Okonjo-Iweala calls for reform of WTO’s trading system, says it’s not flexible enough

Ngozi Okonjo-Iweala, director-general (DG) of the WorldTrade Organisation (WTO), says the trading system of the WTO needs to bereformed to make it more flexible. Okonjo-Iweala spoke on Tuesday while addressing criticism ofWTO’s trade system by the United States during an interview with Arise TV onthe sidelines of the Future Investment Initiative in Riyadh, Saudi Arabia. The DG acknowledged the validity of criticisms levelledagainst the global body, particularly by the United States, regarding itsoperational rigidity. She said the complexity of the WTO’s structure, whichincludes 166 members utilising a consensus-based decision-making system, hasled to issues with the speed of enacting new rules and agreements. “Well, one of them is, this is specifically of the WTO, andI 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 consensusdecision-making system with 166 members. “Consensus is good because it gives the smallest member thesame power as the largest,” the former minister said. “But when it becomes unanimity, it becomes a veto power, andwe need to find a way to make the consensus more workable. “That way, willing coalitions of members can come togetherto make new agreements, new rules. So, I share that criticism. “We need to reform that system. Last one, I think the worldhas become over-dependent in the trading system. It was built forinterdependence, not over-dependence.” Beyond institutional reform, Okonjo-Iweala highlighted amajor systemic flaw in the current global economic arrangement, noting that theworld has become dangerously “over-dependent” in trade, a system initiallybuilt only for interdependence. She pointed out that many countries rely too heavily on theUS for market demand and on China for critical supplies. To mitigate this risk, the DG urged countries to look towarddiversification into new markets. Okonjo-Iweala concluded by strongly pitching Africa as theideal solution to this global over-dependence, stressing that the continent isready to fill the vacuum with its wealth of rare earths and critical minerals. The director-general added that, given the continent’scurrent population of 1.4 billion people and the projection that one in five ofthe working-age population will be African by 2050. ‘WTO EXPERIENCED ITS GREATEST DISRUPTION IN HISTORY’The former finance minister of Nigeria said WTO’smultilateral system has demonstrated surprising resilience in the face of thegreatest disruption it has experienced in its eight-decade history. Okonjo-Iweala said the resilience was confirmed by ananalysis using a specific methodology that tracks how much world trade occurson WTO terms, noting that prior to the imposition of tariffs, the figure stoodat 80 percent, not the expected 100 percent. She explained that after the introduction of tariffs, thefigure dropped to 72 percent, confirming that the tariffs have had a definiteimpact. However, Okonjo-Iweala concluded that the WTO system wasbuilt “block by block over 80 years” and is therefore “not that easy todismantle”. “The second thing is that our forecast for world trade thisyear is quite a bit higher than we had originally said,” the DG said. “In August, after we put in the August tariffs, we wereforecasting 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 goodsto get ahead of the tariffs. “Then we also saw big trade in AI goods. 42 percent of thegrowth in trade in the first half of the year is driven by AI trade.” Speaking on subsidies, Okonjo-Iweala defined a good subsidyas one that makes economic sense, such as supporting research, innovation, andyoung entrepreneurs in tech and startups, which she described as exciting areasfor new discovery. Also, she warned against wasteful subsidies, such as thoseprovided to inefficient state enterprises, and advocated for green subsidies tocombat climate change. On Monday, the DG said the organisation is often taken forgranted 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 forNigeria’s economic take-off, stable exchange rates and a predictable fiscalregime, is now beginning to materialise. Drawing from her experience, she stressed that once thisfoundational stabilisation is achieved, the government must immediately shiftits focus and attention toward implementing policies designed to drive economicgrowth. “The government now needs to look at growth, because theonly way that people can feel that the economy is working for them is when itgrows, and not only just growing, but the seeds and fruits of that growth isspreading to those who don’t have,” she said. “Those at the bottom or end of the ladder, those w

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