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Playing by the rules – what the new WTO DG means for trade

Public Affairs

By Tiffany Burrows

For those who aren’t familiar with it, the World Trade Organization (WTO) was born in 1995 out of the General Agreement on Tariffs and Trade (GATT), the rule provider for international trade. Whereas the GATT primarily covered trade in goods, the WTO and its agreements cover trade in services and intellectual property in addition to goods. The WTO is designed to open up trade, settle trade disputes, and operate a rules-based system of trade.

The WTO has long been plagued by accusations (many entirely justified) of being inefficient and toothless, particularly when it comes to China. Last night at a ConservativeHome and UK in a Changing Europe event, International Trade Secretary Liz Truss summed it up when she said that there is a “huge appetite for change” at the WTO and that “people are fed up”, saying that the organisation “simply isn’t functioning in the way it should”. Enter Dr Ngozi Okonjo-Iweala.

Ngozi Okonjo-Iweala made history yesterday (1 March) by becoming the first African and first female Director-General (DG) of the World Trade Organisation (WTO). She will serve a four-year term, with a possible four year extension at the end of this.

An economist by training, Dr Okonjo-Iweala doesn’t have a traditional trade background. Dr Okonjo-Iweala is a graduate of Harvard University and earned her PhD in economics from the Massachusetts Institute of Technology (MIT). She served two terms as Finance Minister in Nigeria, first from 2003 – 2006, and more recently from 2011 – 2015. She had a 25-year long career within the World Bank, becoming Managing Director in 2013. More recently, Dr Okonjo-Iweala served as Board Chair of the Global Alliance for Vaccines and Immunization (GAVI), valuable experience in light of the urgent task of rebuilding the world’s economy after the pandemic.

Dr Okonjo-Iweala overcame the objections made against her candidacy by the Trump administration to become the last woman standing in the race to become DG (besting UK candidate and former International Trade Secretary Dr Liam Fox fairly early on). Glowing endorsements have been given from around the globe. Former Australian Prime Minister (and co-author to Dr Okonjo-Iweala’s Women in Leadership book) Julia Gillard said that the new DG “will bring a different kind of global perspective to the WTO than anyone before her… She has a global view of challenges and problems and is insightful about solutions”. European Central Bank President Christine Lagarde described Dr Okonjo-Iweala: “under that soft glove there is a hard hand and a strong will behind it”. Truss also recognised the momentum of the WTO getting a new DG, stating that “Dr Ngozi will be important in driving things forward”. She added that “there isn’t a one size fits all solution to the challenges we face globally but it’s about moving in the right direction”.

These are all positive signs that change is coming.

Upon taking the reins at the WTO, Dr Okonjo-Iweala said that “it cannot be business as usual at the WTO”. Helpfully, the DG has already outlined her priorities:

  • The double pandemic shocks – health and the economy
  • Reforming dispute settlement at the WTO
  • Making trade more inclusive
  • Modernising trade rules for a digital economy
  • Reviving talks on traditional trade
  • Rebuilding trust to advance reforms

These ambitions are all incredibly important, particularly countering the pandemic shocks, but for the UK, the focus will be on reforming dispute settlements, modernising trade rules for a digital economy, and rebuilding trust to advance reforms. Throwing in a priority of her own, International Trade Secretary Liz Truss tweeted that she is looking forward to working with the new DG on key issues, citing green trade as one of these.

A litmus test for the new DG (and another moment for Global Britain to add to your calendar) will be the WTO’s next Ministerial Conference (chaired by Kazakhstan). The Conference will take place on 29 November this year in Geneva and will be the first Ministerial Conference held in three years. It will offer the new DG an opportunity to put her words into action and promote her agenda for WTO reform.

Addressing the General Council on her first day at the office, Okonjo-Iweala asserted: “I’ll bring all my knowledge, passion, experience and persistence to the task at hand, reforming the organization and achieving results”. By rebuilding trust and seeking to reform the system in a world where protectionism continues to rear its head and global economies are struggling to get on their feet, the new Director-General certainly has her work cut out in bringing the WTO into the 21st Century.