WTO chief stresses need to learn from history on US push for import substitution

Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, said on Wednesday there is a need to learn from history in regard to the U.S. federal government's push for wholesale re-industrialization or import substitution.

Import substitution stories in countries like Brazil and Nigeria didn't go so well and "we need to learn from history," Okonjo-Iweala said at a dialogue organized by the Council on Foreign Relations.

The United States has to look at not just trade but also technology, which substitutes certain manufacturing jobs, according to Okonjo-Iweala, who is also an economist from Nigeria.

"Sometimes, trade is unfairly blamed for things that are due to technology," and there would be more of that substitution from technology, she said.

Okonjo-Iweala added that there is a need to retrain the people who are impacted by new approaches and new techniques.

She stressed that service jobs pay more than manufacturing jobs while the service sector accounts for about 80 percent of the U.S. economy.

Other countries are looking at how to emulate U.S. strength in innovation and creativity in the service sector, and "this is something you need to safeguard, not destroy because that's the future," said Okonjo-Iweala.

Okonjo-Iweala said she can understand the efforts to maintain an edge in some types of manufacturing for security reasons via wholescale industrialization and import substitution.

The WTO chief urged the United States to pay attention to the service sector, which is growing naturally in trade.

The international trading system was built for interdependence, not overdependence and the trade issues between the United States and China are not purely the fault of trade policy, noted Okonjo-Iweala.

She again warned of the adverse impacts of potential decoupling of U.S.-China trade given the current high level of tariffs.

"That was also a little bit comforting that there may be ways for the two to get to talk to each other and to avoid this situation, that would be very good for the world," she said.

Trade is a strong driver of global growth and there is no country that can exist completely by itself in this day and age, Okonjo-Iweala said.

"Trade is important because it gives you an outlet and that's what interdependence is about," she said, citing U.S. recent imports of eggs from Türkiye to help solve the egg crisis as an example.