WTO: Six Reasons Why USA Vetoed Okonjo-Iweala

November 2, 2020
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On Wednesday, 28 October, 2020 all was set to declare two-time Nigerian Minister of Finance, Mrs. Ngozi Okonjo-Iweala, as the new Director General of the World Trade Organisation (WTO). Over 100 of the WTO’s 164 members were backing her for the position against South Korea’s Trade Minister, Minister Yoo Myung-hee.

The leader of the WTO is appointed ultimately by consensus. Every member has to agree to work with the candidate with the highest vote to become the DG for the selection to be made. The United States of America withheld consent, insisting on the South Korean candidate.

We examine six reasons behind America’s veto, scoring each on a scale of 1-10 depending on its strength in explaining the rationale behind the USA’s decision.

  • America is Wary About Nigeria’s Rise: The USA wishes to be on the rise with South Korea, a long-term ally, while keeping Nigeria down. A variant is that America’s decision is due to racism. This explanation borders on the ridiculous and so scores 0/10.
  • South Korea is a Big American Ally: The USA has stood behind South Korea and invested in the country’s economic development and security since the 1950-1953 Korean War. The USA currently has a 28,500-persons strong military presence in South Korea. 4/10.
  • Strong Trade Ties: America and South Korea signed the Korea-US Free Trade Agreement (KORUS FTA) in 2007; this agreement was renegotiated as part of President Donald Trump’s drive to renegotiate trade deals in America’s favour, with the Korean National Assembly ratifying the new KORUS on December 7, 2018. American-Korean trade in goods and services in 2018 was estimated to be worth $165.4 billion with Korea being the six largest trading partner for goods. American trade with Nigeria in the same year was worth an estimated $11.3 billion, with Nigeria ranking the 49th goods trading partner. The WTO leader is not elected to negotiate KORUS, yet strong US-Korean trade ties are relevant to America’s interests, so we rate this explanation 6/10.
  • Stronger Candidate: The USA argues that the South Korean candidate Yoo Myung-hee has being involved in trade negotiations for 25 years and so has the sort of “hands on experience” to steer the world to the first successful trade negotiation round in 25 years. Nigerians have argued that Mrs. Okonjo-Iweala’s “intimidating profile” towers over Yoo Myung-hee’s. The objective view is that the South Korean has better technical qualifications. Economics is a broad field, she is a trade specialist while Mrs. Okonjo-Iweala is not. It is in fact Yoo Myung-hee, the Korean candidate who led negotiations of the new KORUS. But the USA is using a cunnyman’s argument. When Mrs. Okonjo-Iweala contested for the Presidency of the World Bank in 2012, a position she was eminently qualified for, the USA backed a candidate with near zero development policy experience. Besides, DG of the WTO has a vast bureaucracy with the world’s best expert on trade as well as institutional memory to rely on. We score this factor 2/10 as an explanation for America’s decision.
  • Checkmating China: The WTO has four Deputy DGs and one of them is Chinese. If the Korean candidate is elected DG, China will not be able to get the DG position again when the term of the current Chinese Deputy DG expires. This is a strong explanation given the bipartisan consensus in America that China plays the system to have such a dominant position in global trade. We score this 8/10.
  • Adesina’s Victory at the AfDB: The American Secretary of Treasury Steve Mnuchin wanted allegations of nepotism against Nigeria’s Dr. Akinwunmi Adesina investigated rather than dismissed on procedural grounds i.e. the whistleblowers did not come forward with evidence (a position the compromise Mary Robinson’s Panel of Independent Experts endorsed). Nigeria mounted a vigorous international opposition to America’s request and succeeded in getting a second term for Dr. Adesina. This was an embarrassment to the Americans who may not have expected Nigeria’s strong resistance. The Korean candidate on the other hand made the Trump administration look good by agreeing to and quickly delivering a renegotiated KORUS. To think of it, the European Union countries that have strongly backed Dr. Okonjo-Iweala neither have a reason to strengthen China not are they inferior judges of competence. This may just be America’s payback time. 6/10.

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