Can New WTO Chief Overcome Dysfunction at Global Trade Body?

The Yomiuri Shimbun

14:20 JST, February 20, 2021

Will the World Trade Organization be able to recover from its dysfunctional state? It is hoped the organization will overcome its many difficult challenges and do its best to enhance the free trade system.

The WTO has selected former Nigerian Finance Minister Ngozi Okonjo-Iweala as its director general. She will be the first female and first African director general since its establishment in 1995. The world trade body said Okonjo-Iweala will assume the post in March.

The previous WTO chief stepped down mid-term, and the selection process for a successor was difficult: The U.S. administration of former President Donald Trump was pushing for a South Korean candidate and WTO members struggled to reach a unanimous consensus, a general principle of the trade body.

It is believed that the United States had been wary of a candidate from Africa, where China’s influence is strong.

The stance of the United States changed when the administration of President Joe Biden began, resolving the unprecedented vacancy of about six months in the WTO leadership. The selection of the new WTO chief is welcome news.

Okonjo-Iweala has served in such key posts as World Bank managing director, and she boasts rich personal connections and high popularity. Regarding her abilities, expectations are high.

However, dysfunction at the WTO is serious. Firstly, it is important for the new director general to urgently rebuild the Appellate Body, the final body to hear appeals from member countries in trade dispute settlements.

The United States, frustrated with the slowness of the body’s hearings and judgments, has continued to oppose the selection of members. As a result, vacancies have increased, and the body has not been able to conduct hearings for more than a year. This is the cause of the WTO’s dysfunction. No other organization can solve trade disputes among the about 160 WTO members.

It is important to persuade the United States so that members can be appointed.

The United States has also expressed criticism as China is still being treated as a “developing country” and receiving preferential treatment under the rules, as it is the status that was declared when China joined. The United States has also argued that the WTO is unable to sufficiently deal with China’s unfair industry subsidies and intellectual property rights violations.

These are matters that have long been in need of improvement. It is necessary to strongly press China for reforms. There also are deep-rooted disputes between advanced and developing countries. It is important to make efforts to resolve such confrontations.

The new WTO director general also has to tackle issues concerning the novel coronavirus. Demand for medical supplies and equipment such as masks is increasing, and about 100 countries and regions have introduced export restrictions. Monitoring must be enhanced to ensure WTO rules are being followed.

The WTO has no clear rules on e-commerce and data trading, amid the expansion of such fields. There is an urgent need for the creation of rules for trade in the digital age.

Japan, which promotes free trade, has a big role to play as a coordinator between nations. It should strive to develop personnel who can play an active role in the international arena, aiming to have them eventually become candidates for the top position of the WTO.

— The original Japanese article appeared in The Yomiuri Shimbun on Feb. 20, 2021.