Ngozi Okonjo-Iweala, director-general (DG) of the World Trade Organisation (WTO), says the trading system of the WTO needs to be reformed to make it more flexible.
Okonjo-Iweala spoke on Tuesday while addressing criticism of
WTO’s trade system by the United States during an interview with Arise TV on
the sidelines of the Future Investment Initiative in Riyadh, Saudi Arabia.
The DG acknowledged the validity of criticisms levelled
against the global body, particularly by the United States, regarding its
operational rigidity.
She said the complexity of the WTO’s structure, which
includes 166 members utilising a consensus-based decision-making system, has
led to issues with the speed of enacting new rules and agreements.
“Well, one of them is, this is specifically of the WTO, and
I share it. The US feels the WTO is not flexible enough. It’s too inflexible.
You can’t get decisions made quickly because, you know, it’s a consensus
decision-making system with 166 members.
“Consensus is good because it gives the smallest member the
same power as the largest,” the former minister said.
“But when it becomes unanimity, it becomes a veto power, and
we need to find a way to make the consensus more workable.
“That way, willing coalitions of members can come together
to make new agreements, new rules. So, I share that criticism.
“We need to reform that system. Last one, I think the world
has become over-dependent in the trading system. It was built for
interdependence, not over-dependence.”
Beyond institutional reform, Okonjo-Iweala highlighted a
major systemic flaw in the current global economic arrangement, noting that the
world has become dangerously “over-dependent” in trade, a system initially
built only for interdependence.
She pointed out that many countries rely too heavily on the
US for market demand and on China for critical supplies.
To mitigate this risk, the DG urged countries to look toward
diversification into new markets.
Okonjo-Iweala concluded by strongly pitching Africa as the
ideal solution to this global over-dependence, stressing that the continent is
ready to fill the vacuum with its wealth of rare earths and critical minerals.
The director-general added that, given the continent’s
current population of 1.4 billion people and the projection that one in five of
the working-age population will be African by 2050.
‘WTO EXPERIENCED ITS GREATEST DISRUPTION IN HISTORY’
The former finance minister of Nigeria said WTO’s
multilateral system has demonstrated surprising resilience in the face of the
greatest disruption it has experienced in its eight-decade history.
Okonjo-Iweala said the resilience was confirmed by an
analysis using a specific methodology that tracks how much world trade occurs
on WTO terms, noting that prior to the imposition of tariffs, the figure stood
at 80 percent, not the expected 100 percent.
She explained that after the introduction of tariffs, the
figure dropped to 72 percent, confirming that the tariffs have had a definite
impact.
However, Okonjo-Iweala concluded that the WTO system was
built “block by block over 80 years” and is therefore “not that easy to
dismantle”.
“The second thing is that our forecast for world trade this
year is quite a bit higher than we had originally said,” the DG said.
“In August, after we put in the August tariffs, we were
forecasting 0.9 percent, which is low compared to 2.7 percent pre-tariffs.
“But now after the first half of the year, numbers are in,
we’re actually forecasting 2.4 percent. So that’s much better.
“Why is that? A lot of businesses in the US stockpiled goods
to get ahead of the tariffs.
“Then we also saw big trade in AI goods. 42 percent of the
growth in trade in the first half of the year is driven by AI trade.”
Speaking on subsidies, Okonjo-Iweala defined a good subsidy
as one that makes economic sense, such as supporting research, innovation, and
young entrepreneurs in tech and startups, which she described as exciting areas
for new discovery.
Also, she warned against wasteful subsidies, such as those
provided to inefficient state enterprises, and advocated for green subsidies to
combat climate change.
On Monday, the DG said the organisation is often taken for
granted despite playing a vital role in global trade.
‘NIGERIA’S STABILISATION EFFORTS MATERIALISING;
GOVERNMENT MUST NOW PRIORITISE GROWTH’
Okonjo-Iweala asserted that the primary requirement for
Nigeria’s economic take-off, stable exchange rates and a predictable fiscal
regime, is now beginning to materialise.
Drawing from her experience, she stressed that once this
foundational stabilisation is achieved, the government must immediately shift
its focus and attention toward implementing policies designed to drive economic
growth.
“The government now needs to look at growth, because the
only way that people can feel that the economy is working for them is when it
grows, and not only just growing, but the seeds and fruits of that growth is
spreading to those who don’t have,” she said.
“Those at the bottom or end of the ladder, those who are
working, can feel the impact. I think we’ll get there if the right policies are
put in place.
“What I was telling the government at the time was, please,
it is time now for you to put in place those policies that can make the economy
grow.
“What does that mean? Small and medium enterprises in the
economy. We know Nigerians are so entrepreneurial.
“They don’t even look for much from government. How do we
support small and medium enterprises? Let’s support the Bank of Industry so
that it can, you know, support a lot of small and medium entrepreneurs.
“What are we doing about agriculture? We are blessed with
many fertile lands. If we want, we can feed ourselves. We don’t even need to
import food.”
Okonjo-Iweala urged the government to shift focus to growth
initiatives by targeting rural areas and supporting women and youth
entrepreneurs with innovative business ideas.
She highlighted that growth opportunities exist not only in
agriculture but also in sectors like the creative industries, expressing pride
in its potential after noting it previously contributed 1 percent to GDP.
The DG noted that the country is still too dependent on oil
and gas, and there is a need to diversify.
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