Closing Conversation: Global Trade in Transition

Key Concepts

Global Trade Disruption: The current state of global trade characterized by significant challenges and changes.
WTO (World Trade Organization): The international organization that governs trade between nations.
Most Favored Nation (MFN) Rules: A principle of WTO that requires a country to grant the same trade privileges to all WTO members.
Resilience of the System: The ability of the WTO system to withstand shocks and continue functioning.
Tit-for-tat Tariffs: Retaliatory trade measures where one country imposes tariffs in response to another country's tariffs.
Multilateral System: An international system involving multiple countries working together.
Dispute Settlement Mechanism: The WTO's process for resolving trade disputes between member countries.
Reforms: Proposed changes to improve the efficiency and effectiveness of the WTO.
Consensus Decision-Making: A system where decisions are made only if all members agree.
Unfair Trading Practices: Actions by countries that distort trade and create an uneven playing field.
Transparency in Reporting: The practice of countries openly disclosing their trade-related information, such as subsidies.
Developing Countries: Nations with lower levels of economic development, often facing challenges in global trade.
Services Trade: Trade in intangible goods and services, such as consulting, finance, and tourism.
Digitally Delivered Services Trade: Services traded electronically, often facilitated by the internet.
Green Trade: Trade in environmentally friendly goods and services.
Artificial Intelligence (AI): Technology that enables machines to perform tasks that typically require human intelligence.
E-commerce Agreement: Negotiations for rules governing online trade.
Ministerial Conference: The highest decision-making body of the WTO, held periodically.
Trade to GDP Ratio: The proportion of a country's economic output that is accounted for by international trade.
Intellectual Property (IP): Creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names, and images used in commerce.

Global Trade: Challenges and Resilience

The current state of global trade is described as the "greatest disruption in 80 years." A significant challenge has been the impact on the World Trade Organization's (WTO) Most Favored Nation (MFN) rules. Prior to recent tariff impositions, 80% of world trade operated under these rules. Currently, this figure has decreased to 72%. Despite this decline, the speaker expresses surprise and pleasure at the "resilience of the system," noting that the WTO framework, built over eight decades, remains standing, albeit "knocked, battered, bruised."

The Functionality of the Multilateral System Amidst US Actions

Playing devil's advocate, the question is raised whether the multilateral system can function if a major economy like the US "ignores WTO rules." The response is that the system "is functioning," though not as it did previously. It is highlighted that the US accounts for only 13% of total world imports, meaning 87% of trade continues outside of US actions. A key positive outcome is the avoidance of a repeat of the 1930s, which saw protectionism and "tit for tat tariffs" leading to the Great Depression and World War II. The WTO members have largely avoided retaliatory tariffs, and most trade continues under WTO rules. Some members have filed disputes against the US, which is considered a normal part of the dispute process, initiated by a "request for consultations."

The Need for WTO Reform

Despite the system's resilience, the speaker emphasizes that the 72% of trade still operating under WTO rules is "no reason for complacency." Many criticisms leveled against the WTO, particularly by the US, are acknowledged as valid. The current situation is seen as an "opportunity to reform" the organization.

Key Areas for Reform:

Consensus Decision-Making: The WTO's reliance on unanimity from its 166 members for decisions can lead to stagnation. The need is to find an "efficient way" to make new agreements and decisions more quickly. The responsibility for finding solutions lies with the member states.
Addressing Unfair Trading Practices: This includes tackling creeping protectionism that predates unilateral actions and improving "transparency in reporting." Lack of transparency, especially regarding subsidies, undermines the "level playing field" and the fairness of the system.
Integration and Benefits for Developing Countries: Developing countries often feel the system does not work as well for them, are not as well integrated, and have not benefited sufficiently. These issues are also on the reform agenda.

The WTO Beyond Tariffs: Value and Perception

The perception of the WTO in countries like Nigeria is discussed. Before taking her current role, the WTO was not a "household word." It is likened to plumbing – taken for granted until it breaks. However, the speaker asserts that without the WTO and its basic rules, there would be "chaos" for traders and businesses. Beyond tariffs, the WTO houses fundamental rules on goods valuation, intellectual property (IP), and more. For instance, over $500 billion was earned through IP payments last year, with significant portions going to the US and the EU, demonstrating the non-trivial economic value of these WTO agreements.

The Point of Rules When Disobeyed

In response to the argument that rules are pointless if countries like the US can disobey them without severe consequences, the speaker reiterates that other members are filing disputes. Crucially, "other members value the rules" and their adherence to them "says volumes." The speaker provides data showing that 142 out of 166 WTO members have a trade-to-GDP ratio above 50%, indicating their significant reliance on trade. The US, with a 25% trade-to-GDP ratio, can operate more independently due to domestic demand. For the 142 countries dependent on trade, multilateral rules and a stable, predictable system are essential. The current crisis has highlighted how much members "value the WTO" and the need for reforms to make it "fit for the 21st century."

Innovation, Digital Trade, and the WTO's Future

The discussion shifts to innovation and the WTO's role in establishing global standards for digital trade and AI supply chains. Approximately 40% of global trade this year is attributed to AI-related products, semiconductors, and telecoms.

Opportunities in Growing Trade Sectors:

Services Trade: Growing at twice the rate of goods trade, with digitally delivered services trade expanding at 8% and worth nearly $5 trillion.
Green Trade: Valued at almost $2 trillion.
AI's Impact: AI is expected to "reduce trade costs dramatically," increasing trade value and changing the nature of traded products.

The WTO is actively negotiating rules for e-commerce and digital trade. A group of nearly 100 members is involved in negotiating an e-commerce agreement. The first phase of this agreement is nearing completion and is hoped to be finalized by the next Ministerial Conference in March 2026, followed by a second phase.

Leadership at the WTO: First Woman, First African

The speaker, Dr. Ngozi Okonjo-Iweala, is the first woman and the first African to lead the WTO in its 30-year history. She expresses mixed feelings about these "firsts," stating that the WTO "needs the best person to lead it," and if that person is a woman or African, "that's fine." She believes she is the "best person" because she brings "different thinking and a different approach." She questions why talented women experts in trade haven't been given more opportunities. The interview process for her position was highly public and competitive, involving 166 ministers, which she describes as "very daunting" and a potential deterrent for many.

Personal Risks and Motivation

Dr. Okonjo-Iweala identifies as a "risk taker." She left a senior position at the World Bank to become Finance Minister and later Foreign Minister of Nigeria, a role she also held as the first woman. This involved a significant salary cut and leaving her family. Her motivation stems from a lifelong desire to "serve others," a value instilled in her upbringing. She views her roles as an "honor and a privilege" to serve her country. As Finance Minister, she acknowledges it's not a popular job but one that allows for policy levers to influence the economy. During her tenure, Nigeria's growth rate tripled. She views her current role at the WTO similarly, as an honor and privilege to "materially reform an organization that is very important to world trade." She emphasizes the inextricable link between global trade growth and global GDP growth, stating that "you cannot have global growth without global trade growth."

Conclusion of the Fortune Global Forum

The summary concludes with the closing remarks of the Fortune Global Forum, thanking speakers, partners, and attendees for creating a space for "honest conversations" and "candid insights." Partners like Saudi Conventions and Exhibitions General Authority, Invest Saudi, Numaraba, Guangha Bay Bayushan, IBM, Airbus, and others are acknowledged for enabling the event.