After months of impasse caused by the Trump Administration’s intransigence, Ngozi Okonjo-Iweala was appointed the Director General of the World Trade Organization (WTO). She is the first woman executive head of the WTO and also the first from the African continent. The appointment comes at a crucial juncture when most countries, especially in the developing world, need more than a helping hand from global markets to revive their economies. Would Okonjo-Iweala, an erstwhile development economist, help the WTO remain honest to its objectives of addressing the inequities in the global trading system?
The new director general ignited some hopes of such an outcome getting realised in future in her first statement after getting appointed. She reminded the members that the objectives of the WTO as spelt out in the Marrakesh Agreement are to raise standards of living and to secure a large and steadily growing volume of real income and effective demand. It may be pointed out that the Organization was also mandated to ensure that the developing and least developed countries secure “a share in the growth in international trade commensurate with the needs of their economic development”. But glaring imbalances in the various agreements under the WTO did not allow these objectives to be realised.
Consequently, for the better part of a decade since it began operations in 1995, developing countries strove, largely unsuccessfully, to make the WTO serve its development imperatives better. However, the dominant discourse remained one of pursuing trade liberalisation, thus remaining divorced from its stated objectives. While she has rekindled this critical issue, has Okonjo-Iweala signalled a change in WTO’s dominant discourse under her leadership?
In her first statement, she has quite predictably dwelled on the challenges to make equitable access to vaccines and medicines, which, according to her, is a “key plank of the recovery”. Here lies her first real opportunity to catalyse a consensus among the member states on an important proposal tabled by India and South Africa aimed increasing affordability of Covid-related vaccines, medicines and other medical products by temporarily tweaking the laws governing intellectual property rights (IPRs).
Since monopolies conferred by IPRs tend to increase prices of proprietary products, India and South Africa have proposed that implementation and enforcement of four forms of IPRs — patents, copyrights, industrial designs and trade secrets — be temporarily waived for prevention, containment or treatment of Covid-19. This, the sponsors have argued, would make these critical products affordable, thus paving the way for an early exit from the pandemic. This proposal has been co-sponsored by 55 other countries, including the African group and group of least developed countries. Besides, several prominent developing countries, one prominent observer, Holy See, has supported the proposal. However, despite a trend towards consensus among developing countries in favour of the “Waiver Proposal”, Okonjo-Iweala seems to be breaking ranks with the developing countries.
Many nations, including India, would be dismayed that the new DG has set for herself the task of reviewing the special and differential treatment (S&DT), which allows these countries to take less onerous commitments compared with their developed counterparts. The US has been strongly arguing that countries like India must voluntarily give up S&DT, which Okonjo-Iweala seems to support. Yet another issue on which WTO’s new DG seems to be backing the US is inclusion of electronic commerce in the WTO, although India and South Africa opposed its inclusion, arguing that small businesses in developing countries would be adversely impacted.
Reducing the beneficiaries of S&DT and inclusion of electronic commerce have figured prominently in the agenda for the ‘reforms’ of the WTO proposed by the European Union and a motley group of countries led by Canada. The ‘reforms agenda’ includes several contentious issues like investment facilitation, which India and several developing countries have opposed. Okonjo-Iweala has lent her support to the on-going discussions among a group of members on this issue, indicating these members “need to pursue efforts to build support and attract interest from a significant part of the WTO membership, including from developing countries”.
However, it seems Okonjo-Iweala is paying mere lip service to the key issues on which most developing countries have been seeking amendments of WTO rules, especially on agriculture. Although agriculture continues to engage a sizeable section of the workforce in a large number of developing countries, global markets for agricultural products are dominated by the US and members of the European Union.
Correcting this imbalance is among the challenges for developing countries as the WTO gets back to business under its new executive head.
Professor, Centre for Economic Studies and Planning, School of Social Sciences, JNU