Director General defends WTO amidst OECS concerns

By Kenton X. Chance

KINGSTOWN, St. Vincent (CMC) — The Director General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, Tuesday said that the global community is facing very challenging times with respect to trade and that this is probably the most disruptive period in global trade since the 1930s.

But regional countries, like Dominica and Antigua and Barbuda, have warned that unless the rules of engagement are observed, “these institutions will not work for us.

“In the first place. There is no real benefit to us because of our structure of our economies. But if we are to play a part and to ensure that there is fairness around the world, we will not achieve the desired objectives of the WTO,” Dominica’s Prime Minister Roosevelt Skerrit said.

“So, I appreciate very much the leadership and the commitment of our dear Secretary General, and I believe that with her election to the post and what she’s able to do thus far, it has brought some level of confidence in us, but that has also been tempered by the reality.”

Antigua and Barbuda’s Foreign Affairs, Immigration and Trade Minister, E.P. Chet Greene, said that while the Caribbean remains a peaceful corner of the world given the wars taking place in Ukraine, Gaza, Israel and Iran, among other regions, “our danger is… (the) slow suffocation of our economies and the attendant stagnation of our societies.

“The forces that are shaping today’s world have no patience with small island developing states and our vulnerabilities are not acknowledged, not to mention that our situation elicits no special consideration, Greene said, noting that “many of the major institutions that used to underpin the international order are no longer equal to the challenges that confront them”.

Addressing the Seventh Meeting of the Organisation of Eastern Caribbean States (OECS) Assembly, Okonjo-Iweala said the decision by the United States to impose a tariff on countries, including those in the Caribbean could result in a contraction of global trade by about 0.2%.

“And this is a huge turnaround from the 2.7% growth in global merchandise trade that we had projected for this year,’ she said, telling government and opposition legislators from the OECS that the uncertainty created by the whole situation, could result in a ‘contraction of about 1.5% which is a huge dent on global trade growth”.

United States President Donald Trump has implemented the trade tariffs in a move economists and other traders say is designed to dismantle much of the architecture of the global economy and trigger broader trade wars.

Okonjo-Iweala said that the WTO has been modelling every single change with the uncertainty between US and China bringing about a huge amount of uncertainty into the global trading system.

“But we are so glad they had the meeting in Geneva, the one in London and … when we add the impact of the China-US de-escalation, we have a turnaround of global merchandise trade growth to 0.3%, but then if we add the 50% steel and aluminium tariffs that were recently brought in, and the impact of a possible 50% tariff on the European Union, we go back to a contraction of 0.5%”.

The WTO director general said OECS economies are service economies, “and therefore, mainly, are not as impacted by these tariffs as they could have been.

“But services don’t escape, because anything that happens to global goods trade has some impact on services, but maybe not as much as one would expect”, she said.

Okonjo-Iweala said in her discussions with the United States representatives including Ambassador Jamieson Greer, and Howard Lutnick, the secretary of commerce, the reasons they gave for going unilateral, “I thought that the approach of unilateralism to solve the problem was probably not the best one to take” and that a “more cooperative approach … would have given us a better answer for all WTO members all round”.

She said Article 28 of the General Agreement on Tariffs and Trade enables a member who is no longer pleased with the situation of the tariffs to come back and say to other members, “we want to relook at this.

“But they’ve chosen to go the unilateral way. They have some valid criticisms, and we must ask ourselves, how did we get there? I think what we do about it has a lot to do with this question.

“First, WTO members should recognise that the trade of the United States is 13% of world trade. So, 87% of world trade is among other members. And they should continue to trade among themselves on WTO terms, the most-favoured-nation tariff terms.

“And one of the things that other WTO members can do about the situation is to come together. Come together to say we will continue to respect the system. We will continue to do our trade on most-favoured-nation terms so as to strengthen the system.”

She acknowledged that small island economies can be very vulnerable, and they need the stability and predictability of the system.

“So, making your voices heard on the importance of that stability and predictability is very important, and that’s one action you can take in banding with other members to make sure that your voices are heard on this issue.”

Okonjo-Iweala said the OECS countries will have an occasion to do that at the 14th ministerial meeting of the WTO in March next year “so that we can safeguard the system”.

She said OECS countries must also ask themselves “as uncomfortable as it may be” whether there are any thing the US says it is doing by these unilateral actions because it wanted some reforms at the WTO and other members were not forthcoming to support those reforms.

“They’ve made criticisms of unfair trade practices, on level playing field issues, use of subsidies in ways that are not fair to others, against certain other members, like China. China itself has made criticisms of the system about those who have agricultural subsidies.”

She said developing countries such as the OECS have also been critical of the system, on the grounds that it hasn’t delivered as much for them.

“So, all these are criticisms members have, and if these criticisms are the reasons why the US decided to take unilateral action, well maybe we should turn this very uncomfortable situation into an opportunity. This crisis into an opportunity to say what action can we take as members in order to reform the organisation and make it fit for purpose and fit for the 21st Century.”

She said she personally believes that some of these reforms need to be very deep.

“We have issues, as I said, about some of our rules that may not be fit for purpose, to make sure that members are open, transparent and fair with each other and declare their trade policies and practices in a way other members can gauge and see,” Okonjo-Iweala said.

“We need to look at our negotiations function to make sure that we are able to use all instruments at our disposal, be it the multilateral instrument or the plurilateral we need to look at our dispute settlement system that is still working, but not working as well, because the appellate body has been hubbled for some years now, and say, ‘How do we bring all these things together into a deep reform?’”.