules.

There is no sign yet from the twice-rearranged coming 12th ministerial conference of the World Trade Organization that the institution is back on track. Many outstanding issues – a fisheries subsidies agreement and the issue of the extension of ‘e-commerce moratorium’ – have been under negotiations for a long time and remain unresolved.

We can’t blame the director-general for the decision of one member country to invade another. This has hobbled the WTO – it would hobble any organisation. Similarly, if the knock-on effect from the invasion of Ukraine is to deepen the rift between the two largest economies in the world – China and the US – that also goes beyond the DG’s job specification.

When one of the said countries, supposedly a supporter of the global trade order, is also paralysing one of the organisation’s pillars – i.e. dispute settlement – then it could be said that the position of director-general of the WTO is close to being an impossible job. After all, her predecessor Roberto Azevêdo did not serve out his full second term: this is never a good sign.

Much has been written about the failure of WTO members to reach meaningful new agreements since the institution’s foundation in 1995. Far less has been written about the role of the DG, except typically in focusing on their failure to bring about new agreements.

The role is not limited to dealmaking, however. Perhaps most importantly the director-general of the WTO is the spokesperson and cheerleader for global trade and the rules accompanying it. To those working in Geneva his or her role as head of the institution’s secretariat is also crucial. There is certainly also a directional element to the job, of setting out a future vision and current priorities. There is also perhaps a representational one, particularly for smaller WTO members.

The fifteen months since her appointment in March 2021 were dominated by the COVID-19 pandemic and now Ukraine, so expectations have been moderate.

Nonetheless, the sense of drift has continued under new leadership.

Elusive WTO vision

To many interested observers in the outside world, the WTO is failing if it does not deliver new multilateral deals.

A fairer criticism of the institution would be the absence of significant progress since 1995 on modern issues such as new rules for e-commerce and – increasingly – the nexus between trade and climate change. It has to be noted that there has been some progress in advancing such rules in smaller groups in Geneva, edging towards so-called ‘plurilateral’ agreements.

Reconciling multilateral and plurilateral agreements is not straightforward. It is reasonable to hope the director-general can frame an approach, with broad member support, to be clearly explained to the interested general public. That has not happened. Indeed it is hard to ascertain how Okonjo-Iweala thinks trade rules should work.

On the currently hot issue of COVID-19 intellectual property waiver and on carbon border adjustment there is a sense that the DG rightly believes that the WTO needs to be addressing the issues of the moment. But at times the WTO comes across as a high-quality conference – with no expectation it would ever set new rules.

High-profile leadership – but also discontent

One of the contributory factors to a leader successfully articulating a vision is her profile, so as to ensure the message reaches the right people. Here Okonjo-Iweala can hardly be faulted. She was listed as one of Time magazine’s 100 most influential people for 2021, endorsed by UK Royal Family in the form of Prince Harry.

Such a presence can easily be dismissed. So can her status as a woman leader from a developing country. But both are important. The world of trade policy can often be rather North America and Europe-centric, circling around their developed-country concerns. That has changed visibly.

Frustration at the difficulty of multilateral negotiations, bringing in a developing country perspective, and a desire to be relevant to current issues presumably lay behind the small-group format proposed and adopted for COVID-19 IP waiver discussions between the US, EU, India, and South Africa. Brief hopes that this would lead to a breakthrough agreement seem to have been dashed – but it was surely worth a try.

The greater controversy over Okonjo-Iweala’s leadership seems to have come from within the WTO secretariat.  While it is always hard to distinguish the usual workplace gripes from something more serious, there is certainly a sense that we are confronted with a not-entirely happy organisation.

Daily activity needs improved direction

There has been a lot of talk of some sort of ‘reform agenda’ for the WTO. This is usually code for either or both the US lifting their veto on the appointment of appellate body members and/or China accepting rules disciplining state-owned enterprises. In both cases there has been a notable lack of engagement from the countries concerned, leading to the growing feeling that these issues cannot be resolved.

The global trade system is fragmenting into one made of overlapping rules. In such a context it is interesting to note a recent paper by Richard Baldwin and Dmitry Grozoubinski arguing for a strengthening of the usually-forgotten third pillar of the WTO – after negotiations and dispute settlement – that of monitoring policies, offering transparency, and facilitating dialogue.

Use of such existing WTO monitoring functions is surely one of the ways of reconciling a multilateral rules-based body with the realities of increasingly complex policy challenges that countries prefer to consider in smaller groups. It also feels more practical to go down such a path.

Among the roles of the WTO director-general should be to encourage precisely such new thinking.

While the current focus on negotiation is understandable in Geneva, in the absence of success, there are other options. It would be good to see these efforts explored and crystallised further by Ngozi Okonjo-Iweala.

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