WTO To Run More Smoothly Under New Leadership, But Fate Of Major Reforms Remains Unclear

WTO to Run More Smoothly Under New Leadership, But Fate of Major Reforms Remains Unclear

The World Trade Organization (WTO) is likely to run more smoothly and overcome some minor roadblocks after the appointment of Nigerian economist Ngozi Okonjo-Iweala as its new director-general, but whether major reforms would be passed remains unclear, experts told Sputnik

MOSCOW (Pakistan Point News / Sputnik - 18th February, 2021) The World Trade Organization (WTO) is likely to run more smoothly and overcome some minor roadblocks after the appointment of Nigerian economist Ngozi Okonjo-Iweala as its new director-general, but whether major reforms would be passed remains unclear, experts told Sputnik.

The WTO was running leaderless for five months as former chief Roberto Azevedo abruptly stepped down in August, a year earlier than his second four-year term was set to end. He said that the organization needs a more energetic leader, as it is "stuck" with internal problems. The delays in the appointment of a WTO chief reportedly stemmed from the reluctance of former US President Donald Trump to approve the Nigerian economist's candidacy. The Trump administration favored South Korean Trade Minister Yoo Myung-hee. However, after Joe Biden assumed presidency, the South Korean minister decided to quit the race, paving the way for Okonjo-Iweala's selection.

The delays in the appointment of WTO chief happened against the background of the crisis within the organization, when Washington basically paralyzed the WTO Appellate Body by blocking new appointments to the panel. Trump said that the WTO needed major reform, claiming that China takes advantage of free trade rules, and even suggested that the United States might withdraw from the organization.

Even though the appointment of the former Nigerian finance minister is a positive development for WTO, the powers of DG are limited, while major reforms need consensus of all 164 member-states, which is hard to achieve, according to the experts.

"It's important not to overstate the role of the Director General of the WTO. The position is primarily designed to orchestrate discussions and provide an impetus for negotiations among the members. Ultimately, it is up to the members to decide what kind of new commitments they are prepared to undertake. I am pleased that Okonjo-Iweala enjoys broad support across the membership and seems to be a competent candidate with much experience. So she is a very welcome new addition. I am hopeful that she will focus on rejuvenating the WTO Appellate Body and looking at agricultural subsidies and digital trade. She has said that her initial focus will be on removing trade barriers in relation to vaccines, which is of course also important," David Collins, professor of International Economic Law at the City Law school of the University of London, told Sputnik.

Among the most major reforms that some members expect is the issue of designation of a number of Asian countries, such South Korea, Hong Kong and Singapore, but most prominently China, as "developing" countries even though their respective economies have progressed far beyond the markers of a developing country. Due to their designation to this category, these countries are able to claim some special privileges in WTO and that irritates the United States.

But due to the conflicting interests between superpowers, fundamental reforms are unlikely, according to Gary Clyde Hufbauer, former US Treasury official and non-resident senior fellow with Peterson Institute for International Economics.

"Major reforms are not possible, given significant differences between the big powers, China, US, EU, Russia, India. However, I was encouraged that DG Okonjo-Iweala emphasized plurilateral accords among her priorities. In my view, multilateral agreement by all 164 WTO members, or even the top 40 members, is practically impossible on any subject. But plurilateral agreements on fisheries, e-commerce, investment facilitation and a few other subjects may be within reach - if the DG puts all her political strength on the line," Hufbauer told Sputnik.

Daniel Crosby, a partner specializing in international trade with the US corporate law firm King and Spalding, has a more optimistic prognosis regarding the possibility of WTO reforms.

"I do believe it is possible to reform the WTO, its members wish to do so. And this is possible very quickly because the discussions have been going on since 2000. For the last several years, we have been having intensive negotiations regarding the reform issues. These issues are not new, but the political will to address those long-standing issues has been outstanding for a long time. So Dr.Ngozi's challenge is to create and direct the political will of the members to achieve what most members know needs to be done," Crosby said.


As the Trump administration maintained a critical stance on the WTO, the experts agree that the new US administration will adopt a more flexible approach toward the organization and likely unblock the Dispute Settlement Body (DSB).

"I think the Biden Administration will work to restore the DSB, with a few modest changes that are acceptable to the other big powers. So in that sense, the WTO machinery will work more smoothly. But crucial test for WTO vitality is completing negotiations on the key issues of the day," Hufbauer said.

Collins also believes that Biden will support the rehabilitation of the Appellate Body, but notes that the international trade policy of the new US administration will become clearer after the appointment of US Trade Representative is confirmed by the Senate.

Biden has nominated Katherine Tai, who played a leading role in the Obama administration in trade disputes including the ones targeting China. Both the Democrats and the Republicans reportedly support her candidacy.

However, the King and Spalding's expert warns that Washington's discontent with the WTO emerged long before the Trump administration and the concerns about China's role in the WTO are bipartisan.

"I think it is very clear that the WTO will run more smoothly under the Biden administration to the extent one country can influence that. I think the wish of the Biden administration is to work with the WTO and other international organizations. That's a good time for the WTO. The bad news is many of these issues arose way before the Trump administration and are bipartisan issues. Some of the problems with the WTO, including with the appellate body, are not related physically to the Trump administration, they go way back. In my view, the reform of the appellate body will probably come together with the reform of other rules because everything is interlinked and the problem with the appellate body has to do with the rules. You should reform the rules as well as the procedure of the appellate body and then it will be fixed," Crosby concluded.