• Saturday, May 18, 2024
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EXPLAINER: Here’s why Okonjo-Iweala needs US support for WTO job


Nigeria’s former finance minister, Ngozi Okonjo-Iweala, by now would have been recorded as the first African woman to occupy the seat of director-general of the World Trade Organisation (WTO) but for a veto by the United States, which halted her announcement, perhaps temporarily.

The body is due to meet on November 9. However, the election is likely to be delayed by one month due to the rapid spread of the second wave of Covid-19 in Switzerland.

Nevertheless, for Okonjo-Iweala, starting out without the world’s largest economy on her part may mean difficult times ahead.

The Donald Trump administration is adamant it will not be supporting the former managing director of the World Bank and US citizen, Okonjo-Iweala, instead it prefers to throw its weight behind South Korea’s trade minister Yoo Myung-hee, who is also contending for the seat.

Okonjo-Iweala has received the support of many member countries of the WTO, just as she is practically seen as carrying the hope of the entire continent of Africa.

While she will become the first woman and African to head the trade body, experts say Okonjo-Iweala also has the chance to put Africa’s plans to build the world’s biggest free trade area on the top table, pointing to the market opportunities on the continent.

However, how successful she becomes in championing those causes would depend on her relationship politically with the powers that control the WTO.

The WTO may be a consensus-driven entity, but the process through which those trade decisions are arrived at is steeped in backroom politics.

About the WTO and how it works

The WTO is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947 in the expectation that it would soon be replaced by a specialised agency of the United Nations (UN) to be called the International Trade Organisation (ITO).

While the ITO did not materialise, the GATT proved remarkably successful in liberalising world trade for nearly 50 years.

The model of reaching agreements through consensus began during the GATT period. Consensus meant no votes on senseless resolutions and decisions were not by majority rule. Some experts have traced the origin of the consensus model to US President Roosevelt who introduced the Reciprocal Trade Agreement Act (RTAA), which allowed the US representatives to negotiate bilateral trade deals without recourse to the US Congress. The RTAA created a model for those bilateral agreements, which would become the basis for GATT.

Not surprising therefore that from the beginning, the agenda for the agreement were set and dominated by the US and the European Community.

The WTO, which eventually replaced the GATT in 1994, adopted the consensus model with the US, the EU Community, and Asian powers like China coming into the fray. As of 2000, when the membership swelled to 160 countries from 135, there was no single voice for Africa in the WTO.

Where the hurdles lie

Since it was founded, the six director generals the body has elected have come from three continents including Europe (4 DGs), Asia (1 DG), and South America (1 DG). The African continent has never had a strong voice in the WTO, which partly explains why the continent is throwing everything it has to ensure that Okonjo-Iweala emergence is not scuttled.

“Nigeria is currently reaching out to all members of the WTO including the US and South Korea to overcome the impasse as well as persuade the US to join the consensus,” according to a statement from the Ministry of Trade and Industry.

While the US has stayed out of the ballot, it has always made sure its national interest was prioritised and for good reason. The US is the single largest contributor to the funding of the WTO. In 2015 for instance, the country contributed 11 percent of the total budget of the organisation. China, which came second, contributed 8.6 percent.

Although the rise of China as an economic bloc has provided a counterbalance to US dominance of agreements, the latter still enjoys the friendship of many European countries, hence, is likely to get the upper hand in major decisions.

Those who have ignored the power of Washington in the WTO, particularly under President Trump, have had to lick their bruises.

It would be recalled that in 2019, the US blocking of the appointment of new judges as a way to protest the way WTO does business, threw the organisation into an existential crisis.

Following the US action, the appellate body of the WTO considered the Supreme Court for international trade, lost its ability to rule on new dispute cases.

The panel, whose decisions affect billions of dollars in global trade, is supposed to have seven judges. But their ranks have dwindled because the US — under the past three presidents — has blocked replacements in protest.

While the US general election on Tuesday is likely to usher in a new President, the handover is still in January, which gives the incumbent enough time to achieve his designs in the WTO election. But Okonjo-Iweala has a choice to intensify her lobbying of the US power bloc and prove she is more qualified than she is perceived.