Garlands For Okonjo-Iweala, But The Party Is Over

The appointment of the Nigerian economist Ngozi Okonjo-Iweala as head of the World Trade Organization removes an obstacle, but the group faces daunting challenges.

The appointment removes a key obstacle to the performance of the World Trade Organization, which has been rudderless during a time of growing protectionism and global economic upheaval brought about by the coronavirus pandemic. But even with Dr. Okonjo-Iweala at the helm and the renewed support of the Biden administration, the World Trade Organization, which was founded in 1995 to ensure that trade flows as smoothly and freely as possible, will face enormous challenges surrounding its effectiveness as the world’s trade arbiter.

Trade negotiations have dragged on without resolution and there are deep divisions over whether rich and poor countries should receive different treatment under global trade rules. There is also growing consensus that the World Trade Organization has failed to police some of China’s worst economic offenses, which many in the United States consider the world’s biggest trade challenge today. And there is deep uncertainty about whether the group can be overhauled to address those inadequacies.

Dr. Okonjo-Iweala, flanked by Ambassador Akin Fayomi and Mrs. Yinka Fayomi, Chairman, Foreign Investment Network.

“There are a lot of issues that are begging for reform,” said Wendy Cutler, a former U.S. trade negotiator and a vice president at the Asia Society Policy Institute. She said that the Biden administration’s support for Dr. Okonjo-Iweala could be “an easy way to gain goodwill and get everyone focused on the important substantive issues.

The Trump administration spent the last four years mostly criticizing or ignoring the World Trade Organization, ultimately weakening the institution by carrying out its most prominent trade policies outside of its boundaries. Rather than working with the World Trade Organization, President Donald J. Trump took on trading partners like China and the European Union one-on-one, deploying hefty tariffs that those governments argued contravened the W.T.O.’s rules.

President Biden is likely to take a very different approach. He has criticized Mr. Trump for alienating allies and weakening the multilateral system and is expected to make the United States a more active player in international groups including the World Trade Organization.

That includes supporting the organization’s new leadership. On Feb. 5, the Biden administration announced it would support Dr. Okonjo-Iweala, reversing efforts by the Trump administration to block her candidacy.

The former director-general, Roberto Azevêdo, announced last May that he would leave the job a year early and departed in August. While the vast majority of the organization’s members supported Dr. Okonjo-Iweala to replace him, Trump administration officials, particularly the former trade representative Robert E. Lighthizer, had criticized her lack of trade experience and supported the South Korean candidate, the trade minister Yoo Myung-hee, instead. However, on February 5, Ms. Yoo withdrew from the race thereby paving the way for Okonjo- Iweala as the consensus candidate.

With the defeat of Donald Trump in the US presidential election, the new administration of president Joe Biden decided to back the economist. “The United States stands ready to engage in the next phase of the W.T.O. process for reaching a consensus decision on the W.T.O. director-general,” the Office of the United States Trade Representative said in a Feb. 5 statement. “The Biden administration looks forward to working with a new W.T.O. director-general to find paths forward to achieve necessary substantive and procedural reform of the W.T.O.”

Dr. Okonjo-Iweala, 66, is a development economist who spent 25 years working at the World Bank, including as a managing director, and served two terms as Nigeria’s finance minister, as well as the country’s foreign affairs minister. A U.S. citizen who earned a doctorate from the Massachusetts Institute of Technology, she serves on the boards of Twitter and Standard Chartered and is an adviser to the Asian Infrastructure Investment Bank. Until recently she served on the board of GAVI, an international organization that distributes vaccines to poor countries.

In her first stint as finance minister, she led negotiations that resulted in most of Nigeria’s external debt being wiped out. Later, as coordinating minister of the economy in Nigeria — a powerful position created for her that has never been held before or since — many ministers took directives from her according to some sources.

Following Dr. Okonjo-Iweala’s appointment, one of the most pressing issues for the World Trade Organization will most likely be the paralysis of its system for settling trade disputes.

The appellate body, a part of the organization that considers appeals by countries to W.T.O. decisions on trade disputes, has been shuttered for over a year after the Trump administration blocked new appointments to the panel that hears those arguments. The Trump administration argued that the appellate body had exceeded the mandate it was created with, ultimately engaging in a kind of judicial activism that undercut U.S. trade law, harming American workers and infringing on American sovereignty.

Before leaving office in January, Mr. Lighthizer expressed no regrets for the role he played in suspending the W.T.O.’s dispute settlement system, saying in an interview that it had “become a net negative for America, and getting rid of it was positive for American interests.”

He added that the World Trade Organization had “been largely a failure,” though he said that getting rid of the group entirely would “create more problems than it’s worth.” While the Biden administration is unlikely to be as critical or confrontational as the Trump administration about the issues plaguing the World Trade Organization, some Democrats share certain concerns about the organization’s shortcomings, including whether the appellate body has unfairly constrained U.S. trade policy. And many officials in the Biden administration recognize the World Trade Organization has only limited power to push China to make economic reforms

The Biden administration’s nominee for United States trade representative, Katherine Tai, is intimately acquainted with both the strengths and shortcomings of the global trade body, having successfully litigated cases against Chinese export restrictions at the World Trade Organization during the Obama administration when she served as general counsel for the office of the trade representative.

Ms. Tai led a legal challenge, supported by Canada, Japan, and the European Union, to a ban China had imposed on the export of rare earth materials, a key input for electronics. The United States won the case, and China dropped its quotas in 2015.

The Biden administration also announced that it was appointing Mark Wu, a Harvard Law School professor who has written about the World Trade Organization’s shortcomings when it comes to China, as a senior adviser to the office of the trade representative. Mr. Wu argued that the World Trade Organization had effectively disciplined China in areas where it has relevant rules. But for some of China’s most egregious economic practices — in particular, the state’s prominent role in industry and its heavy subsidies paid to businesses — the World Trade Organization has fallen short, Mr. Wu said.

From reviving WTO’s dispute settlement process to policing China, the new director-general has her task cut out. A lot of her success would depend on how she deals with the growing mistrust among prominent members.

Okonjo-Iweala takes over as the global trade body struggles to remain relevant amid growing protectionism and trade tensions and an economic crisis unleashed by the coronavirus pandemic. Okonjo-Iweala said her top priority would be to deal with the economic and health fallouts of the pandemic. WTO members should accelerate efforts to lift export restrictions on medical supplies and vaccines.

“The WTO can contribute so much more to helping stop the pandemic,” Okonjo-Iweala told Reuters news agency. “A very top priority for me would be to make sure that prior to the very important ministerial conference … that we come to solutions as to how the WTO can make vaccines, therapeutics, and diagnostics accessible in an equitable and affordable fashion to all countries, particularly to poor countries,”

As a friend of the house, we wish Dr. Ngozi Okonjo-Iweala a successful reign as the Director-General of the WTO.

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