If Donald Trump’s election marks the end of an era in global trade, it will be the World Trade Organization left trying to hold up the threatened edifice of international law. For years now, the US has been falling out of love with the WTO and the post-World War II multilateral trade order has been weakening. Trump seems quite happy to let it die. But beyond some regional trade deals, there’s nothing really to replace it. In contrast to that gloom, globalisation itself, trade in goods, services, data, foreign direct investment has done just fine.
Now, we always start with a simple question, which we ask you to answer on a scale of one to 10. The WTO has been consistently more optimistic than other institutions and forecasters about the resilience of globalisation. And so far it’s been proved right. I partly mentioned this because so have I. In four years’ time, on a scale of one to 10, where one is total autarky, total self-sufficiency and ten is trade doing as well as it has now? How healthy will globalisation be?
In four years’ time? I would say maybe about seven.
That’s actually very optimistic?
Yes. And there are reasons for it that I can share.
Let me just ask you the question that I think will lead into that, which is we’re talking a little over a week after Donald Trump has taken over as president and we’ve seen all sorts of threats of tariffs and so on. Where do you think US trade policy is going under Trump? How do you think globalisation can respond?
Well, I can talk about globalisation. I don’t want to opine on where US trade policy is going under President Trump because that is an affair for one of my members. And I think we should just wait to see exactly what policies President Trump puts in place. As you know, as I was talking to both audiences in Davos and reporters, I said, look, I think we need to not hyperventilate over this issue of trade policy and tariffs, that we actually need to take a deep breath, wait to see what is actually done with the tariffs, and then we can act accordingly, because the WTO has mechanisms with which to deal with when members have issues with one another.
And we’ve seen an example now in Colombia that a tariff was announced not for trade purposes, but for other political, actually migration purposes. And I think both presidents were able to solve this issue and I think is a win-win for both Colombia and the US or President Trump, as well as President Gustavo Petro, who brought his citizens back in the way he wanted, dignified in his own planes, which is what he was seeking, was President Trump sent the migrants back and, you know, the tariff issue has dropped. So that’s why I say, look, let’s wait.
Now, commenting on globalisation itself, you know, we had a golden period in a way from the 1990s to the Great Financial Crisis in 2008. Trade was growing about twice as fast as global growth. And, you know, this was a bit of a golden era of globalisation in a way. In fact, prior to that, we had seen great growth of trade faster than global growth, two-to-one faster. So trade was pushing global growth and we were integrating into the WTO countries like China. We were integrating east European countries. So there was a big push.
And then we’ve seen now after the financial crisis, it’s more like a one-to-one growth or even slightly less than that between trade and global growth. And that’s leading many people to say we’re de-globalising, you know, we are no longer globalising. It is true that globalisation has slowed down. That is evident from the numbers. But I don’t think that we are de-globalising. I think the nature of it is changing because we are not absorbing economies as big as China and some of the east Europeans that were outside of the global trading system. I don’t think we will have those big bumps that we saw in the past. But we do have evidence that globalisation may have slowed down, but it’s still there. I mean, you can see that global goods trade, 80 per cent of it is still going on WTO terms. We have a total of about 30.5tn in global trade now, which is higher than the pre-pandemic peak of nearly 25tn.
Trade has shown remarkable resilience in spite of all the concerns and the issues confronting it in the last four to five years since I’ve been director-general. And we are forecasting global goods trade growth, as you know, of 3 per cent in 2025, slightly below global growth. So all I’m trying to say is with all these numbers that yes, globalisation has slowed down, but it is still there. We will see more regionalisation of supply chains, which we actually to some extent encourage. We are talking of something called re-globalisation. We need to decentralise and deconcentrate supply chains. I think they have been too concentrated in some products so regionalising more, decentralising more supply chains is I think a good thing. It helps to build global resilience.
So let me ask about the WTO itself, a bit slightly provocative, which is the WTO was created in 1995. Since then, it’s done some agreements, but it hasn’t done the big kind of, you know, multi-stranded goods and services and intellectual property and so on, agreements that it wanted to. Nonetheless, globalisation has been, as you say, OK, it’s slow, but it’s been OK. Does the WTO actually played a role in this? Was it actually vital for this post-cold war surge of globalisation or was it just, down, didn’t make much difference?
Well, thanks for being provocative because that gives me to say absolutely the WTO was vital. And, you know, this is the thing that really gets me excited to talk about the organisation because we are beyond tariffs. OK, Alan, the WTO is beyond tariffs. I told you before that 80 per cent of global trade takes place on WTO terms. I just want to repeat that, which is about tariffs. So most members are still obeying the most-favoured-nation tariffs approach that they negotiated under the WTO. But beyond that, I want to mention two or three agreements why it’s not so easy to say the WTO is not playing a role. We have the Sanitary and Phytosanitary Measures Agreement. This assures the safety of food and other products traded in the world. So when you are trading, you need trust that what you are going to get, you need some certain standards and that these measures are also not being used as protectionism against trade. The same with technical barriers to trade agreements, which also tries to assure the standards and harmonise product standards and assure that these are not used as a barrier to trade. So there is absolutely no other organisation in the world that can build that kind of trust for global trade to flow.
You mentioned the trade-related Intellectual Property Agreement, which protects innovation and research. United States companies in the US are receiving $136bn a year in royalty payments for their intellectual property. And not net, because they also pay out, is more than 80bn. This is the substantial sum that is being given because we’ve got this agreement. We have the Customs Valuation Agreement. Before you levied tariffs, how do you value the products that are going to levy the tariffs? Before, there was no real methodology and it was kind of chaotic and a free-for-all. In 1973, the US itself pushed for this agreement to be negotiated so we could have a common approach and methodology. Otherwise, you have chaos. So anyone who says, does the WTO have anything to do with it? I think that is why you see that member states in the WTO because they know it’s not just about tariffs, but they have trust in trade, and trade is not going to stop.
So this brings us on to something that slightly puzzled me. As you say, the US has benefited from trade wars and the WTO through IP and a bunch of other things. And I understand we don’t want to try and predict Donald Trump’s trade policy. But just looking back, the US has been falling out of love with the WTO for quite a long time. This didn’t start with Donald Trump. There’s been a lot of concern in particular about dispute settlement and the appellate body telling Congress what to do and so forth. It was like Obama’s administration that wouldn’t reappoint a particular judge if not judges in general. Why do you think this is? Why do you think that from everyone else’s perspective, the US has done very well out of the WTO? From the US perspective, it’s been ripped off and marginalized?
Well, you know, Alan, it may be because the impact of trade on the US economy has not been as well publicised as it should have been over the years. And there’s this feeling that the rise of China and trade has taken away good manufacturing jobs. And it is true. If you look at the research, you see about 2.3mn to 2.4mn jobs in manufacturing, you know, has been the China impact.
But by the same token, over 3mn jobs have also been created in manufacturing through trade and even more service jobs. So if you look at the total number of jobs created over this period of China joining, in services — which is never talked about, by the way — services and goods, about 7mn jobs. So jobs have been lost, but jobs have been created, perhaps not in the same places, so the poorer regions in rich countries that have lost out, and really you need to have an approach where you can try to retrain, redirect people with skills to move to areas where the new jobs are being created and all attract new manufacturing to those places that have lost. And technology has also been a big factor. I mean, in mining, it’s more technological now, but people blame trade. So that’s the narrative that we need to also correct.
But it’s also true that at the WTO, I think the US has faced some challenges with some of the cases that have been brought. And I think the disenchantment may have arisen from the fact that through the system the US has criticised the WTO dispute settlement system and I think we should listen to some of that criticism. I think they have made some good points. The system takes too long. It’s getting too complicated. And they also questioned whether the appellate body, which is the second tier that they don’t like, should be making jurisprudence. We need to look at all those criticisms and not back away from them. And we need to see how we can reform. And I want to tell you, Alan, we are actually in the process of reforming that system now. All members agreed it has to work for everyone. So I hope the new US administration will join us to want to approach it in a very constructive manner and reform it. So that may be the reason both the narrative within the US about trade, which I think is not reflective of the benefits as much as it should be, and the consequence of some of these rulings from the dispute settlement system may have led to the disenchantment. And you’re right, it comes through in several administrations. It’s not one. But what should we do about it?
I strongly believe that we need to reform ourselves to be fit for the 21st century and that there’s some work to do. We need to safeguard the parts of the WTO that work very well, and it’s working for the world, as you said. But we need to be able to lift up and reform those parts that are not working well. Do they rise up to 21st-century challenges like pandemics, climate change, other issues that the world cannot solve except as a globe? How do we do it? The green transition, the agreements with negotiated in the past, how can we look at them? Subsidies, issues of level playing field. The world is not what it was. Some of these agreements were negotiated pre-China joining in. Do we need to lift up and see how we reform some of these agreements? Absolutely. Why not? And we’re prepared to work with the US to do that.
I’m going to ask one more question about Trump and then move on. And this is the super controversial one, which I’m sure you were expecting, which is just wondering how you got on with him in the past. As you know, they opposed your first appointment. You’ve just been reappointed. Just wondering what you expect that kind of personal relationship to be like.
Well, look, for me, it’s a little bit of old news. But we want to move on. And, you know, I was able to work very well. I think all our members, for me, all my members are vital and are very much treasured. And my approach is how can I work with each and every member as a treasured part of the WTO. And how do I get members to work with each other more importantly, in a very collaborative fashion? So I think with the new administration, my message is and has been, we’re here, we welcome you, we’re willing to work with you, and we can work very productively together to make the multilateral trading system better.
You’re the first DG, as I said before, from Africa. This is another kind of personal question. What do people think of the WTO back in Nigeria? When you became DG, did people say, wow, fantastic, it does great work? Or did people say, well, that’s a bit of a mess, you need to go and sort that out? Or as I think most people in most countries would say, what is the WTO? What does it do?
I think it’s all of the above. But look, let me say something. You know, people start by saying the first woman and the first African. You know, I have very mixed feelings about that, Alan. On the one hand, of course, it’s nice, for the recognition.
On the other [hand], my feeling is like it’s about time. Why should I have been the first woman? Why did it take so long? Women are just as good at running places. Why should I have been the first African? You know, we should have had that. They’re just as good. You see what I’m saying?
I do. Why did you think that was? Why did you think that was? Why did it take so long?
Well, you know, on the gender side, we know the story. We don’t have to say anything. I mean, it takes women longer to get to leadership positions all around. And, you know, we want to get to these positions on merit. When I was competing for this job, everybody was saying African woman, you know, I was a little bit cheeky with the interviewers. And I said, look, it’s good to be an African and a woman, but what the WTO needs is the best person to run the organisation and try to reform it and turn it around. If that person is a woman and an African, so be it. And I think I’m qualified to do it, by the way. But the metric should be merit. That’s what I actually said.
Well, you know, on the gender side, we know the story. We don’t have to say anything. I mean, it takes women longer to get to leadership positions all around. And, you know, we want to get to these positions on merit. When I was competing for this job, everybody was saying African woman, you know, I was a little bit cheeky with the interviewers. And I said, look, it’s good to be an African and a woman, but what the WTO needs is the best person to run the organisation and try to reform it and turn it around. If that person is a woman and an African, so be it. And I think I’m qualified to do it, by the way. But the metric should be merit. That’s what I actually said.
So you asked me, my country, how did they feel? You know, I was nominated by the government. They feel very proud. And as you said, the WTO may not be a household word in many of our countries. And of course, you know, people now know more about the WTO, both in Nigeria and in Africa now that I’m here, which is a good thing. And they’re asking me important questions, what has the organisation done for us? Because remember, many of our countries were not at the table when Gatt was created and even the WTO, we joined later in some cases. So we may not even have been around this table when some of these agreements were negotiated that we’re housed in now and they want to know what more can the WTO do to make us lift up our economies through trade? That’s a legitimate question. Africa’s trade as a share of world trade has stagnated at around 3 per cent and below. Least developed countries, 33 of which are in Africa, their trade has stagnated at 1 per cent or below. They’ve seen trade lift up 1.5bn people from poverty around the world, lift up many east Asian economies whose growth was export-led and they are wondering what can we learn and how can the WTO help?
So we are trying here to look into these issues and just say what can our countries do? There are few things we need to do for ourselves internally within the continent to attract investment. But we certainly need to add more value to our products. As long as we keep trading just primary commodities, and it is extraction and out, we are not going to have more trade. And this is a message to leaders on the continent also. We must attract supply value chains into the continent. We will have the biggest young population in the entire world by 2050. So we must attract these value chains to add more value and create jobs. That way we will trade more. You cannot trade more without investment.
By the way, we have a beautiful instrument here that we’re negotiating called Investment Facilitation for Development Agreement, which is designed to sweep away the bureaucracy impeding investments so we can get more value chains. We just need to get it adapted and agreed. And I also want to remind you that in June 2022, the WTO landed new agreements. And decisions, very pertinent to the world. So when people say we have not been able to do new agreements, I beg to disagree. At that time it was called the Miracle on Lake Geneva by almost all the press because they expected this ministerial not to come up with any agreements like in the past or with very few.
Instead, we came up with really a slew of multilateral agreements. We had the Fisheries Subsidies Agreement, a multilateral that had been under negotiations for 22 years with no results. And it’s delivering the sustainable development goal 14.6 for sustainability of our oceans. We got that after 22 years and we are working really hard to get it ratified now. You know that our oceans are 7 per cent overfished in 1970, were close to 49 per cent, 50 per cent overfished now. So this is very important. We got a decision which is very material to allow the World Food Programme to be able to procure food to help the hungry in the world without any export restrictions. We’ve got the Trips agreement to allow waiver on intellectual property for a period of time so that developing countries could also try to manufacture their own vaccines. I’ll just stop at three. But there were so many material decisions that we got. So the WTO is alive and well and delivering. I want to debunk this idea that the deliveries are not happening because they are.
Now, Dr Ngozi, as you know, the most famous comment I think, that’s ever been made about specifically of WTO governance, the way it works was your predecessor, one Pascal Lamy, who said it was medieval in terms of requiring consensus on everything? What I mean, that is obviously a criticism that’s often been made. You’ve just said it manages to come up with a lot of agreement, nonetheless. You know, I think a lot of people would say a lot of those agreements are not hugely broad or they’re not very deep. They’re not what was wanted. Anyway, but those agreements are there.
Yeah. No, I disagree with you. I disagree with that.
I know.
Yeah, completely.
But what do you think of the medieval issue about the way it’s run?
I don’t want to use the word medieval, you know, but before I answer that, I actually want to come back to this issue of the WTO. The WTO has been characterised by its dispute settlement system. I think that the image of the organisation shifted dramatically to an organisation just about disputes and lawyers and people forgot that this organisation delivers real things to real people, Alan. And that’s the part that has to be corrected when people say it hasn’t delivered this and that.
Also, the time for the grand rounds like the Uruguay Round are over. The world has changed so much. I think the way we negotiate now will not be in those grand rounds. You saw them becoming increasingly more and more and more difficult to pull off in Seattle and Bali, in all these places. And the world has changed so much. Geopolitics has become so difficult. We must negotiate an agreement at a time. And when people say those are not impactful, what the hell did they mean? Excuse my French, my language. What do they mean? If you negotiate an agreement to stop illegal, unregulated fishing that saves, let’s say, the Africa region, $11bn in illegal fishing, that’s not impactful? If you negotiate an agreement so the World Food Programme can feed the hungry without any restrictions, that’s not impactful?
Let me remind you of one thing. The reason I agreed to run for this organisation was when I saw its purpose as set out in the preamble to the Marrakech Agreement. It said the purpose of the WTO is to enhance living standards, help create jobs and support sustainable development. That attracted me so much because it’s all about people. It’s all about people and planet. And so whenever we are delivering whatever agreement that supports people, that excites me. And I’m still excited.
And yes, coming back to your question about our governance systems, everything is decided by consensus. I know, real consensus at the WTO. So we’re a little bit proud of that, that this is one organisation where the voice of the smallest member is as impactful and important as the biggest. We don’t have the system in other organisations where big shareholders decide what happens. So there’s equality of treatment. We are one of the very few. But of course that has its drawbacks. It makes decision-making quite difficult. Yes, it can be frustrating sometimes when you see a good agreement that we should be able to negotiate faster and you don’t do it. But we have to be mindful. This is one place in the world where each member feels they are equal and they are valued. And for the global south, this is very important because in many other multilateral organisations, they don’t have the same footing, they don’t have the same voice. So it’s treasured. How do we keep our treasured attribute but make it work better for us? That’s really what we need to look at in our governance system.
So let me pick out this question of the global south, lower-middle-income countries because one thing that’s always struck me is there’s a lot of commentary I see everywhere about this great wave of protectionism sweeping over the world. From where I stand, that’s predominantly a rich world phenomenon and predominantly a US phenomenon. I don’t see trade barriers going up across Africa or across emerging Asia. This seems to be quite a lot of enthusiasm there about the benefits from trade. But as you say, some of the sort of later waves of developing countries haven’t seemed to benefit from trade in the same way as early ones did. Do you think in those countries they think that’s because there’s something wrong with the rules, that it’s biased against them, that the latter has been kicked away? Or is it something else? Is it something that’s within their own power to deal with?
I think it’s both. On the one hand, there’s a feeling from the global south that developed countries have benefited quite a bit from globalisation, but so have the emerging markets. Don’t forget that the 1.5bn people lifted from extreme poverty came from developing countries. And even when you take away the impact of China, you still see substantial lift up from poverty. So developing countries benefited largely in east Asia.
Now, there are many other parts of the world that feel that they haven’t benefited as much. And they do feel that, look, don’t kick away this ladder just as we are trying to get on it and try to find how the system can also benefit us. So there’s some element of that feeling. And of course, we’d like better trade integration in the world. But it takes two things. Some of them feel that, OK, as you said, Alan, the WTO rules, some of them were made when we were either not members or didn’t go the way we would have wanted. There’s something called special and differential treatment, which is more flexibility for developing country members to be able to deliver agreements, perhaps some exemptions in the way they do it more time, etc more technical assistance that many developing countries feel that perhaps they terms of this special and differential treatment in some of our agreements should be looked at, to provide them more policy space to implement and have more industrialisation and manufacturing. And I think there’s a willingness among the membership to try and do that.
But beyond that, development needs much, much more. It needs to look at your own internal domestic policies to see whether they are fit for purpose, to attract investment. And we’re trying to help them with this new instrument, which, as economists say, can be an external restraint in enabling them to enact the proper laws. Once the Investment Facilitation for Development Agreement, for instance, is signed on to. So it’s both external and internal. But you’re right, there is an absolute desire to still maintain the multilateral trading system, to still trade within it, to still integrate. You look at the trade-to-GDP ratios of many of these countries and they are quite substantial. It’s not like the US, which is in the 20s or below. The same for China. Many of these countries have trade-to-GDP ratios greater than 50 per cent. Some even have a 100 plus per cent. So trade matters greatly to that development.
Even those who are succeeding like Malaysia, Philippines, Thailand and so on, they have high trade-to-GDP ratios. They’re still very dependent and they would like us to strengthen the multilateral trading system. So they are there, Latin America, Brazil, Colombia and Mexico want a strengthened multilateral trading system, and so do African countries. So I would say the majority of our members want this.
So I asked you at the beginning what globalisation would look like in four years. I’m wondering, in four years, what will the governance of trade look like? Will it still be done from the WTO? Or because you talked about regional supply chains, will it be a series of regional trade deals that are really setting the rules?
I think in four years we will see more regionalised supply chains and we’ll also see more regional and bilateral trade agreements. They are multiplying in number, but does that mean the WTO is not, you know relevant or is being ignored? Absolutely not. We welcome them. You see, all those trade agreements, even the big nice regional ones like the Africa Continental Free Trade Area, they are based largely on the WTO platform, on WTO rules. And sometimes even after negotiating some of these bilaterals, they are not followed. They end up still trading on WTO terms.
So I think we will see an increase in numbers, but it’s not going to change the fact that the WTO will be at the centre of world trade four years from now. And we do welcome all the agreements. Some of them are more advanced than the platform, and we can also learn from them and integrate them into the multilateral agreements that we have here. So I think it’s a win-win on both sides.
And with that, we’ll end. Dr Ngozi, thank you so much for joining us.
Thank you, Alan, very much.
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