WTO: Africa must cut reliance on US trade

While Africa may currently be shielded from the worst of global trade shocks, WTO Director-General Ngozi Okonjo-Lweala warns that aid is dwindling and trade is becoming increasingly politicised.  

This, she said, makes self-reliance more crucial than ever.

Okonjo-Lweala said Africa’s overall economic outlook remains stable, but some smaller economies like Lesotho remain particularly vulnerable.  

Even though the continent trades less with the United States compared to other regions, Okonjo-Lweala cautions against complacency.  

Instead, she’s calling for African countries to boost intra-continental trade and reduce reliance on external partners.

"At the aggregate level, Africa’s economic outlook remains broadly stable under current trade policies. Real GDP growth for the continent is largely unchanged, even if reciprocal tariffs are reinstated.  

"This is largely because Africa’s trade with the United States is relatively small,” she said.

Currently, Africa’s exports to the US account for just 6.5% of its total global exports, while imports from the US make up around 4.4% of total imports.  

But those figures conceal significant disparities between countries.

Lesotho, for instance, heavily depends on textile exports to the US, worth about $240 million, or 10% of its GDP.

Okonjo-Lweala said Africa was becoming increasingly central to global demand, with one in four people expected to live on the continent by 2050.

While negotiations continue, including appeals for tariff exemptions for many African nations, the WTO is calling on African countries to focus inward.

"Of the 44 least-developed countries, 32 are in Africa. The external environment has become more challenging. Aid is drying up. Trade is becoming more politicised.”

Instead, she encouraged African governments to focus on raising domestic resources, attracting investment, both foreign and regional, and accelerating efforts to integrate trade within the continent.  

Currently, intra-African trade sits at just 16%.

"Take textiles, for example. Africa imports about $7 billion worth each year.

" There is no reason why Lesotho’s $240 million in textile exports can’t be absorbed within the continent itself. Africa must rethink how it trades within itself and with the rest of the world.”

LESSONS FROM THE TRADE CRISIS

Okonjo-Lweala said the current crisis was filled with important lessons — and opportunities.

"One of the clearest takeaways from the COVID-19 crisis was the need to diversify sources of supply.  

Today’s trade tensions show us we must also diversify demand. Over-dependence on one market, either for imports or exports, makes economies vulnerable to shocks and leads to unfair burden-sharing.”

She continued to advocate for "re-globalization" — a model that broadens global trade by integrating countries and regions that have historically been left on the margins.

"Even the US makes a valid point when it argues that too many countries are dependent on its market, or that the production of critical inputs is overly concentrated in specific regions.  

To build global resilience, we need interdependence, not over-dependence.”

WTO'S ROLE IN ADAPTATION

Okonjo-Lweala said the WTO must also evolve in response to shifting global dynamics.

"This crisis reminds governments of the WTO’s role in creating stable, predictable market conditions,  but it also shows that reform is necessary.”

She said the organisation must tackle systemic issues: ensuring a level playing field for poorer countries, overhauling decision-making, and modernising outdated rules.

"Our rules were never meant to be set in stone for 30 years. They were meant to evolve."

Despite global tensions, she says she’s encouraged by the willingness of member states to work together, and to reaffirm their support for the WTO’s founding principles, including the most-favored nation rule that underpins global trade stability.

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