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Ngozi Okonjo-Iweala on Ending Poverty

W.T.O Director-General Ngozi Okonjo-Iweala On Ending Poverty
On March 1, 2021, Ngozi Okonjo-Iweala took office as the director-general of the World Trade Organization (WTO). She is the first woman and the first African to hold this office. After experiencing the Nigerian Civil War, she came to the U.S. and studied development economics at Harvard University. She also received her doctorate in regional economics and development from the Massachusetts Institute of Technology. In 2003, she served as Nigeria’s finance minister. After a second appointment ending in 2015, she also served as a foreign minister and worked for the World Bank for 25 years, overseeing an $81 billion portfolio. In her newly appointed role, Okonjo-Iweala promises to influence and implement policy in order to restore the global economy.

What is the World Trade Organization?

The World Trade Organization is an international organization that deals with the “rules of trade between nations.” Member governments negotiate trade agreements that are then ratified in their own parliaments. All major decisions are made by the membership as a whole, either by ministers, their ambassadors or delegates.

The WTO plays an important role in reducing global poverty. Studies show that free trade helps impoverished countries “catch up with” developed nations. More than three-quarters of WTO members are developing countries. Every WTO agreement holds particular provisions for these countries, including longer time spans to carry out agreed-upon policies, “measures to increase their trading opportunities” and assistance to support these countries in building the necessary infrastructure to improve their economies. Least-developed countries are often exempt from many provisions.

The WTO also aims to reduce living costs and improve living standards by mitigating the effect of protectionism on consumer costs. This means that products are more affordable for those with a lower income. In addition, lowering such trade barriers stimulates economic growth and employment, creating opportunities for the impoverished to increase their incomes.

Okonjo-Iweala and Poverty

Okonjo-Iweala’s long list of achievements includes many in the realm of poverty reduction. As the minister of finance in Nigeria, she helped Africa’s largest economy “grow an average of 6% a year over three years.” She also helped create “reform programs that improved governmental transparency and stabilizing the economy.”

As the board chair of Gavi, the Vaccine Alliance, she contributed to ensuring vaccine equity. During her 25-year career at the World Bank, she rose to the second-most prominent position of managing director. Okonjo-Iweala ran for the office of director-general of the WTO with the strong belief that trade has the power to lift people out of poverty.

Okonjo-Iweala is also a supporter of COVAX, aiming to resolve vaccine nationalism. During the COVID-19 pandemic, vaccine nationalism is a problem that disproportionately affects impoverished countries. COVAX is a global vaccination effort launched by Gavi and leading partners to ensure vaccine equity.

In a January 2021 article, Okonjo-Iweala writes that “All manufacturers must step up and make their vaccines available and affordable to COVAX,” in order to ensure equitable and timely vaccine distribution to low-income countries. She also warned against repeating history.

In 2009, a small number of high-income countries bought up most of the global supply of the H1N1 flu vaccine, which left the rest of the world lacking. If history were to repeat itself during the COVID-19 pandemic, the impact on impoverished countries, and the world at large, would be devastating.

Okonjo-Iweala’s Plan

As director-general of the WTO, Okonjo-Iweala’s immediate plans focus on ending the COVID-19 pandemic with vaccines for all. In a statement outlining her vision for the future of the WTO, she says “the WTO can and must play a more forceful role in exercising its monitoring function and encouraging Members to minimize or remove export restrictions and prohibition that hinder supply chains for medical goods and equipment.”

She also says that member nations of the WTO need to adopt a stronger stance in preventing vaccine nationalism and protectionism. International cooperation, in her opinion, is the only way to come up with the vaccines, therapeutics and diagnostics needed to put an end to the COVID-19 pandemic.

Okonjo-Iweala has promised to face the economic and health challenges presented by the novel coronavirus head-on. Importantly, she notes that “a strong WTO is vital if we are to recover fully and rapidly from the devastation wrought by the COVID-19 pandemic.” Okonjo-Iweala promises to work in a collaborative effort to “shape and implement the policy responses” necessary to restore the global economy.

– Brooklyn Quallen
Photo: Flickr

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5 Important Ways that World Trade Reduces Poverty

World trade reduces poverty
World trade proves to be a prosperous way for countries to keep good relations while benefiting from one another. World trade reduces poverty in many unique forms, allowing businesses to buy and sell their goods in an easier, safer environment while improving economic balance and structure.

Economic Benefits

According to the World Trade Organization (WTO), an economy will grow quicker and at a more consistent pace when free trade is more easily accessible. A company which earns a greater profit is more likely to hire a larger amount of people while giving their employees a stable position within the company, without fear of being laid off or fired due lack of funds or money.

WTO reports that there has been a 34 percent wage increase for companies in sub-Saharan Africa that participate in exporting goods. In a closed economy, the numbers severely decrease in amount, proving that the impact of trade can have a great consequence on each individual country. Generally speaking, world trade reduces poverty by boosting each economy and providing more opportunity for growth in any country.

Education and the World Trade Institute

With a better economy that has higher profits, this creates more money to be given to educational institutions. Not only do elementary, middle and high schools benefit, but for countries with an open market, this gives college-aged students and business owners a chance to learn the skills in trade, importing and exporting.

The World Trade Institute (WTI) provides many different programs for graduate students interested in learning the art of trading. WTI offers Doctorate and Masters programs in economics, political science or international law and economics. The World Trade Institute also offers courses and topics in trade, investment and sustainability, leaving its students with the knowledge of a successful career in trade while providing internship opportunities to gain experience and learn how world trade reduces poverty.

Reduction of Corrupt Governments

Many times, high poverty rates within a country can be a sign of government corruption or the country’s leaders taking advantage of its citizens. The World Trade Organization has enabled many different plans to help fight bribery, extortion, fraud and nepotism. Through the Government Procurement Agreement, government purchases can now be tracked and watched to ensure all money received or gifted is in good faith and only used for those who are abiding by the law.

The American Society of International Law reports that citizens universally pay around 25 percent more than average for communal goods and services under corrupt governments. When the government is providing better funding for things such as housing, education or creating jobs rather than participating in questionable business deals, this opens up opportunities for the people to create a better life.

Industrialization and Infrastructure

When business owners and entrepreneurs have access to public transportation and roads, it provides an outlet that allows them to travel to and from different regions, expanding their markets and advertisements. However, when a business owner who produces a good they would like to trade does not have a simple entry into other provinces, it proves difficult for them to be able to make any money or get their product noticed.

The World Bank reports that, sometimes, increasing trade for poverty-stricken areas can have quite an easy answer; sometimes, all that is needed is a new road. The World Economic Forum states that for a continent such as Africa, it is best for nations to trade with their neighboring countries. This allows the business to trade on a smaller scale before moving on to trade with first-world countries such as China or the U.S.

Technology Brings New Trading Outlets

Technological advances have made it easier than ever before for consumers to find what they wish to buy and for business owners and product builders to “post” their brand online. This way, the consumer can have their product delivered right to their door, while the company benefits from the profit.

E-commerce sites have recently become a staple in African communities, and businesses such as Jumia have seen a rise in revenue by raising $150 million in 2014 alone. Websites like Jumia have everything a customer could possibly want or need, from electronics to fashion to grocery items. Websites like Jumia showcase how technology can bring in money and jobs, while easily marketing brands around the world.

Technology, economic benefits and industrialization are only a few ways world trade reduces poverty. The Office of the United States Trade Representative ensures that our markets are left free and open, while keeping trade agreements with countries where poverty can be most prominent, such as Africa, the Middle East and South and the Western Hemisphere of the Americas. Keeping good relations with these countries ensures economic and job growth while bringing in an abundance of goods.

– Rebecca Lee

Photo: Flickr

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Global Benefits of the Trade Facilitation Agreement

Global Benefits of the Trade Facilitation Agreement
The Trade Facilitation Agreement (TFA) came into effect on Feb. 22, 2017, after ratification by the World Trade Organization (WTO). According to the WTO, the TFA contains provisions allowing for “expediting the movement, release and clearance of goods, including goods in transit.” The agreement was created to benefit both wealthy, developing and underdeveloped countries that wish to engage in trade and commerce.

According to an article in The Economist, the TFA is designed to cut trading costs in developing countries by implementing more efficient processes and eliminating unnecessary obstacles prior to export clearance.

For example, individuals in sub-Saharan Africa must go through an excessive amount of barriers to get an item exported, including going through up to 200 hours of regulations and inspections. In comparison, wealthier countries may face up to only 15 hours of regulations and inspections.

According to the WTO, full implementation of the TFA “could reduce trade costs by an average of 14.3 percent and boost global trade by up to $1 trillion per year, with the biggest gains in the poorest countries.”

The TFA is divided into different sections and categories, each made up of substantive provisions. For example, section one of the agreement contains provisions necessary for expediting the movement and clearance of goods. Section two, however, consists of special provisions that would allow for developing and underdeveloped countries to benefit from trade facilitation upon receiving special assistance from member organizations that are involved in its implementation.

The member organizations that are involved in assisting developing and underdeveloped countries include the WTO, World Customs Organization and the United Nations Conference on Trade and Development.

The TFA will result in a heightened level of exports taking place out of developing and underdeveloped countries. Furthermore, a rise in trading expenditures will have a positive global effect on countries such as the U.S.

– Lael Pierce

Photo: Flickr

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South Korea Anticipates Building an Agricultural Training Center

Agricultural_Training_Center
With a history of agriculture and farming, the Korean Rural Community Corp. (KRC) has decided to spread its knowledge by building an agricultural training center.

The corporation plans to begin construction for the estimated $43 million dollar Rural Community-International Education Exchange Center (RC-IEEC) in 2016 and will start running the facility in 2017, training government officials from developing countries to learn more about Korea’s knowledge of agriculture.

“Many developing countries are seeking to learn from Korea about how it developed its agricultural industry,” said KRC CEO Lee Sang-mu.

According to the CEO, “To meet this growing demand, we decided to build the RC-IEEC to more effectively share our knowledge about farming, agricultural infrastructure and experience with the developing world. The planned facilities will enable us to share our knowledge in a more systematic manner.”

In the 1970s, farming and agriculture accounted for half of South Korea’s economy. Known for their long, hot humid summers that are favorable for the development of varied vegetation, South Korea’s most popular crops include rice, pork, beef, and milk.

Due to the rapid growth of technology, currently agriculture only accounts for 6.2 percent of the economy.

After joining the World Trade Organization (WTO) in 1994, the government was forced to cut tariffs and eliminate quotas, resulting in today’s 20 percent grain production compared to its 70 percent grain production in 1970.

Today, South Korea is the Asian leader in organic agriculture production, making this announcement a timely decision to build the RC-IEEC and share their agricultural knowledge with developing countries.

“The RC-IEEC will play a crucial role in spreading Korea’s experience and knowledge in agriculture by inviting public-and private-sector government officials from 50 developing nations to come and learn,” Lee said. “The center will contribute significantly to improving the livelihoods of farming villages across the globe.”

The four-story building will have classrooms, conference rooms, and other teaching facilities that will create an environment to learn and conduct business. The center plans to provide at least 50 academic training programs in the areas of rural development, rural welfare, and individual empowerment.

With the announcement of the training center, many developing countries are already on board for training with hopes to solve their countries’ personal food crisis.

– Alexandra Korman

Sources: Encyclopedia Britannica, The Korea Times, The Nation
Photo: Prospect Farm

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WTO Discussion on Duty-Free Trade Ends

WTO
The World Trade Organization recently held talks to discuss the possibility of duty-free trade on information technology goods. The proposed legislation sought to extend a 17-year-old trade agreement to end all tariffs on IT products.

However, on December 12, all talks ceased and collapsed due to a deadlock between China and South Korea over liquid crystal displays, commonly referred to as LCDs. The zero-tariff agreement applied to over 200 hundred products. South Korea wanted LCD products to be included in the deal; however, China refused this measure. It seems unlikely that China will concede to the stipulations regarding the LCD screens.

The Information Technology Agreement, or ITA, intends to strengthen trade between countries in the growing sector of technology. Opening channels for trade would have benefited both countries immediately as they would no longer be penalized for trading goods.

WTO Director General Roberto Azevedo said after the talks collapsed, “The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalize the negotiations this week.”

In 2015, the talks are projected to continue with the hope that they will receive a unanimous vote in agreement. The WTO is committed to multilateral trade that integrates 161 countries around the world. The ITA deal would integrate mostly developing economies with significant production of new technology.

The deal makes imported products significantly cheaper than manufacturing and selling the products in one’s own country. India’s Prime Minister, Narendra Modi did not enter into the signed deal with the United States and China to protect India’s manufacturing interests.

However, a case could be made that a deal for India would increase exports, in turn benefiting India’s economy.

India is currently number 19 on the list of leading exporters and the 12th largest exporter. The balance of trade is India’s main concern and the concern of counties who do not already have robust industries.

– Maxine Gordon

Sources: NDTV, Rediff
Photo: Business Times