WTO director-general says supply chain problems could last months | FT

Ngozi Okonjo-Iweala, the first African head of the World Trade Organization, tells the FT Africa Summit that she expects global supply chain difficulties to last several months. She tells FT editor Roula Khalaf that the rhetoric about a decoupling of the US and Chinese economies is not matched by reality on the ground, and she blames a lack of global leadership for Covid-19 vaccines not ending up where they are needed most. Read more at

Welcome back i’m here with dr ngozi okonjo iwala who’s the seventh director uh general of the wto she took over on first of the first of march 2021 becoming the first woman and the first african to serve as director general it’s wonderful to have you with us dr negozi back in march back in march you told the ft if you really look at what’s happening objectively

You’ll see that supply chains have been resilient indeed they were during the pandemic they held up very well but as the covet crisis has receded strains have emerged we have bottlenecks everywhere we have um problems of ports ships that are stuck so what’s going on well i think the issue is a supply demand mismatch it looks like from the demand side the

Stimulus the appropriate stimulus trillions of dollars that was implemented by many of the developed countries putting cash into the hands of of uh households and businesses has led to um increase in demand uh by consumers as the kobe 19 pandemic you know has abated in several countries and they’ve opened up at the same time i think there’s also an increase

In demand by businesses for inventory there is inventory accumulation i think when i speak to some business people there’s a bit of panic you know there’s fear that their supply chain is going to be impacted in future so they are buying more and accumulating inventories as a as a risk management technique so if you and that’s exacerbating the problem that’s

Exacerbating the problem and if if you put that against the fact that at the beginning of the pandemic a shipping lines felt that there would be lower demand so you know they they cut down on availability of free containers were left in the wrong places so now there is a container shortage so all of this supply issues with the demand increase is resulting in

What we see now as an existing from where from where you’re sitting how long do you think um these bottlenecks and the shortages and the supply chain problems will last well it’s very difficult to say but it looks like it’s going to go on for several months ruler we’re going into the holiday season in many countries again with very high demand and and you know

The container mismatch is not yet being solved so my we expect at the wto that this will continue for several months but that it is transitory perhaps sometime later next year we will see this you know sort of now uh being made much better or so but i’m afraid we’re in for several months of difficulties okay um let me ask you about the the state of the world

Today where we are in a phase of decoupling between the us and china and new geopolitical reality and a new cold war do you think that the differences between the us and china can be bridged and to what extent do you worry that they’re going to in endanger the club the global recovery well um rula let me get back to this issue of decoupling when you listen to

The rhetoric from both countries uh from other all the big powers you start thinking of this decoupling but the evidence we see on the ground with respect to trade does not support this decoupling a theory trade between the eu and and and china for instance is that uh at peak that highs and the u.s is trending in the same direction uh we we talked of this

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Demand push uh that we for that i mentioned before with supply chain so there’s the statistics a merchandise trade between the big powers is very robust there’s very robust rates so when people talk of the decoupling we need to look at the numbers so that’s the first thing um but you know the rhetoric is really hot and and moving away from what the realities

Are on the ground secondly it’s not so easy to unwind supply chains they’re very complicated for many products if you take vaccines for example there’s so many components manufactured across multiple countries and unwinding that and decoupling that will not be easy now on the on the issue of um you know the growth uh uh and and what is happening i i will say

That we see that vaccines are a critical factor in in the different growth patterns or recovery patterns that we see now in the world you see that those that rich countries that have access to vaccines have vaccinated more than 50 percent of their population and have implemented very strong fiscal stimulus billions of dollars are on a better recovery path

Than the poorer countries who have no physical space and who also have very little access to vaccines the fact that 60 or more for people in rich countries in many rich countries have been vaccinated versus slightly below two percent in poor countries just gives you the the rate of the divergence with respect very very relevant obviously for africa and despite

A lot of calls um by politicians by by experts we’ve published so many op-eds in in the ft calling for more equality um on vaccines that does not seem to be to be happening it is this for you a um a failure of global leadership i i think so i mean you know it it really is i think for me it’s really difficult to see that we have the technology to save lives

And yet we can’t seem to get that to where it’s needed and uh you know the the look many rich countries have pledged hundreds of millions of dozens of vaccines the us president biden recently liked another 500 million uh uh the eu president von der line has just played another 500 million so we have all these pledges but they’re just not translating into

Distribution in the countries where they are needed so that’s what we really need to look at we need to look at the more transparency on the contracting for these vaccines from the producers how do we get them you know into the arms of people in developing countries and i have to say that in this regard rule i’m quite proud of some of the work we’re doing

At the wto where we’re working directly with manufacturers uh to look at their supply chain issues and at the same time trying to get from them some of these numbers uh uh transparency on what is being done so we can see why why do we have these problems do you think that and do you support waiver on intellectual property do you think it would make a big

Difference let me say what i’ve said before you know as dg wto i have members on both sides of this issue so it is i cannot take sides my job is to bring them together and what i i do want to make clear is that easier access for developing countries to to vaccines and including to manufacture is something that we we just need to support now because it’s part of

Building resilience for the future at the same time we don’t want to disincentivize research and innovation so we’re looking for that happy middle ground in the trips arrangement where we can have a pragmatic approach that meets both these objectives and i think it can be done members are trying to reach such a pragmatic conclusion it’s not easy actually formal

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Negotiations on this are stuck but they’re informal discussions going on which i hope can help unlock some of the difficulties there are two issues that i i want to ask you about um one is um cop26 and you wrote uh a piece for us um just last uh last week um you advocate for a price for carbon but you also say that border border carbon border adjustment schemes

Of uh the sort that that are being advocated in europe could penalize african economies especially carbon intensive ones what do you think developing countries should be saying at cop26 both in terms of what they’re pledging to do but also what they are demanding from rich nations well ruler let me correct something i didn’t say that carbon border adjustment

Penalized developing context that they may they are afraid it may penalize them we won’t know until the detailed design of these are done whether they’re wto compatible or not um but the point i was trying to make is their fears that these mechanisms uh you know may hurt some members and the sooner we can find an approach that for a global carbon price that

Will be fair to everyone the better um that would be so that’s what i was trying to to really say and i’ve advocated that all the international institutions should be asked by the g20 to come together to develop such an approach now you know with respect to what developing countries should say well you know africa for instance produces three to four percent of

The carbon emissions in the world so um and and has few resources with which to make a transition uh to renewables and to look upon a mission development so what we’re saying african countries um should be asking for the financing that was promised them the hundred billion a year for helping transition has not been as forthcoming as it should and we need a just

Transition you cannot expect this continent for instance another low-income countries to transition at the same pace if they don’t have the financing to put in the kind of green low-carbon infrastructure which is really possible to do you know but it needs more it needs money to be able to do it so i’m sure they’ll be asking for that at the same time i think

That african countries should also they’ve all put in their nationally determined contributions and even though they didn’t cause much of the problem they also need to be part of the solution to the extent they can so they need the finance to deliver the commitments that they have made but i do believe they should contribute you think they can go green and

Develop at the same time is is it realistic to think of leap frogging absolutely ruler absolutely i think that dichotomy that if you go green you won’t develop it’s not it’s not true it’s been shown that you know new technologies renewables also can create new jobs um that that um you know we’re not thought about before um when you have uh solar for instance

We have in solar sun in abundance on the continent so if we can manufacture solar panels ourselves rather than importing them that will create lots of jobs servicing and maintaining all this it creates other jobs there are other services environmental services that we can render so i think that fear that if we if we go green we will fall behind in development

It’s not really justified provided we can get the support and the financing to transition the theme of our of our conference um today is is trade how important is the african continental uh free trade area and how can it be implemented successfully because if anything manufacturer manufacturing has gone uh backwards and most most of africa in in recent deca in

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Recent decades we’re like you’re absolutely right there’s been a de-industrialization on on the continent in recent decades and we need to bring back maybe not the old type of manufacturing jobs but some manufacturing jobs so that we can have decent jobs for our youth and i think that the african continental free trade area is absolutely critical it is what

Makes the it’s so attractive imagine in a market of 1.3 billion consumers where you can cross borders um i i think what to make this work i’m very proud that ratification uh by different countries has gone on uh the beginning digitalization and the wto is trying to work with the secretariat and with various countries to try and help with capacity building

Regulatory frameworks but we also need infrastructure between the countries to improve um because one of the ways we can have a smooth functioning of markets is to have borders that are very easy to cross so these and that needs a lot of investment but we have to start somewhere just imagine ruler my dream is that we can have for instance for pharmaceuticals

The whole ecosystem of production on the continent some countries can be making some inputs others other inputs others can be finishing the product if you have this kind of large market it’s it’s do you think nigeria is committed to the free trade area it has it has signed up but there is a suspicion that it’s quite it’s a reluctant participant do you see it

As a reluctant participant well you can understand a little no i i think not in the beginning yes because i think the manufacturing association that we’re trying to see what does this really mean uh for nigeria is it really going to be a case where goods have been manufactured on the continent tissues of rules of origin are we going to have products you know

Kind of brought into the continent and then you know a bill that’s been manufactured there with little finishing you know just little value added so and how would that undermine competition so you can see how how the manufacturers were worried that some of these issues need to be sorted out but i think once sorted out uh they see the the advantage of the vast

Market because nigeria has the ability to add value to its products and so it should be looking on this as a good thing now not a bad thing i know i have to let you go in literally one minute so my last question to you because i’m not gonna let you go without asking it what what does it mean for africa that there is an african at the head of the wto well um

I think for for africa what it means is that there is someone who is off the continent knows the problems has been a policy maker on the continent and therefore can find help find uh deliver some of the solutions that may be needed somebody with an attentive year yes i’m dgwto for all the members of worldwide but i’m from the continent and i know its problems

First and not secondhand so they have a very attentive year and someone who is eager to help solve as many of the trade related problems on the continent as possible dr ngozi thank you for giving us uh your time thank you nice talking to you pleasure bye bye you

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WTO director-general says supply chain problems could last months | FT By Financial Times

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