With growth slowing and families struggling to make ends meet, it is an appalling injustice when money ends up in the hands of criminals – money that could be spent on much-needed global growth and development” // NGOZI OKONJO-IWEALA Ngozi Okonjo-Iweala was appointed director general of the World Trade Organization in 2021, the first woman and the first African to do hold the position. An economist and international develop- ment expert, she has chaired the board of Gavi, the Vaccine Alliance and African Risk Capacity, and co-chaired the Global Commission on the Economy and Climate. She served as Covid-19 Special Envoy for the African Union and the World Health Organization. Dr Okonjo-Iweala served twice as Nige- ria’s finance minister and spent 25 years at the World Bank rising to the position of managing director.
X-TWITTER @NOIweala @WTO wto.org
trade continues to operate on most favoured nation tariff terms, and 87% of global goods trade takes place among the rest of the world outside the US. Governments, including the US, retain considerable agency to stabilise and strengthen world trade, and to manage the impacts of trade diversion. Failing to do so would come at signif- icant social and economic cost. Trade is a valuable driver of growth, pov- erty reduction and wider economic resilience. Open global trade helped economies rebound from the global financial crisis and the Covid-19 pan- demic. Over the past few decades, trade has helped 1.5 billion people out of extreme poverty. Advanced economies have benefited, too, through increased purchasing power for households and businesses, stronger productivity growth, and access to global inputs and markets for their own exports. These are benefits we should strive to retain – not least because electorates will miss them if they disappear. A FOCUS ON EQUITABLE TRADE Not everyone has shared adequately in these gains. Many poor countries, particularly in Africa, remain on the margins of the multi-country supply chains that are a hallmark of modern globalisation. Even within rich coun- tries, some people and places are left behind, fuelling today’s disenchant- ment and populism. That said, the focus on job dislocation linked to import competition and technological change often overshadows the reality that lost jobs are outnumbered by new ones linked to trade opportunities – jobs, however, often in the services sector, in different geographic locations and for different people. Another justified criticism of the trading system pertains to overcon-
centration. The US makes a valid point about others’ overdependence on its market, or that the production of some key goods or supply chains is excessively concentrated in certain geographies and there is a need for deconcentration for national security or global resilience purposes.
– among governments and businesses alike – of the value of the stable and predictable international market con- ditions we now take for granted. But there is also a big warning sign that WTO members ignore at the peril of the organisation. The US is hardly alone in wanting to see changes to how the trading system functions. WTO members have long complained of different problems, from unfair trade practices and other level playing field concerns, to repairing the dis- pute settlement system, helping poor countries to grow by better integrat- ing into world trade, and improving decision-making processes so that the WTO agenda can keep moving forward. One clear need is for more dynamism within the WTO: from more negotiat- ing instruments to re-vitalised rules and agreements. Our rules were never meant to be set in stone. Over the past 30 years the world has changed, and WTO rules must be reconsidered and changed as needed. G7 leaders face a pivotal choice: continuing down the road of fragmen- tation in global trade, or repositioning and re-vitalising the WTO and the multilateral trading system. For the sake of future prosperity, fairness and resilience, I hope they will give their political backing to the latter – and instruct their trade ministers to deliver.
THE IMPORTANCE OF RE-GLOBALISATION
If one big takeaway from the Covid- 19 pandemic was the vulnerability of supply chains and the importance of diversifying sources of supply, what we see today reminds us that we must also diversify sources of demand. To make trade more equitable and more resilient, we need ‘re-globalisa- tion’: deconcentrating production and demand by involving more countries and regions in international produc- tion networks. Cultivating new source locations is not enough – businesses also need to find new markets. Encour- agingly, data suggest an increase in the number of source countries for differ- ent products. And South-South trade now accounts for around a quarter of world trade, up from less than a tenth in 1995. But we need to take this much further. To do so, open trade anchored in international cooperation and rules remains vital. A silver lining of the cur- rent turmoil is the renewed recognition
“Open trade anchored in international cooperation and rules remains vital. A silver lining of the current turmoil is the renewed recognition – among governments and businesses alike – of the value of the stable and predictable international market conditions we now take for granted”
47 globalgovernanceproject.org
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