New WTO chief, Dr. Ngozi Okonjo-Iweala, promises to shake up multilateral trade body to deliver results, but concedes it will not be an easy task

This is an onsite edited excerpt of the G|O Briefing newsletter

The scared and limping members of the fractured and demoralized World Trade Organization—derailed by years of bitter trade tensions, crippling trade wars, a widening North-South divide, mistrust, and institutional paralysis—have decided to collectively place their hopes on a highly regarded Nigerian to try to bring the WTO back on track.

Indeed, after months of high anxiety amid a global pandemic, WTO members agreed Monday by consensus to select Nigeria's Ngozi Okonjo-Iweala as the next Director-General for a 41/2 year term. When she begins her appointment on March 1, Okonjo-Iweala will be the first woman and first African to hold the world's top trade post.

“This is ground-breaking and positive,” Dr Okonjo-Iweala, a US-trained economist, former World Bank managing director, and former Nigerian minister of finance, told delegates during a virtual special session of the WTO's ruling General Council. “You can count on me to be proactive, to work hard, to be balanced, fair, professional, and objective, … to continuously earn and sustain your trust,” she declared. “That way, together, we can restore and rebrand the WTO as a key pillar of global economic governance, a force for a strong, transparent, and multilateral trading system, and an instrument for inclusive growth and sustainable development,” she added.

But she also conceded the challenges facing the WTO “are numerous and tricky, but they are not insurmountable. There is hope. There is light at the end of the tunnel if we work together in a transparent manner that builds trust, builds bridges, defuses political tensions, and encourages convergence.”

“This appointment is significantly timely when the WTO is at its critical moment and must be able to deliver soon."
- Li Chenggang,
                                    China's new ambassador to the WTO.

More than 80 delegations intervened virtually to welcome Dr Ngozi and to declare their expectations, except for the Council Chair ambassador David Walker of New Zealand, who surrounded by only a few WTO staff members, spoke from the podium into the cameras in an empty chamber, a far cry from earlier appointments in the past, marked by a packed auditorium, rousing applause and a reception for the victor.

Delegates made it clear from their interventions, however, that they have placed a lot of faith in the Harvard and MIT trained economist to deliver.

“Dr Okonjo-Iweala has promised that under her leadership it will not be business as usual for the WTO, and we are excited and confident that she has the skills necessary to make good on this promise,” said David Bisbee, Chargé d'affaires ad interim of the US Mission to the WTO. “Her wealth of knowledge and experience in critical pillars of economics, trade, and diplomacy will bring a welcome boost to efforts underway to reform and revitalize the WTO. Indeed, it will require a masterful blend of all these skills to navigate 164 members to consensus,” he noted.

Similarly, Li Chenggang, China's new ambassador to the WTO, stated: “This appointment is significantly timely when the WTO is at its critical moment and must be able to deliver soon. The collective decision made by the entire membership demonstrates a vote of trust not only in Dr Ngozi herself but also in our vision, our expectation, and the multilateral trading system that we all believe and preserve.”

“We members have high hopes on you for the months and years to come, and pressingly, we expect you to help deliver outcomes by securing a successful MC12 (WTO’s Ministerial Conference),” the envoy added.

João Aguiar Machado, the European Union's ambassador to the WTO, also placed high hopes on Okonjo-Iweala and voiced: “Today marks a new beginning and gives us all the opportunity to refocus our energy on the urgent and challenging tasks ahead. We have negotiations to conclude, bridges to rebuild, new challenges to tackle, and reforms to pursue … The members cannot achieve these tasks without able and effective leadership. The EU has full confidence that this is what we can expect from you.”

Okonjo-Iweala indicated to delegates that at the WTO the director-general “leads from behind, working with the talented secretariat staff to help Members achieve results." This will be a welcome relief for both WTO secretariat staff and WTO ambassadors, given that some previous WTO chiefs failed in their mission to deliver results because they either ignored the counsel of WTO staff or bypassed the Geneva-based envoys and went directly to ministers in capitals, WTO insiders said.

“What you need in the WTO is someone who knows how to persuade people, to build bridges, and to lead from behind,” a former senior WTO diplomat, who requested anonymity, told The G|O. “If you tell ambassadors what to do, it does not work, they will not cooperate.”

Top diplomats and Geneva-based WTO insiders, when asked about the incoming WTO chief, were optimistic that she stands a good chance to deliver “something positive” on the roll-out of COVID-19 vaccines for the poorest countries. The same sources said Okonjo-Iweala's long tenure at the World Bank and as a past Chair of the Board of GAVI, the vaccine alliance, puts her at a vantage point on this critical issue.

On the pandemic and vaccines, Okonjo-Iweala told delegates that the WTO can and must play a more forceful role to minimise or remove export restrictions that hinder supply chains for medical goods and equipment. “WTO members have a further responsibility to reject vaccine nationalism and protectionism: they should rather intensify cooperation on promising new vaccines, therapeutics, and diagnostics," she said. There should be a “third way” she argued, “to broaden access through facilitating technology transfer within the framework of multilateral rules, so as to encourage research and innovation while at the same time allowing licensing agreements that help scale up manufacturing of medical products.”

Aside from the COVID-19 priority, other priority tasks Okonjo-Iweala flagged that could bear results in 2021 included trying to conclude a deal on fisheries subsidies, e-commerce, and agreeing on a work programme on how to reform the WTO Dispute Settlement System and in particular its stalled Appellate Body. The WTO rule book is outdated and needs to be updated to take account, as she put it, “of 21st-century realities such as e-commerce and the digital economy.”

The WTO also needs to do more in the area of trade and the environment, she noted, and suggested the agency needs to ensure how it can “best support the green and circular economy and address more broadly the nexus between trade and climate change.”

However, when talking to reporters she alluded that politically thorny issues such as industrial goods and agricultural (trade-distorting domestic) subsidies need to be revisited, but did not single them out for urgent action in 2021.

Okonjo-Iweala, reflecting her 25-year background as a senior World Bank official, floated some ideas on how to make the WTO more transparent and timely for our times. These included moving the Secretariat away from the current “siloed way of working to a more team and task-based approach.” Beefing up monitoring of commitments and reporting obligations were also mentioned. The Secretariat, she said, has to be fit for purpose to take account of the changing dynamics of the global economy and priorities of members. In addition, she suggested members should consider holding a ministerial conference every year and not once every two years.

Delegates are eager to see the team of WTO deputy director-generals she selects for her tenure. Diplomatic sources say there is a good chance there will be a better gender balance than the out-going team, which consists only of men.