Can the WTO stay relevant? With Ngozi Okonjo-Iweala

Episode Summary

Executive Summary: FT host Alan Beattie interviews WTO Director-General Ngozi Okonjo-Iweala about globalization under Trump, WTO relevance, and trade governance. She argues globalization has slowed but not reversed, the WTO still underpins most trade, and reform—not abandonment—is needed to update dispute settlement, development rules, and negotiations for climate, pandemics, and supply-chain resilience.

Main Topics: Globalization is slowing, not ending (Priority: 5/5): Okonjo-Iweala says trade no longer outpaces global GDP as it did before 2008, but global trade remains resilient and large. She frames current trends as a shift toward regionalization and supply-chain diversification rather than de-globalization. The WTO’s continuing relevance (Priority: 5/5): She argues the WTO remains central because most trade still occurs on WTO terms and its agreements create trust, standards, and predictability across food safety, technical barriers, IP, and customs valuation. US dissatisfaction and the need for WTO reform (Priority: 5/5): The discussion centers on long-running US criticism of dispute settlement, especially the appellate body. Okonjo-Iweala says the WTO should acknowledge valid criticisms, reform the system, and make it fit for 21st-century challenges. Development, Africa, and trade inclusion (Priority: 4/5): Okonjo-Iweala describes why many African and Global South countries still want the multilateral system, while also feeling the rules have not benefited them enough. She stresses investment, value addition, and policy reform inside countries. Recent WTO deliverables and negotiation style (Priority: 4/5): She pushes back against claims the WTO no longer delivers, citing recent agreements on fisheries subsidies, food procurement for the World Food Program, and vaccine-related IP measures. She defends consensus-based decision-making while admitting it can be slow. The future of trade governance (Priority: 4/5): The conversation ends on whether regional and bilateral deals will dominate. Okonjo-Iweala says they will grow, but WTO rules will remain the foundation and can absorb innovations from those deals.

Key Arguments: Globalization has slowed since the 2008 financial crisis, but it has not reversed; trade remains robust and globally integrated. The WTO is vital because it provides the legal and institutional rules that make trade predictable, including standards, customs valuation, and intellectual property protection. US criticism of the WTO dispute settlement system is partly justified because the system is slow and overly complex; reform is necessary rather than abandonment. Trade has created as well as displaced jobs in the US; the political backlash reflects uneven local impacts and weak public understanding of trade’s benefits. Developing countries still broadly support the WTO, but they want more policy space, better special and differential treatment, and more help attracting investment and moving up value chains. Regionalization and bilateral deals will expand, but they are likely to remain anchored in WTO rules rather than replace the WTO entirely. The WTO has recently delivered concrete outcomes, including fisheries subsidies rules and food-security-related decisions, so it is not institutionally dead or irrelevant. Future WTO reform should address climate, pandemics, subsidies, and the realities of a more multipolar, China-influenced world economy.

Data Points: Expected global goods trade growth in 2025: 3% - WTO forecast cited by Okonjo-Iweala as slightly below global growth Global trade value: About $30.5 trillion - Current global trade level mentioned by Okonjo-Iweala Pre-pandemic trade peak: Nearly $25 trillion - Used to show trade has recovered above pre-pandemic levels Trade share on WTO terms: 80% of global trade - Okonjo-Iweala’s estimate of how much trade still operates under WTO rules Trade-to-global-growth ratio pre-2008: About 2:1 - Trade grew roughly twice as fast as global growth in the 1990s to 2008 period Trade-to-global-growth ratio after 2008: Around 1:1 or slightly less - Used to describe the slowdown in globalization US manufacturing jobs lost to China impact: About 2.3–2.4 million - Okonjo-Iweala cites research on job losses from China-related trade effects Manufacturing jobs created through trade: Over 3 million - Jobs created in manufacturing despite losses elsewhere Service jobs created through trade: More than 7 million total jobs with services included - Used to argue trade’s net employment effects are broader than manufacturing losses alone Royalty payments to US companies from TRIPS: $136 billion a year - Benefits of IP protection under WTO rules Net royalty balance for US companies: More than $80 billion - After accounting for payments out, per Okonjo-Iweala Year WTO fisheries subsidies agreement concluded: 2022 - Described as part of the WTO’s recent delivery Length of fisheries subsidies negotiations: 22 years - She cites this to show the agreement’s significance Illegal fishing losses in Africa: $11 billion - Used as an example of the real-world impact of fisheries rules Oceans overfished in 1970: 7% - Context for why fisheries subsidies matter Oceans overfished now: Close to 49%–50% - Illustrates worsening ocean sustainability Africa’s share of world trade: Around 3% and below - Used to explain why African countries seek stronger trade integration Least developed countries’ share of world trade: 1% or below - Describes stagnation in trade participation

Pivotal Quotes: "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." — Ngozi Okonjo-Iweala: On how the WTO should respond to Trump-era tariff threats "The WTO is beyond tariffs." — Ngozi Okonjo-Iweala: On the broader role of WTO rules in global commerce "The purpose of the WTO is to enhance living standards, help create jobs, and support sustainable development." — Ngozi Okonjo-Iweala: On why she agreed to lead the WTO and what the institution should deliver

Implications: The episode suggests the WTO still matters as the backbone of trade governance, but it must reform dispute settlement and update rules for climate, resilience, and development. Listeners should expect more regional deals, but not a post-WTO order.