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

IANS April 24, 2025 136 views

WTO Director-General Ngozi Okonjo-Iweala has raised critical concerns about the United States' approach to import substitution and re-industrialization. She argues that historical examples from countries like Brazil and Nigeria demonstrate the potential pitfalls of such strategies. Okonjo-Iweala emphasizes that technological change, not trade, primarily drives job market transformations. Her insights highlight the importance of understanding global economic interdependence and focusing on service sector innovation.

"Trade is important because it gives you an outlet and that's what interdependence is about" - Ngozi Okonjo-Iweala, WTO Director-General
New York, April 24: Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has said there is a need to learn from history in regard to the US federal government's push for wholesale re-industrialisation or import substitution.

Key Points

1

WTO chief critiques US import substitution strategy

2

Technology drives job market transformations more than trade

3

Service sector represents 80% of US economic strength

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Global trade requires collaborative international approach

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

The US 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, Xinhua news agency reported.

She stressed that service jobs pay more than manufacturing jobs while the service sector accounts for about 80 per cent of the US economy.

Other countries are looking at how to emulate US 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.

She added that she can understand the efforts to maintain an edge in some types of manufacturing for security reasons via wholescale industrialisation and import substitution.

The WTO Chief urged the US 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 US and China are not purely the fault of trade policy, noted Okonjo-Iweala.

She again warned of the adverse impacts of potential decoupling of US-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 US recent imports of eggs from Turkey to help solve the egg crisis as an example.

Reader Comments

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James K.
Really insightful perspective from Dr. Okonjo-Iweala. The service sector point is spot on - we can't ignore where 80% of our economy already is! 👏
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Sarah M.
I appreciate how she distinguishes between technology vs trade impacts on jobs. Too often we conflate these issues. The retraining aspect is crucial.
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Robert T.
While I agree with most points, I think she underestimates the national security aspect. Some manufacturing capabilities are too important to outsource, regardless of economic efficiency.
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Aisha P.
The egg example really drives home the point! 🥚 Global trade helps stabilize markets when local production falls short. We need more of these practical examples to explain complex trade concepts.
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Miguel C.
As someone who worked in manufacturing for 20 years before being retrained for IT, I can confirm service jobs pay better. But the transition wasn't easy - we need better support systems for workers making these shifts.
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Emma L.
Interesting to hear about Nigeria's experience with import substitution. We rarely hear perspectives from African economists in mainstream trade discussions. More of this please!

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Tags:
WTO Ngozi Okonjo-Iweala Trade Policy US Economy International Trade Import Substitution
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