Welcome back.
I'm here with Dr Ngozi Okonjo-Iweala,
who's the seventh director-general of the WTO.
She took over on the 1st 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 Ngozi.
Thank you.
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 Covid crisis has receded, strains have emerged.
We have bottlenecks everywhere.
We have problems of ports, ships that are stuck.
So what's going on?
Well, Roula, I think the issue is a supply-demand mismatch.
It looks like from the demand side, the appropriate stimulus,
trillions of dollars that was implemented
by many of the developed countries,
putting cash into the hands of households and businesses
has led to increase in demand by consumers as the Covid-19
pandemic 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.
They fear that their supply chain is
going to be impacted in future.
So they are buying more and accumulating inventories
as a risk management technique.
And that's exacerbating the problem, in a way.
That's exacerbating the problem.
And if you put that against the fact
that at the beginning of the pandemic,
shipping lines felt that there would be lower demand so they
cut down on availability of freight containers
were left in the wrong places, so now there
is a container shortage.
So all of these supply issues with the demand increase,
is resulting in what we see now as an exacerbation.
From where you're sitting, how long
do you think 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, Roula.
We are going into the holiday season in many countries,
again with very high demand, and the container mismatch
has not yet being solved.
So 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 now being made much better also,
but I'm afraid we're in for several months of difficulties.
OK.
Let me ask you about the state of the world today, where
we are in a phase of decoupling between the US
and China, a 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 endanger
the global recovery?
Well, Roula, let me get back to this issue of decoupling.
When you listen to the rhetoric from both countries,
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 theory.
Trade between the EU and China, for instance, is at highs.
And the US is trending in the same direction.
We talked of this demand push that I mentioned before
with supply chain.
The statistics on merchandise trade between the big powers
is very robust.
There is very robust trade.
So when people talk of decoupling,
we need to look at the numbers.
So that's the first thing.
But the rhetoric is really hot and moving
away from what the realities are on the ground.
Secondly, it's not so easy to unwind supply chains.
They are very complicated for many products.
If you take vaccines, for example,
there are so many components manufactured
across multiple countries.
And avoiding that and decoupling that would not be easy.
Now, on the issue of the growth and what is happening,
I will say that we see that vaccines
are a critical factor in the different growth patterns
or recovery patterns that we see now in the world.
You see that those rich countries that have access
to vaccines have vaccinated more than 50
per cent of their population and have implemented very strong
fiscal stimulus, trillions of dollars,
are on a better recovery path than the poorer countries
who have no fiscal space and who also have very little access
to vaccines.
The fact that 60 per cent or more of people in many rich
countries have been vaccinated versus slightly below two per
cent in poor countries just gives you the rate
of the divergence with respect...
Very, very relevant, obviously, for Africa.
And despite a lot of calls by politicians,
by experts, we've published so many aspects in the FT calling
for more equality on vaccines, that
does not seem to be happening.
Is this for you a failure of global leadership?
I think so.
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 look, many rich countries have
pledged hundreds of millions of doses of vaccines.
The US president Biden recently pledged another 500 million.
The EU president Von der Leyen has just
pledged 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 into the arms of people
in developing countries?
And I have to say that in this regard,
I'm quite proud of some of the work we're doing at the WTO
where we're working directly with manufacturers
to look at their supply chain issues,
and at the same time trying to get from them some
of these numbers, transparency on what
is being done so we can see why we have these problems.
Do you think that, and do you support the waiver
on intellectual property?
Do you think it would make a big difference?
Roula, let me say what I've said before.
As DG WTO, I have members on both sides of this issue.
So I cannot take sides.
My job is to bring them together.
And what I do want to make clear is that easier
access for developing countries to vaccines,
and including to manufacture, is something
that we just need to support now because it's part of building
resilience for the future.
At the same time, we don't want a disincentivize research
and innovation.
So we are 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 negotiations on this are stick.
But there are informal discussions
going on, which I hope can help unlock
some of the difficulties.
There are two issues that I want to ask you about.
One is COP26.
And you wrote a piece for us just last week.
You advocate for a price for carbon,
but you also say that carbon border adjustment schemes
of the sort that are being advocated in Europe could
penalise 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, Roula, let me correct something.
I didn't say the carbon border adjustment penalised developing
countries.
I say may, that they are afraid it may penalise them.
We won't know until the detailed design of these
are done whether they are WTO compatible or not.
But the point I was trying to make
is there are fears that these mechanisms may
hurt some members.
And the sooner we can find an approach for a global carbon
price that will be fair to everyone,
the better that would be.
So that's what I was trying 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, with respect to what developing countries should
say, well, Africa, for instance, produces three to four
per cent of the carbon emissions in the world
and has few resources with which to make
a transition to renewables and to low carbon emission
development.
So what we're saying, African countries
should be asking for the financing that
was promised them, the $100bn 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,
and other 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,
but 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
[INAUDIBLE] 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 it realistic to think of leapfrogging?
Absolutely, Roula.
Absolutely.
I think that dichotomy that, if you go green,
you won't develop, is not true.
It's been shown that new technologies, renewables also
can create new jobs that were not thought about before.
When you have solar, for instance,
we have 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 environmental services that we can render.
So I think that fear that 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 conference today is trade.
How important is the African Continental Free Trade Area?
And how can it be implemented successfully,
because if anything, manufacturing
has gone backwards in most of Africa in recent decades?
Roula, you're absolutely right.
There's been a deindustrialization
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 it so attractive.
Imagine a market of 1.3bn consumers where you can cross
borders.
I think what to make this work, I'm
very proud that ratification by different countries
has gone on, 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 because one of the ways we
can have a smooth functioning of markets
is to have borders that are very easy to cross.
And that needs a lot of investment,
but we have to start somewhere.
Just imagine, Roula.
My dream is that we can have, for instance,
for pharmaceuticals a 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.
Do you think Nigeria is committed to the free trade
area?
It has signed up, but there is a suspicion
that it's quite a reluctant participant.
Do you see it as a reluctant participant?
Well, you can understand a little, no, I think not.
In the beginning, yes, because I think the manufacturing
association, they were trying to see, what does this really
mean for Nigeria?
Is it really going to be a case where
goods are being manufactured on the continent, issues
of rules of origin?
Are we going to have products brought into the continent
and then billed as being manufactured there
with little finishing, just little value added?
And how would that undermine competition?
So you can see how the manufacturers
were worried that some of these issues need to be sorted out.
But I think, once sorted out, they
see the advantage of the vast market
because Nigeria has the ability to add value to its products.
And so it should be looking at 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
going to let you go without asking it,
what does it mean for Africa that there
is an African at the head of the WTO?
Well, I think for Africa, what it
means is that there is someone who is of the continent,
knows the problems, has been a policy maker on the continent,
and therefore can help deliver some
of the solutions that maybe be needed,
somebody with an attentive ear.
Yes, I'm DG WTO for all the members worldwide,
but I'm from the continent, and I know its problems first
and not secondhand.
So they have a very attentive ear
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 your time.
Thank you, Roula.
Nice talking to you.
Pleasure.
Bye.