WTO Chief Criticizes Rich Nations for Embrace of Protectionism

(Bloomberg) -- The head of the World Trade Organization sharply criticized western governments for embracing protectionist policies and shifting toward a power-based global trading system.

“Recent unilateral protectionist measures by some developed countries coupled with a more general reticence about the multilateral trading system and the WTO is seen as cynical and hypocritical by developing countries,” WTO Director-General Ngozi Okonjo-Iweala said Monday at a conference in Berlin. 

“The latter feel that rich countries who have benefited immensely from the multilateral trading system to develop their economies now no longer want to compete on a level playing field and would prefer instead to shift to a power-based rather than a rules-based system,” she said.

Though Okonjo-Iweala didn't single out any country, US administrations under Presidents Joe Biden and Donald Trump have called for more domestic production in key industries and a larger focus on economic security — after more than a quarter-century of American policy fostering globalization.

Okonjo-Iweala, who is a dual American and Nigerian citizen, encouraged western economies to shift production facilities into nations from the global south as a way of building resilience in global supply chains after three years of historic disruptions.

“The right response is to de-concentrate, diversify and deepen global trade by bringing more countries and communities from the margins to the mainstream,” she said. “Extending global production and trade networks to Africa, Latin America and Asia would make them simultaneously more resilient to localized shocks and more inclusive in socio-economic terms.”

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Okonjo-Iweala commended the European Union for investing in vaccine manufacturing in Africa. At the same time, she urged European leaders to help find “rational solutions” to address migration flows from Africa. 

Climate Finance

Okonjo-Iweala highlighted the contrast between China and America's infrastructure loans to countries in the developing world. 

She cited academic research that found China's Belt and Road Initiative provided $428 billion in finance to developing countries between 2013 and 2017. “It is a reality across the African continent, for example, that people see the impact of new or improved physical infrastructure built with Chinese assistance,” she said.

During the same time period, the US offered $185 billion in loans, she said, and the government in Washington attaches too many conditions to its funding, which makes them “less attractive.”

Okonjo-Iweala also faulted western governments for failing to offer sufficient financing to help developing countries transition to green economies as a means to reduce the effects of climate change. 

“Western governments have missed an opportunity,” she said. “Falling short on climate finance pledges was not just bad for people on the planet, it sent a damaging political signal.” 

WTO Reform

German Foreign Minister Annalena Baerbock acknowledged that the west is “not perfect” and said a more critical analysis of Europe's trade policies would help make the 27-nation trading bloc stronger. 

Baerbock, who was hosting the conference at her ministry, told attendees that the WTO is an important forum to help solve problems that arise amid tensions between the US and China. 

“We are working toward this with all our power,” Baerbock said. “We will also continue to seek new ways forward with difficult partners, even if we are not in agreement on all issues.” 

--With assistance from Iain Rogers.

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