World Trade Organization head appointment prompts optimism

The world’s agricultural exporters are relieved at what might be the beginning of the recovery of the World Trade Organization.

The appointment of a new director-general to head the organization could be signalling a revival of the world’s rules-based trading system.

“Now we finally have some good news,” said Claire Citeau, executive-director of the Canadian Agri-Food Trade Alliance.

“We’re hoping that 2021 can be the year when we see some concrete movement.”

Ngozi Okonjo-Iweala of Nigeria takes the helm at WTO March 1 in a uniquely challenging environment. Appointing a new director-general had been blocked by an effective American veto, with the position staying open since near the beginning of the pandemic. The U.S. had backed the candidacy of a South Korean woman, who has now withdrawn from consideration.

U.S. president Joe Biden’s administration removed the objection, allowing the role to be filled.

Okonjo-Iweala comes in with a host of issues to grapple with, something she sounds keen to address.

“WTO members agree that the organization needs reforms, but a lack of trust among members means that there is less agreement on the nature of these reforms or their sequencing,” said Okonjo-Iweala.

“To restore its credibility, the WTO must deliver early success and results.”

Many of the organization’s rules and regulations are outdated and badly need updating to reflect the contemporary situation in world trade.

That is particularly true for agricultural trade, which is dealing with a host of phytosanitary, market access and pesticide residue level issues that create many disputes.

And when there are disputes, they can’t be easily resolved through the WTO resolution system because appeals of rulings end up stalling since the former U.S. president Donald Trump’s administration blocked the appointment of appellant judges.

The Biden administration has not cleared the way for judges to be appointed.

All in all, there is much work to do to get the WTO well-functioning again.

“There is some optimism now that we have a new director-general in place, but it really doesn’t reduce the issues,” said Citeau.

World trade has been under assault for half a decade, with numerous countries, including China and India, controlling market access and finding technical barriers to imports.

The U.S., normally a champion of expanded trade, joined the protectionist tide after Trump was elected in 2016.

That has left a collection of small and medium-sized countries, including Canada, to defend the WTO and the “rules-based” international trading order.

Canada formed the “Ottawa group” of pro-free trade countries trying to bolster the waning strength of systems and organizations like the WTO.

That group’s work continues as the WTO limps along. Early in the pandemic a number of countries including Canada formed a “parallel process” within the WTO to try to iron out disputes before they became intractable. That was a response to the failure of the WTO complaints system that occurred once the appeals process stalled.

“Hopefully the negotiations will resume very soon” to fix the concrete issues, Citeau said.

A meeting of trade ministers should soon be called, but due to the pandemic and the vacancy of the director-general’s position for the last the year, it will likely be pushed toward the end of 2021, rather than being held in June as earlier expected.

While giant world trade players like China, the U.S. and India sometimes feel that they’re better off seeking bilateral agreements with individual trading partners and following “America first” type policies, significant but smaller exporters do not tend to believe they can independently swing deals that will allow their industries to thrive.

While the pro-free trade forces have been weak in recent years, they have stayed resolute and learned to work more closely together through arrangements such as the Ottawa Group.

At the same time, they have found allies in the many small and fragile nations that have faced food security and food storage challenges during the pandemic.

Poor and developing nations need access to foreign markets for their food exports and access to the world’s crops to feed their often-growing populations.

Citeau said there is a lot to do to fix the WTO, but getting Okonjo-Iweala is an essential first step.

“It’s now that the hard work is really starting,” said Citeau.

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