GENEVA, Feb 11 (Reuters) – The director-general of the World Trade Organization (WTO) on Wednesday called on members to evaluate important reforms and discuss the concept of most favored nation, as trade turmoil threatens the relevance of the global trade regulator.
“The status quo is not enough,” Ngozi Okonjo-Iweala told reporters in Geneva.
“One should never be afraid to address the issues of the day, including fundamental principles, especially at a time when, in a world of uncertainty and geopolitics, a conversation must be had,” she added in response to a question about the concept of most favored nation.
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“I believe ministers should have a conversation that looks at these important issues… Perhaps then ministers will have a chance to reaffirm or not reaffirm, as appropriate,” she said.
WTO members are considering a program of reforms ahead of a ministerial conference in Cameroon in March, amid concerns that the future of global trade could be decided outside the 30-year-old regulator unless it undergoes rapid reforms.
Global trade was shaken last year after US President Donald Trump imposed tariffs on global trading partners, and companies are having to contend with a rapidly changing landscape.
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The US said in a document on WTO reforms in December that the concept of most favored nation — one of the organization’s fundamental principles — is no longer appropriate in a modern trading system and advocates moving to a system in which members can apply differentiated, non-concept and reciprocal trade measures.
In an opinion piece published in the Financial Times in January, European Union trade commissioner Maros Sefcovic also stated that members should question whether the concept remains fit for purpose.
The most favored nation principle requires WTO members to treat each other equally. The share of global trade conducted under these terms has declined from about 80% to 72% since Trump imposed higher import tariffs on most trading partners, according to WTO data.
Sefcovic said countries should be able to change their tariffs more easily when their economies are threatened, adding: “Access to lower tariffs cannot be unconditional: it must be achieved through stronger and more credible commitments to the fundamental principles of free and fair trade.”
(Reporting by Olivia Le Poidevin)
