Creon Butler
Well, hello, everyone. My name is Creon Butler, and I’m the Director of the Global Economy and Finance Programme at Chatham House, and it’s my great pleasure to welcome you to today’s event, which is the first in our Series of Big Picture conversations with leading world figures, which we are very pleased to be hosting in partnership with Societe Generale.
And I’m absolutely delighted to welcome our first speaker in the series, Dr Ngozi Okonjo-Iweala, Director-General of the World Trade Organization. Dr Ngozi took office at the WTO as the first DG from Africa and the first woman to be DG on the 1st of March this year. This follows a truly remarkable career as a Development Economist and Internal Policymaker. She has twice held the position of Nigerian Finance Minister. She has been Managing Director of Operations, that’s the number two position, at the World Bank. And most recently, before taking up her current position, she chaired the board of Gavi, the Global Vaccine Alliance, and was the AU Special Representative to mobilise finance to fight the pandemic. So there’s really no better person to comment on the enormous challenges facing the world economy today than Dr Ngozi.
I will shortly hand over to Alexandre Fleury, Co-Head of Global Markets at Societe Generale, for some quick words of welcome. But first, some housekeeping points. This conversation will be on the record. It is being livestreamed and will be recorded. We will be very tight for time, but we are keen to take some questions from the audience and to include those in the conversation. So please post your questions as soon as you think of them to the Q&A function, and I will either read them out, or if we have time, we’ll unmute you and ask you to pose the question yourself, and this will take place at the end of the 30 minutes. Please also keep your questions as short and to the point as possible. So thank you very much, and Alexandre, over to you.
Alexandre Fleury
Thank you, Creon, and hello, everyone. Thank you for joining today’s Big Picture Series, for the first in a new line-up of conversations with leading world figures, hosted by Chatham House in partnership with Societe Generale. We have together designed a Big Picture Series to provide respective members and clients around the globe with access to critical knowledge and insight on the major challenges facing the world economy. We are inviting world leading figures to share their unique perspectives, thought leadership and big picture insights, to help you navigate the future chapters in your professions.
In today’s live interview, we are honoured to have Dr Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, to discuss the future of world trade, the challenges, opportunities, and her views on key issues, including climate change, post-COVID economies, and critical geopolitical events. Many questions were received during the registration process, to include in today’s interview, for which the key themes have been collated and will be included, along with a selection of specific questions to be asked. Thank you very much for these and thank you once again for joining. I’m sure we are all looking forward to this conversation. Creon, back to you.
Creon Butler
Thank you very much Alexandre. Dr Ngozi, I interviewed you – actually, it’s almost exactly a year ago, when you were a candidate for the Director-General, and I remember being very struck at the time by the emphasis you placed on trade as a means to achieve wider goals. And today, the world faces three truly enormous challenges, I’m sure you’d agree: defeating the pandemic, delivering an equitable economic recovery, and undertaking the transition to net-zero. And arguably, this is a greater set of economic challenges than the world has ever faced, frankly. So, can I ask you, what is your vision for the role that international trade can play in enabling the world to address these problems?
Dr Ngozi Okonjo-Iweala
Well, thank you, Creon, and thank you, Alexandre, and let me say thank you to Chatham House. It’s an honour to be with you, to kick off this series. Indeed, the world is facing some really serious problems of the global commons. You know, some collective action problems, from the pandemic to climate change, as you mentioned. And in this, trade is required to play maybe a more creative and perhaps different roles, but certainly, what I can say is that trade is critical to resolving some of these issues. And therefore, sometimes people don’t typically think of trade or the WTO with respect to health issues, for instance, or the pandemic. So let me try to illustrate.
Actually, the relevance of the WTO and of trade to the issue of the pandemic has just been demonstrated by a series of things that have happened. Let me take trade. Even as the value of trade last year decreased by about 8% in 2020, the value of trade in medical products rose 16%. The value of trade in personal protective equipment rose 50%. The value of trade in agricultural goods was stable. So what does this mean? It means that trade served the role of moving these very essential products around the world, from where they were being made, to where they were needed, and if we didn’t have this trade, we would have much more difficulty than we have now. I know people don’t think about it, but this is vital. So trade is very critical.
In some other – on trade, on the pandemic as well, I’d like to say that the WTO and its rules, it’s also playing a critical role. Supply chains are very important for manufacturing some products like vaccines. We’ve all heard the very complicated supply chains for Pfizer-BioNTech, 280 components manufactured at 86 sites in 19 countries. Moderna, a similar complicated supply chain. Johnson & Johnson and AstraZeneca, all of them are done in multiple countries. When you have that, it means that any, kind of, export restrictions and prohibitions become an issue for the supply chain. But it also means that trade facilitating measures can actually be helpful in moving supply chains.
Now it’s WTO members who have control over these trade measures and so what we’re trying to do is to say to our members that with respect to trade restrictions and prohibitions, we must try to lower those as much as possible, to make sure that we are not impeding supply chains. And of course, actually, with trade restrictive measures have gone down from 116 at the height of the pandemic, down to about 50 today. So we’ve made a lot of progress. We’ve done trade facilitating measures on over $280 billion worth of goods, trying to enhance this. So, that’s one set of issues where we are very helpful.
The other is working with – we’re working with manufacturers to help them monitor the bottlenecks on their supply chains. And whilst working with them, we are also saying to them, “We need to work with you so you can invest in emerging markets and developing countries to produce more vaccines. We cannot have a situation in the world, as we have today, where 55% of people in developed countries have been vaccinated, less than 1% in low income countries, less than 3% in Africa. So to improve on that, we need to produce more. So how can we work with you to invest in new production capacity to transfer technology to developing countries?”
And finally, on the issue of trade, it’s at the WTO that the discussion on the agreement on intellectual property’s taking place. So coming to some sensible agreement among our members on how to handle that issue, along with technology transfer, will materially help trade – help vaccine production, help trade in medical goods and supplies. So that’s just one illustration.
In terms of the global commons of climate change, trade will be green. It’s one of the things they say about the future of trade, is that it will be green. Trade can be so instrumental. If we look at a negotiation on environmental goods and services that was started years ago and shelved in 2016, if we revive that, and give incentives for low carbon products to move around the world, that could help us towards net-zero by 2050. I’ll just leave it there. It’s just to illustrate to you just how important trade and the WTO are to the global commons.
Creon Butler
Yeah, no, I think it’s a really good example of the way trade is a, kind of, shock absorber, if you like, to these major events. But there’s a lot, as you say, the WTO can both do ahead of time, but also, during such an event, in making sure it works effectively as a shock absorber. I mean, one of the things you flagged, towards the end of your comments, was around a proposal for a TRIPS waiver on COVID-related medical technologies. And, you know, what we have seen is a ramping up in vaccine supply, and indeed, there was coverage in the press today about, you know, the extent to which vaccine supplies increased. But we also don’t yet have a, if you like, a specific proposal from the US, although they have indicated their you know, their broad support in this area. And I just wondered if you could say how you see that discussion going forward from now? I mean, I appreciate it’s a very sensitive area, but is there anything you can say about, basically, your optimism about progressing this? Or do you see any, you know, any other aspects of it that, you know, mean that you think this is something that could actually reach a constructive outcome?
Dr Ngozi Okonjo-Iweala
Well, you know, before, you know, our members were not really engaging on the issue. They were reading speeches in the TRIPS Council, and you can’t come to an agreement by reading statements to each other. We’ve passed that stage to where members have agreed to engage on text-based negotiations to come to an agreement. However, it’s very difficult. It’s not really moving the way we would like it to move. I personally was trying to see – I would have loved to see us come to some agreement by the end of July, because we are talking about what are we doing, because people’s lives are at stake, and so on. So it’s in a difficult place now. That’s what I have to say. Nevertheless, I think members recognise that this is part of what the WTO will be able to contribute to solving this very tricky problem, not just for this pandemic, but for the future. We are going to have future pandemics. You know, we are going to need billions of doses.
I think the industry stepping up to try and produce a – we had a meeting with industry a few days ago, and they said they might produce about 15 billion doses this year. Even though those doses, we are still trying to see how they can be equitably distributed. But if we go to boosters and things like that, maybe we need 20 billion doses. So we really need to work very hard. So what I’m hoping is that we can come to a sensible compromise at the WTO, in which the concerns of either side is met – are met. Developing countries, of 100 of them want this waiver. Can we meet some of their concerns of access to technology, so that they can produce an investment? The developed countries, many are worried about research and innovation, and disincentives for that, if there is a waiver. Can we show them how we can do things without disincentivising? I believe there is a compromise to be had, and we are hoping to get there. We are not there yet, but we have to work very hard.
Creon Butler
Okay, thank you very much for that. I mean, there is, I think, a strong parallel between the issues you’ve just flagged, in terms of access to technology, concerns about IP and so on, in the – in that health space, as there is in the climate space, where we, as you know, we have the issue of border carbon adjustment mechanisms, which in the context of COP26 is another, you know, sensitive issue. But with the urgency of the climate threat, and with a specific set of plans put forward by the EU, at least from my perspective, you know, it almost seems unavoidable that this is a direction in which the world is going. So my question really is, can you see a co-operative approach to this, maybe that takes account of the issues just flagged in relation to health, on technology, technology transfer, you know, protection of IP and so on? Do you see a way in which this can be dealt with in a complementary approach between the advanced and the developing countries?
Dr Ngozi Okonjo-Iweala
You know, Creon, I’m smiling, because just a few days ago, at the Bruegel Annual Meeting, I said something on carbon pricing, which I thought was pretty sensible, and in return, I got alarming headlines in the media that they didn’t have anything to do with what I said. So, I’m going to be quite cautious to probably not saying anything. Look, I mean, we have net-zero by 2050. Climate change is with us. It’s very obvious, and it’s obvious the world needs to find mechanisms to try and handle this. I talk to you about the negotiations and environmental goods and services. That’s one thing the trade community, the WTO members can do and I hope we can revive that. We can – we also need a co-operative approach, as you said, to – you said it, I agree, to issues of carbon pricing. How can we avoid a fragmentation of approaches in the world and move towards a co-operative way of looking at carbon prices, at floor price, and so on and so forth?
We are very far away from there. We are still with fragmented systems. But I think we ought to be looking in that direction, because that is, as an Economist, of course, I think a carbon price, a global one, would be the best, but it would take us time to go there. I actually think the international institutions, the WTO, the IMF and the OECD, the World Bank, should come together and try to see how we can put a methodology forward, and we have many brilliant minds in academia on this issue. We need to pull all that together. So that’s what I think. I suggested it a few days ago. I’m actually talking to Kristalina Georgieva, the MD of the IMF, on this issue. So let me leave it there, and say, look, that’s what I can say. There is a way forward.
Creon Butler
Yeah, well, thank you. I think from my point of view, that’s very clear. So let’s hope that doesn’t get misrepresented.
Dr Ngozi Okonjo-Iweala
Can I say one more thing?
Creon Butler
Yeah, sure.
Dr Ngozi Okonjo-Iweala
On this issue, anything we do must take – be cognisant of a just transition for developing countries. We cannot expect developing countries, especially the least developed, to adjust to issues at the same pace as others. You know, we have a common responsibility, but we have to have, you know, a more considered approach to how each country delivers on it. So any mechanism we put in place must bear in mind this very issue.
Creon Butler
Indeed, yeah, thank you. What I’d like to do before moving to some questions, and we had some good questions that are being put forward, is just broaden the focus a little bit. Tomorrow, as you very well know, is the 20th anniversary of the 9/11 attacks, which destroyed the World Trade Center in New York, and you’ll recall that the Doha Round, launched in November 2001, received a significant impetus from the desire to show that the world was united in response to that, sort of, that terrible event. But today, when you look at the geopolitical environment, in many respects, the tensions are a lot more severe than they were then, you know, particularly between major powers such as China and the US. And there’s even a risk that we may see some of those tensions translate into a decoupling of the global economy. So my question really is, how do you view this challenge, you know, performing your job in a world with these major tensions? And in particular, what role do you see both for yourself and the WTO in trying to prevent that, if you like, decoupling of the world economy, which I think would make us all a great deal poorer if it were to happen? Thank you.
Dr Ngozi Okonjo-Iweala
Thank you, Creon. I mean, there’s no doubt, we all see the China-US tension, EU-China. By the way, there is also an EU-US tension, as far as trade is concerned. But let me say this, there are deeper political problems, and we mustn’t – we must accept that trade cannot solve all the problems of the politics of the issue. As a matter of fact, trade is sometimes used as a weapon to solve problems that are not trade-related. So what we try to look at, at the WTO is to separate out the trade issues, and say, you know, “How can we, you know, be helpful at the WTO and bringing our members together?”
I personally think, and this is my opinion, that there are areas where they can be strategic, there will be strategic competition between the powers, and that we cannot avoid that, and that has to be managed. But there are also areas of strategic co-operation, and we just talked of problems of collective action problems. It’s clear that no one country in the world can do this on their own. So if the powers could just agree on these two buckets of strategic competition and strategic co-operation, and manage relationships along those lines, I think that would be very helpful.
Now, coming to trade, you talked about decoupling. We’ve seen the tariff wars and so on that were reminiscent of what used to happen in the past. But I’ll tell you one thing, whilst we talk of decoupling, we are seeing that US-China trade, merchandise trade, is on track, you know, to reach a new record, a new record high later this year. So whilst we are talking of decoupling in political or whatever, economic terms, actually, what we are seeing on the ground is the opposite. By the way, it’s the same with China-EU trade. So I think consumers and producers are telling us one thing, that these economies are coupled, and the Politicians are perhaps saying something. So we need to think about that. At the WTO we want to do as much as we can to foster this, kind of, co-operation, this trade. The multilateral trading system has been a force for good for both China and the US, for EU. It’s still a force for good for them, and also for developing countries.
So I can tell you that the approach here is to say, “What can we do that can help build that trust between the countries?” This is easier said than done, at least at our level, as I say, we can’t tackle everything. We – I do want to tell you that in that regard, the US-China, the EU, are round the table in some of the negotiations that we are having. There’s a multilateral negotiations on ending harmful fishery subsidies going on, and the three blocs are around the table, along with developing countries. So I just want people to know that there are some areas where these power blocs are actually trying to co-operate with each other at the WTO. Similarly, the US, EU, China, around the table in eCommerce negotiations. The world is going digital. The future of trade is services and digital and they recognise this, and they are negotiating, along with others on this. Similarly, with service regulation of domestic regulation of services, they are doing the same.
So let me just end it. All I’m trying to say is, look, we see a lot of tension, a lot of strategic, geopolitical tension and competition, but that doesn’t mean that there are not areas where these powers are co-operating. And we try to, at the WTO, to use that instrument to get them to co-operate as much as possible to help ease those tensions and build trust.
Creon Butler
Thank you very much. I mean, I think you make a very good case, that in the – there are, kind of, two worlds. One you have described, in terms of the, you know, booming trade figures and the areas of co-operation, and then there’s the other world, which we see reported in the press. I mean, I guess the worry is at some point, and this could be more worry about, kind of, shocks, something from the geopolitical world suddenly hits the other world and, you know, and we may not have much time to adjust. But, I mean, as you say, there’s a lot of good stuff going on as well.
Given our shortage, what I’m going to do is just read out a couple of questions very quickly. And one of the first questions I have is from Pier Sobet, and his question is, “Dr Ngozi, you spent 25 years at the World Bank, an institution whose staff and management enjoy considerable institutional autonomy. You are now heading a member-driven organisation that altogether has a quite different modus operandi, and how are you adjusting to the greater constraints weighing on the WTO’s Secretariat and you as DG?” So maybe, Dr Ngozi, you might want to just briefly comment on that question.
Dr Ngozi Okonjo-Iweala
That’s a very good and perceptive question, and I’m smiling, because the questioner is absolutely right. Even though WTO is one of the three, kind of, Bretton Woods institutions created to deal with the world economy. So there are three of them: WTO, IMF, World Bank. The IMF and the World Bank enjoy a bit more autonomy than the WTO. Yeah, so it’s an adjustment, but I’m making it, because I believe in the mission of the WTO. I think the members can see that I’m trying to bring fresh ideas, a fresh approach, on the table. I’m very – I’m, sort of – I believe the WTO can live up to its purpose, which is spelt out in the Marrakesh Agreement, to deliver for people. So that’s what’s driving me. So I don’t let other issues, in terms of other bureaucratic hurdles discourage me. I’m very excited about the possibilities, and that helps me to overcome the hurdles on the way. I’m not saying there are no down days by the way. There will always be some down days. But I think 70% or more of my days are up days, so that’s the way I handle it.
Creon Butler
And that’s a very good ratio. I wish we could all achieve that ratio. And then the second question I’d like to – which is an area we’ve not touched on, but just, I’m afraid we have very little time, but on digital trade, this is a question from Alex, I don’t have his full name. “How can we effectively modernise WTO rules to reflect a modern world economy and to adapt to the post-pandemic era?”
Dr Ngozi Okonjo-Iweala
These are really good questions. I think that’s the issue. I firmly believe the future of trade is three things. It’s services, it’s digital, it’s green, and it should also be inclusive and so, there is no getting away from digital. I’m actually quite excited about it. Do you know why? Because digital gives the opportunity for micro, medium, and small enterprises to have a platform to join global and regional and national value chains. It gives women a chance to trade with people far away and get rewarded. So digital is in, but as you noted, we don’t have modern rules underpinning digital trade that can ensure a level playing field for all participants, and that’s why we embarked on these eCommerce negotiations.
Admittedly, they are plurilateral, they are not multilateral, meaning not every member is engaged. But we have 86 members, which is a good number. And if we can push along to agree on these rules, then we can have the underpinning of a digital eCommerce system that works for the world. Of course, along the way, there are also some issues about cross-border data flows, regulatory frameworks for developing countries who don’t have the capacity, the digital divide. We have to solve all these problems, but the negotiations are proceeding in a reasonably good fashion.
Creon Butler
Well, thank you, Dr Ngozi, and a very – unfortunately, I’m afraid we are now out of time, and first of all, can I thank you for sharing these fascinating insights and perspectives with us today, and also for being very frank about some of the frustrations and challenges you face. I mean, you have a vitally important task, and I’m sure I can speak for everyone here on this call in wishing you well in tackling these challenges ahead.
Dr Ngozi Okonjo-Iweala
Yeah, Creon, Creon, let me say something before you end. I’m not frustrated, I’m excited.
Creon Butler
It’s two ends of the same thing, but yes, frustration builds excitement. Yeah, I totally agree. I’d also like to thank Societe Generale and Alexandre Fleury for partnering with us on this event, and to thank the audience for some really good questions. Dr Ngozi, as you said, there were some excellent questions. One very final thing is, I’d just like to remind those of our audience who registered today through the Societe Generale to please stay online for the following events that they have. But with that, Dr Ngozi, thank you so much for joining us.
Dr Ngozi Okonjo-Iweala
Thank you.
Creon Butler
And all the best for the future.
Dr Ngozi Okonjo-Iweala
Thank you, Creon. Bye, bye.
Creon Butler
Cheers then, bye.
