The Confederation of Swedish Enterprise hopes that Ngozi Okonjo-Iweala, the new Director General of the WTO, will drive the work of reforming the WTO, re-establishing the dispute resolution system and finding methods for closer cooperation with the business community.
Okonjo-Iweala believes that she is precisely the type of leader that the organisation needs: an individual who knows trade policy, who can analyse situations, understand the problems and determine what needs to be done. Above all, perhaps, she can drive reforms.
On Monday, 15 February, WTO members took a long-awaited decision to appoint Ngozi Okonjo-Iweala from Nigeria as their new Director General. She will take over the role as of 1 March this year.
Within the World Trade Organization, which is headquartered in Geneva, the member countries agree on common rules to help facilitate trade between them. The organisation also has a role in managing trade agreements and in resolving trade conflicts between member countries. The WTO was established in 1995 and is based on the multilateral trading system that was established by the GATT Trade Agreement. The agreement was one of those created after the end of the Second World War, as part of efforts to build a more transparent and rules-based world follow decades of conflict.
What has happened?
When the former Director General announced, in August last year, that he would resign his post, the process began to identify a candidate to replace him. During the autumn, it became clear that the two candidates who were leading in the process were Ngozi Okonjo-Iweala from Nigeria and Yoo Myung-Hee from South Korea. Okonjo-Iweala received the greatest support, but the process of appointing her as Director General was blocked by the United States. However, when Joe Biden took office as US President States in January of this year, the country chose not only to drop its objections to her appointment but also to actively support her for the role. Okonjo-Iweala will take over as Director General on 1 March this year, and her renewable term of office runs until 31 August 2025.
Okonjo-Iweala believes that she is precisely the type of leader that the organisation needs: an individual who knows trade policy, who can analyse situations, understand the problems and determine what needs to be done. Above all, perhaps, she can drive reforms. Okonjo-Iweala is a citizen of both Nigeria and the United States and was a senior member of the World Bank, where she worked for over 25 years. She also twice served as Nigeria’s Minister of Finance, where she pushed for reforms in the country. This means that Okonjo-Iweala has knowledge both of conducting reform work and international experience, something that is likely to prove useful in her new role.
What does this mean for Sweden and Swedish businesses?
The WTO’s common agreements and rules create predictability and transparency for companies undertaking international trade. In many ways, the WTO acts as the guarantor against protectionism in world trade.
Companies are also frequently able to avoid dealing with trade barriers, thanks to the WTO’s efforts to remove them. The WTO is the most appropriate organisation for dealing with global trade issues, as the vast majority of the world’s countries are among the 164 members.
However, the organisation urgently needs to be reformed and modernised in several areas if it is function more effectively. Not only has world trade increased rapidly since the WTO was initially founded, it has also evolved considerably in many areas, without keeping pace with WTO rules. A burning issue is that the review body for dispute resolution no longer works. The large ministerial conference that was due to take place in June 2020 had to be cancelled as a result of the COVID-19 crisis. The fact that the WTO also had no Director-General in place has also meant that developments within the organisation, and the important reform work, have basically ground to a halt.
The WTO is a member-driven organisation; it is the members who make the decisions. But the Director General can lead the work of reforming the WTO, including efforts to re-establish the dispute settlement system and to press for negotiations on new rules. The Confederation of Swedish Enterprise believes that new rules are needed, among other things, for digital trade, the trade in services and subsidies to industry. Another important issue is to find new ways of closer cooperation between the WTO and the business community. We believe that there should be consultations established to ensure the organisation obtains the views of the business community in a structured fashion. In future, we will therefore focus on how to make the dialogue between business and the WTO much closer. It is important to remember that it is companies, not countries, that trade and invest and that use trading rules and agreements. Therefore, trade policy must be adapted to the reality of business.WTOTrade