COMMENT: Many challenges await the global trade body’s new chair Ngozi Okonjo-Iweala, but her appointment is a cause for celebration, writes Paul Polman
The World Trade Organization has now been without a director-general for almost half a year, and its absence from international economic diplomacy is starting to take its toll.
The recent decision by the European Commission to introduce export restrictions on Covid-19 vaccine supplies, which reopened still-tender EU-UK Brexit negotiating wounds and rang alarms bells in international capitals, is the latest example of the WTO’s missing influence.
The EU believes its new curbs are exempt from the trade body’s ban on export controls. But the European Commission’s miscalculation of the wider national security and public health issues at stake – which led to a quick rebuke among world leaders – is symptomatic of a gaping hole in public life: a powerful trade voice at the top table, listened to by presidents and prime ministers.
Under new, reinvigorated leadership, the WTO can help build a stronger, cleaner and fairer world economy
Loss of faith in the WTO is well-documented and perhaps understandable. Since its establishment in 1995, the WTO has failed to conclude a single round of global trade talks, including the Doha Development Round. Instead, progress has been incremental, with only a few successes, such as the Trade Facilitation Agreement, and commitments related to agricultural export subsidies.
But it is wrong to write off the WTO. In an age of populism, we mustn't allow trade liberalisation to become the lightning rod for the perceived shortcomings of globalisation. And portraying the WTO as a bureaucratic institution whose rule-making and dispute-settlement functions are insulated from real-world challenges and opportunities couldn’t be further from the truth. The WTO can make a huge impact on the world stage and under new, reinvigorated leadership it can help build a stronger, cleaner and fairer world economy.
The appointment of a new director-general cannot come quickly enough, with former Nigerian finance minister Ngozi Okonjo-Iweala set to become the first female, and African, to lead the global trade body. This alone is cause for celebration, given what it says about advancing diversity and inclusion in mainstream politics. And her recent experience as chair of Gavi, the Global Alliance for Vaccines and Immunisation, suggests an improvement to pandemic-related trade relations is likely.
Meanwhile, the WTO should turbo-charge efforts to establish a new global trading framework to unlock much-needed growth. Covid-19 has already pummelled the world economy with one of the biggest recessions in the last 150 years. The World Bank has forecast “a lost decade” of economic activity. And the International Chamber of Commerce has calculated that “vaccine nationalism” could cost the global economy $9.2tn. It’s clear the ground has dramatically shifted in favour of a new global trading order that genuinely lifts all boats. The lives and livelihoods of billions depend on it.
Trade policy can also work much harder to tackle runaway climate change, the biggest systemic threat facing humanity. The finance sector is already showing what’s possible, with more and more asset managers now placing climate-related risks at the top of their portfolio concerns and aligning investments behind the Paris Agreement. Trade negotiators need to be equally ambitious. Accelerating fossil-fuel subsidy reforms, improving market access for green technologies, re-directing state aid toward responsible industries, strengthening carbon markets and raising environmental standards to support export growth would all help to spur a green recovery. If world leaders really do believe in building back better, then the trade agenda needs to be fully integrated into their plans.
We need the WTO to succeed, and I for one will be rooting for its renaissance
Nor should we underestimate the role the WTO can play in helping to reset US-China relations, which has been beset by an ongoing trade dispute that shows no signs of abating. Diplomatic quarrels have covered the full spectrum of high-stakes trade bargaining. With flashpoints over subsidies for Chinese state-owned enterprises, market access rights, demands for technology transfers and investments in key infrastructure and strategically important companies. The WTO can do much more to act as an honest broker between these dominating super-powers. It’s certainly no easy task, but the rewards of unlocking the full potential of enhanced US-China economic cooperation would be unmistakeable.
With Oxfam warning that we’re facing the biggest rise in inequality since records began – both within and between countries – the WTO must also help the UN deliver the 2030 development agenda. Crucially, this should include supporting every nation to tap the enormous benefits promised by the fourth industrial revolution. A supply-side miracle that is driving long-term gains in efficiency and productivity, the opportunities for wealth creation are staggering, but so too are the risks of significant job losses. The WTO urgently needs to upgrade the General Agreement on Trade in Services, by reducing trade barriers to e-commerce and helping poorer nations access the aid they need to exploit digital technologies for trade and development.
We need the WTO to succeed, and I for one will be rooting for its renaissance, so that we can make trade work for our people and our planet.
Paul Polman, co-founder and chair of IMAGINE – a social venture accelerating business leadership to achieve the global Sustainable Development Goals – and honorary chair, International Chamber of Commerce
SDGs WTO Paul Polman Covid-19 EU Paris Agreement GATT climate change