Okonjo-Iweala urges countries to diversify global production

World Trade Organisation Director-General, Ngozi Okonjo-Iweala, has urged countries to diversify production and reform global trade rules to reduce supply chain disruptions and make the global economy more resilient.

She said overdependence on a single country or location for production had exposed global supply chains to risks, stressing that countries must begin diversifying their sources of supply and production centres.

Okonjo-Iweala made the call in an interview with Bloomberg’s Francine Lacqua, where she advocated a new approach to globalisation known as “re-globalisation”.

The concept, developed by the WTO, seeks to spread production across countries with competitive advantages rather than concentrate it in a few locations.

“We believe that we need to reimagine globalisation and reimagine value and supply chains in a way that builds greater resilience for the world instead of being dependent on one geography or one place,” she said.

The WTO chief warned that building reliable supply chains takes years, making it necessary for countries to begin diversification efforts immediately.

“Efforts to diversify must begin now,” she said.

Okonjo-Iweala also disclosed that global trade was worth about $33tn, with digitally delivered services emerging as its fastest-growing segment.

She said digital trade, covering services such as entertainment, education and healthcare delivered online, was worth approximately $4tn and growing by about six per cent annually.

WTO rules need urgent reform

The former Nigerian finance minister said global trade was facing unprecedented disruption and fragmentation, with growing dissatisfaction among WTO members over existing trade rules.

According to her, some countries believe the current framework no longer adequately addresses their economic interests, prompting them to increasingly pursue unilateral actions.

“Global trade is under tremendous stress and that is because many members of the WTO are beginning to feel that the rules no longer work for them the same way that they used to work in the past,” she said.

“The dissatisfaction is leading to unilateral behaviour on the part of some.”

She said the rules must be updated to reflect changes in the global economy since the WTO was established, including the entry of China and other developing economies into the multilateral trading system.

Okonjo-Iweala cautioned against treating the challenges facing global trade as a dispute involving only the United States and China.

“Making it a US and China problem is not recognising that many emerging markets and poorer developing countries also have problems with the system,” she said.

She called for reforms that would address the concerns of all WTO members, including emerging markets and poorer economies.

The WTO director-general also expressed concern over mounting pressure on multilateral institutions, noting that countries established such organisations after the Second World War because some international challenges could not be resolved by individual nations acting alone.

She said virtually all WTO members recognised the need for reform, urging the organisation to act promptly to address their concerns.