Governments risk repeating the mistakes of previous food crises by imposing export controls amid soaring commodity and energy prices, the head of the World Trade Organization has said.
In an interview with the Financial Times, Ngozi Okonjo-Iweala, who became WTO director-general a year ago, also urged countries to agree to a controversial deal on patent waivers for Covid-19 vaccines and said the global supply chain crisis would last much longer. than previously thought.
Okonjo-Iweala’s tenure has been marked by successive waves of Covid-19 halting production and transportation, severe congestion in land and sea container traffic and a breakdown in global energy and food markets. caused by the war in Ukraine.
“I hope we have learned something” from the previous global food crisis of 2007-2008, Okonjo-Iweala said, referring to a period when problems were caused by droughts in major producing countries of wheat and rice, as well as an increase in the cost of energy. “The signs we’re seeing now don’t show that we’re learning much, because we have the same situation of soaring food prices, soaring energy prices and an emerging spiral.”
“We should try not to make the problems worse by putting in place export restrictions that might encourage others to impose their own export restrictions,” she said. Governments with excess stocks of products such as vegetable oils and grains should release them on world markets, she said, although she declined to name specific countries.
Okonjo-Iweala, a former Nigerian finance minister and managing director of the World Bank, said only a dozen WTO member countries had so far imposed export restrictions to keep food at home, which they are allowed to do under a loophole in the WTO rules.
The war in Ukraine has put intense pressure on the WTO as a negotiating forum, as divisions between Russia and a coalition of mostly wealthy governments backing Ukraine boil over into talks. These governments have issued a declaration at the WTO denouncing Moscow, blocked application integrate the institution and took of so-called “most favored nation” status for Russia, allowing it to impose higher tariffs on Russian goods than on other members of the organization.
Okonjo-Iweala said governments withdrawing most-favoured-nation status were acting within their rights. “It’s something we obviously don’t encourage, but under WTO rules it’s something that can be done,” she said. Members had found ways to continue the negotiations despite what she described as “a very delicate situation”.
In a positive development, governments are set to strike a landmark deal to waive patent protection for Covid-19 vaccines under WTO rules, to facilitate production in developing countries. the draft agreement – agreed by a central negotiating group comprising the EU, US, India and South Africa – was critical by pharmaceutical companies for violating intellectual property (IP) rights and by health activists to be too narrow. The proposal will be submitted to all WTO members for approval, which requires unanimous support.
“I think we have to move because it’s a viable solution,” Okonjo-Iweala said. “We must remember that the WTO is a forum for negotiation. This is not a diktat forum. It’s not a place where a party can come and say, ‘this is what I want, give it to me’.”
The draft agreement came despite a stark difference between the sweeping suspension of intellectual property initially demanded by South Africa and particularly India and the much more limited approach advocated by the EU. ‘Ministers are really to be commended for putting the necessary time into this,’ she said. “They negotiated and tried to obtain a framework that they did not impose on anyone. They just say that could be a basis on which we could proceed.
The other big problem the WTO is trying to address is the tangle of global supply chains. Congestion, especially at US West Coast ports, began in 2021 after a huge increase in demand for consumer durables. It was prolonged by the variant of the Omicron coronavirus interrupting production and transport, particularly in China. The war in Ukraine worsened the situation by blocking trade routes and depriving shipping companies of Ukrainian and Russian sailors.
Last year, Okonjo-Iweala was initially optimistic that supply chain issues would resolve quickly, but said she had become progressively more gloomy on deeper issues.
Earlier this month, she convened a summit of CEOs of transport, logistics and trade companies. “After listening [the CEOs]I think there are more structural issues, which could mean some of that may stretch out for a while,” she said.
“It’s not just port congestion. These are problems on earth. They said we didn’t have enough warehouses, we didn’t have enough truckers. It is no longer an attractive job for many young people. The drive for net zero carbon emissions has also strained the system by requiring different vessels, which has affected the amount of cargo that can be transported, she said.
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