Okonjo-Iweala becomes first woman, African to lead WTO

Nigerian economist Ngozi Okonjo-Iweala was appointed Monday to head the World Trade Organization, becoming the first woman and first African to take on the role amid rising protectionism and disagreement over how the body decides cases involving billions in sales and thousands of jobs.

Okonjo-Iweala, 66, was named director-general by representatives of the 164 countries that make up the WTO, which deals with the rules of trade between nations.

She said during an online news conference that she was taking over at a time when the WTO “is facing so many challenges” and is in need of “deep and wide-ranging reforms.”

She said the first priority would be quickly addressing the economic and health consequences of the Covid-19 pandemic and ensuring that poor countries do not have “to wait in line” for vaccines.

“Vaccine nationalism does not pay” she said, because countries that lag in vaccination will be the source of new variants.

Other priorities would include reforming the organization’s dispute resolution process and finding ways for trade rules to deal with change such as digitalization and e-commerce. Dispute resolution is key because the WTO is the only place countries can come to have their trade differences settled, she said.

“It will not be easy because we have the issue of lack of trust among members which has built up over time,” she said. “One good thing is, every member agrees that dispute resolution needs to be reformed,” she added, though they have different opinions about what those reforms should be.

The appointment, which takes effect March 1, came after US President Joe Biden endorsed her candidacy, which had been blocked by former President Donald Trump.

Biden's move was a step toward his aim of supporting more cooperative approaches to international problems after Trump's “America first” approach that launched multiple trade disputes.

But unblocking the appointment is only the start in dealing with trade disputes launched by Trump, and in resolving US concerns about the WTO that date to the Obama administration. The US had blocked the appointment of new judges to the WTO's appellate body, essentially freezing its ability to resolve extended and complex trade disputes.

The US government has argued that the trade organization is slow-moving and bureaucratic, ill-equipped to handle the problems posed by China's state-dominated economy and unduly restrictive on US attempts to impose sanctions on countries that unfairly subsidize their companies or export at unusually low prices.

Okonjo-Iweala has been Nigeria's finance minister and, briefly, foreign minister, and has had a 25-year career at the World Bank as an advocate for economic growth and development in poorer countries. She rose to the No. 2 position of managing director, where she oversaw $81 billion in development financing in Africa, South Asia, Europe and Central Asia. She made an unsuccessful bid for the top post in 2012 with the backing of African and other developing countries, challenging the traditional practice that the World Bank is always headed by an American.

Serving as special envoy for the African Union to mobilize financial support for the fight against Covid-19, she urged richer countries to support a two-year standstill on debt service for indebted countries and proposed easing economic sanctions on Sudan and Zimbabwe for health reasons.

Okonjo-Iweala has a bachelor's degree in economics from Harvard University and a PhD. in regional economics and development from the Massachusetts Institute of Technology.

South Korean trade minister Yoo Myung-hee had withdrawn her candidacy, leaving Okonjo-Iweala as the only choice. Her predecessor, Roberto Azevedo, stepped down Aug 31, a year before his term expired.

Trump repeatedly accused the WTO of unfair treatment of the US, started a trade war with China in defiance of the WTO system, and threatened to pull the United States out of the trade body altogether. Trump also imposed 25% steel tariffs that hit European allies on national security grounds, a justification that went beyond trade measures normally used within the WTO rules framework to address complaints about unfair trade.

So far, Biden has not said whether the US will unblock the appellate appointments, and he has not withdrawn the steel tariffs either, which are backed by US steel industry and union groups.

Chad P Bown, senior fellow at the Peterson Institute for International Economics, said unblocking Okonjo-Iweala's appointment was “a very good first step” in re-engaging with the WTO, “but that's the easy one. The rest are hard.”

In particular, the WTO faces “a ticking time bomb” in the form of other countries' challenges to Trump's use of national security as a justification for imposing tariffs, a little-used provision in US law rejected by key US trading partners in Europe.

Bown said any decision would be a lose-lose dilemma for the WTO. Ruling against Trump's move could provide a rallying cry for WTO skeptics in the US, while a ruling in favor could lead to other countries using national security justification as well. And that "opens a giant loophole in the trading system whereby all rules are meaningless.” That gives Biden's administration an incentive to find a way to take the dispute off the table before a decision, expected this summer.

“If you're the Biden administration what you want to do is settle this thing, so you don't put the WTO in this awkward position,” Bown said.