US blocks selection of Nigeria’s Okonjo-Iweala to lead WTO

The process of selecting a new Director General for the WTO moved from what had been a relatively smooth process to one of uncertainty Wednesday (October 28) when the US blocked the selection of former Nigerian Finance Minister Ngozi Okonjo-Iweala to lead the trade body, throwing its weight behind a rival candidate.

The US said it is instead backing Korean Trade Minister Yoo Myung-hee to be WTO's next Director General, with the Office of the US Trade Representative (USTR) saying in a statement she "has all the skills necessary to be an effective leader of the organization" at a time it faces steep challenges.

"Minister Yoo is a bona fide trade expert who has distinguished herself during a 25-year career as a successful trade negotiator and trade policy maker," the statement continued. "This is a very difficult time for the WTO and international trade. There have been no multilateral tariff negotiations in 25 years, the dispute settlement system has gotten out of control, and too few members fulfill basic transparency obligations. The WTO is badly in need of major reform. It must be led by someone with real, hands-on experience in the field."

Because the selection of a new Director-General is made by consensus, any of the 164 WTO members can block an appointment.

A WTO spokesperson made clear the US was the lone delegation expressing opposition to Okonjo-Iweala's appointment, following a meeting in Geneva Wednesday evening. "All of the delegations that expressed their views today expressed very strong support for the process, for the troika and for the outcome. Except for one," said spokesman Keith Rockwell.

This raises another issue for the world trade body that has seen the Appellate Body process grind to a halt at US insistence that changes must be made, a situation reiterated in the US announcement supporting Yoo to lead the WTO. A senior US official said the US opposition to Okonjo-Iweala is because she has no background in trade while Yoo has an extensive background in trade policy. This sets the stage for a vote at a November 9 General Council meeting.

Some reports indicate the links between Okonjo-Iweala and former WTO chief Pascal Lamy and former World Bank President Robert Zoellick—she held the number two spot at the World Bank under both Lamy and Zoellick—could have been a factor in the US stance. Others have suggested the US could use its position to extract actions in other areas at the world trade body. Still, this represents yet another challenge for the WTO.

Opposite the US, China likely prefers the elevation of Okonjo-Iweala to WTO's top spot, seeing her as under less potential political influence from the US. China has taken more aggressive action against US trade policy at WTO, including a dispute targeting US Section 301 duties on billions of dollars in Chinese goods imposed during the US-China trade war.

Until a new Director General is selected, WTO's four deputy Directors-General, Yonov Frederick Agah of Nigeria, Karl Brauner of Germany, Alan Wolff of the United States and Yi Xiaozhun of China, will continue to lead the body on a joint acting basis.

One reason former Director-General Roberto Azevêdo cited for his early retirement late this summer was to give the body time to select a new leader well in advance of next year's Twelfth Ministerial Conference (MC12), giving the new leader an opportunity to make an early mark on the trade body. With the US action, that timetable could be in jeopardy.

Posted 29 October 2020 by Richard Morrison, Writer/Editor, S&P Global Commodity Insights and

Roger Bernard, Policy Analyst, Refining Chemicals And Resources Solutions, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.