It has been a major player in the regulation of international trade for more than two decades, but in recent years, the World Trade Organisation (WTO) has not been without challenges. As part of a global panel, Sam Achampong, Regional Head and General Manager, MENA region, Chartered Institute of Procurement & Supply, shared with us his perspective on the outlook for the WTO.
The WTO and other intergovernmental bodies play a vital role, especially now amid such volatile change, because ultimately they are there to arbitrate or oversee how trade is done. In times of transition, there often aren’t clear rules, and so you need someone to define them for you in the interim. It doesn’t matter whether the world becomes more protectionist or opens up again in the longer term, we will still need overarching bodies to ensure agreements are adhered to.
Before COVID-19 there was clearly an increasing slant towards protectionism, but the global pandemic has made governments take steps that, although motivated more by pragmatism than politics, have cemented protectionism in certain areas. For example, COVID-19 highlighted to sovereign governments that they need control over the supply of certain commodities, such as food and medicines, and not only control over immediate supply, but over the security of future supply too.
We see that here in the Middle East; Saudi Arabia already had strategic stockpiles of key food types but is now building them up still further. However, holding supplies of this size on hand is not a tenable long-term solution, so we are also seeing a rush to build local capabilities in all sorts of areas – from medicines to aeroplane parts.
Longer term, there are more changes in store for the way the world trades. First, while China will remain the world’s shop, there will be some key commodities and services that are no longer sourced from China so purchasers don’t feel they are putting all their eggs in one basket.
Second, one of the biggest changes in our region is the continuing momentum behind the African Continental Free Trade Area. With Nigeria finally ratifying the agreement in September, the goal of having 50% of African trade within the continent by 2030 could be in sight. As the only continent that has no need to import anything, this could really shake up the region, and world trade in general.
What happens politically to world trade is near impossible to predict, but the pragmatic steps politicians took – such as holding larger amounts of strategic stock or building more local capability to produce it – are likely to persist.
Because of all these changes ahead, the WTO and other intergovernmental organisations will be vital to our future. It’s crucial that we have participation from many countries to help us through transition. During Brexit, for example, a lot of people said, “We’ll go back to WTO terms.” Intergovernmental organisations provide a default position for people when unforeseen or unplanned decisions are made. It is far better to have dissenting voices all in one tent rather than people going their own way outside of those agreements.