By Peter Fabricius*
The sudden resignation of the World Trade Organization’s (WTO) director-general, the Brazilian Roberto Azevêdo, has created both opportunity and challenges for Africa. Of the eight candidates to replace Azevêdo, three are African: former Nigerian finance minister Ngozi Okonjo-Iweala; former Kenyan foreign minister and WTO General Council chairperson Amina Mohamed; and Abdel-Hamid Mamdouh, an Egyptian lawyer and erstwhile WTO official.
The other candidates are former British trade secretary Liam Fox; former Moldovan foreign minister Tudor Ulianovschi; South Korean trade minister Yoo Myung-hee; former Saudi economy minister Mohammed al-Tuwaijri; and Mexico’s former WTO deputy director-general Jesús Seade Kuri.
Some pundits believe Africa has a good shot at the job. An African has never held the position – though the WTO doesn’t formally rotate the job regionally. Also, the continent has three candidates, and they are competitive. But there are problems.
The African Union began the process of endorsing a consensus candidate at its February summit. But a combination of late nominations, Azevêdo’s unexpected departure in August, COVID-19 and dogged competition among Egypt, Nigeria and Kenya have made that unlikely.
With the first round of voting due to start in Geneva next month, it seems the three African candidates will have to campaign nationally and without continental endorsement – which might hurt their chances. Okonjo-Iweala and Mohamed seem to be the frontrunners of the three Africans, at least judging by relative media attention. Some at the WTO say Mohamed is ahead of all eight candidates.
Mills Soko, Professor of International Business and Strategy at the Wits Business School and Professor Mzukisi Qobo, head of the Wits School of Governance, punt Okonjo-Iweala as a ‘political heavy-hitter with the skill and experience to cajole, knock heads together and break logjams.’ They also say Okonjo-Iweala could ‘contribute towards restoring the multilateral trade agenda.’
But it’s unclear whether South Africa, for one, shares this enthusiasm. One trade official said Okonjo-Iweala’s lack of trade experience would count against her at the WTO. And he was worried about her recent remark that if elected, she would try to build bridges between China and the United States (US).
This official saw that as implying that she would back off from defending China’s inclusion in the WTO’s category of developing countries enjoying ‘special and differential’ trade status. That position means China enjoys better trade terms than developed countries. The US and the European Union have been trying hard to squeeze China and other major emerging markets like India out of this category as they are too big to enjoy such preferential treatment.
And Pretoria evidently fears that kicking China out of the club would have a cascading effect that could ultimately also expel South Africa. The official said only the Egyptian candidate had been explicit about defending special and differential treatment.
This issue is a reminder of the desperate state world trade and particularly the WTO are in. The Doha Round of trade negotiations has stalled since 2001, the Trump administration is mounting a full-scale assault on the WTO, and COVID-19 has shrunk global supply chains, thereby seemingly sidelining the WTO.
In such circumstances, does Africa really want the job of WTO director-general at all? Would this not be a poison chalice, setting up an African incumbent for inevitable failure?
The African trade official thinks this would probably be so if US President Donald Trump were re-elected in November. But with his Democrat rival Joe Biden in the White House, an African WTO director-general could make progress, including defending special and differential treatment.
And an African in the Geneva chair could also help the African Continental Free Trade Agreement (AfCFTA) – now due to become operational on 1 January 2021 – especially by sheltering it from wider global trade as it attempts to build up intra-African industrial supply chains.
Trudi Hartzenberg, Executive Director of South Africa’s Trade Law Centre (tralac), supports the idea of an African woman at the helm of the WTO, at a critical time for the institution, and for multilateralism more generally. ‘It’s not all doom and gloom; there’s light at the end of some tunnels,’ she says.
An agreement on fisheries subsidies could well be within reach, Hartzenberg says. She also sees potential in projecting the model of the WTO’s only recent major success, the Trade Facilitation Agreement, onto other areas, such as investment.
‘The Trade Facilitation Agreement is a multilateral pact but member countries self-select their commitments,’ she notes. It also includes technical and financial support for developing and less developed countries to help with implementing commitments. Hartzenberg also suggests this model could be applied to the ‘plurilateral’ agreements that some – but not all – WTO members have started negotiating on issues such as e-commerce.
‘To get all 164 member states in such a diverse body to agree on anything is very difficult,’ she notes. So member states should reconsider these more pragmatic plurilateral agreements in specific sectors where those who are ready and willing move ahead and others may join later.
She also notes that some global supply chains may reconfigure and become more regionally focused as a result of COVID-19. Despite this, the pandemic is also showing that global trade and multilateral rules remain essential, not least for the transparency and notification that members must give others about what they are doing to accommodate the pandemic.
Hartzenberg disagrees with the African trade official’s suggestion that the AfCFTA should evolve as an African import-substitution enclave. That sort of protectionism – apparent in the positions of some countries in the negotiations on tariffs and rules of origin – would just drive others into a protectionist corner and reduce the potential impact of the AfCFTA, she says.
Instead, African nations should boost and diversify their capacity to produce tradeable goods and services, including through African value chains, but also by integrating better into global supply chains. Africa would also be more competitive globally if it reduced its excessive logistics costs such as transport, which are generally lower for imports from China than between African countries. Significant benefits are likely from better customs and border management and other trade facilitation improvements.
None of this will be easy, and Hartzenberg cautions that the AfCFTA alone won’t transform and diversify Africa’s productive capacity. Member states must work at national level to attract investment, for example. The AU also has several flagship projects such as those to boost infrastructure and industrialisation, which complement the AfCFTA.
The AfCFTA, though full of potential, isn’t the magic bullet for Africa’s economic ills. It has by no means rendered the WTO obsolete for Africa. Likewise global trade, though ailing, is not dead. So having an African in the Geneva hot seat – one who is prepared to work very hard and very smart – could still be a big boon for the continent.
*About the author: Peter Fabricius, ISS Consultant
Source: This article was published by ISS Today