Global trade is expected to slow sharply this year as high energy prices and rising interest rates take their toll on the economy. The World Trade Organization (WTO) projected in October that after growing by 3.5% in 2022, trade volumes will increase by just 1% in 2023.
Given uncertainty over the strength of China’s rebound from Covid lockdowns, the outcome could be better. Either way, Africa may start to reap the benefits of a free trade deal that came into effect in 2021.
The landmark African Continental Free Trade Area (AfCFTA) agreement created the world’s largest new free trade area since the establishment of the WTO.
The same year, Nigerian Ngozi Okonjo-Iweala was appointed as the WTO’s director general, becoming the first woman and the first African to hold the position. She spoke recently with CNN’s Eleni Giokos about the future of trade on the continent. The following interview has been edited for clarity and length.
AfCFTA came into effect in the beginning of 2021. It’s an amazing journey. Has the WTO been able to track any changes that are visible on the ground?
Okonjo-Iweala: [AfCFTA] is important — it creates a market of 1.4 billion people and counting. The fact that the ratification of this has happened — that we have 44 out of 54 countries ratified — is already good progress. But I’ve learned that in the trade field, things take so long.
I’m an economist, I want things to move, but on the trade side it takes time.
Intra-African trade [as a proportion of the continent’s imports and exports] is stuck at around 15%. You are speaking to CEOs right now to find out what their experience is. What do they need and what are they telling you in terms of doing cross-border trade on the African continent?
Okonjo-Iweala: That 15% is too little. Africa’s share of global trade at 3% is too little. We need to do something to double and triple that. We need to overcome the challenges that lie in front of the continental free trade area: we need the infrastructure to work, we need to digitize more, so that we overcome some of the bureaucratic hurdles that make it difficult to trade, and we need to reduce trade costs.
Talking to CEOs, I think the issue is [identifying] the industries where we can make use of this large market to get onto regional and global value chains. Pharmaceuticals is one of them, and that is where I’ve been interested in what we can do to deconcentrate manufacturing of vaccines, of therapeutics, and diagnostics. What we’ve seen during the pandemic is that Africa needs to get its own manufacturing capacity, and this falls right back into what can make the continental free trade area work.
You’re the first woman and the first African to head up the WTO. What changes, if any, did you need to implement in this huge institution when it came to African policy, and what impact would you say you’ve made?
Okonjo-Iweala: It’s early days, but one of the exciting things being here [at the WTO] as an African is just to see how much we are benefiting from this. What I tried to do when I came in, is to urge members to speed up the rate at which these negotiations are happening.
I’m very excited that in June 2022, we were able to conclude the Fisheries Subsidies Agreement to lower the $22 billion [in worldwide subsidies] that are leading to illegal, unreported and unregulated fishing of our waters.
Another thing we are benefiting from is the TRIPS agreement [a set of international rules governing intellectual property, including patents on medicines]. We had the pandemic, and we used to import 99% of our vaccines — still do, mostly — and 95% of our pharmaceuticals. We were able, at the WTO, with African countries pushing with other developing countries, to get an agreement to override contracts for a period of five years so that our industry will have the ability to manufacture these things.
Now we have the challenge of inflation, the high price of food due to the war in Ukraine, the volatility of food prices, and the challenges of energy. What did we do? We got an agreement to get food to people who need it, like the Horn of Africa. The World Food Program had been encountering difficulties getting access to humanitarian food supply. WTO members agreed they would not put export restrictions on food, so that the WFP can get easy access. That is a net benefit for our continent.
Those are just three areas in which I feel we’ve been able to do something concrete. For me, trade is not just talking about rules, it’s about getting achievements that can benefit the ordinary man and woman on the streets of Africa.
Trade is synonymous with globalization, but globalization for the last few years has been vilified. Could you break down for us just how important trade is in poverty alleviation, specifically in the African context?
Okonjo-Iweala: Globalization has helped to lift more than 1 billion people out of poverty — we shouldn’t forget that. But there’s also no doubt that not everyone benefited. There were poor people in rich countries that were left behind … and there are poorer countries — many on our continent — who have not yet benefited.
But does that mean that we cannot benefit in the future? The answer is no. We need a new type of globalization, I call it re-globalization, that is going to benefit our countries by pulling in all those who were left behind.
Source : CNN