New York: Europe and the Arabs
As governments and global markets grapple with the uncertainty following the imposition of new US tariffs, Rebecca Grynspan, head of the United Nations Conference on Trade and Development (UNCTAD), called for exempting the poorest countries—which have little impact on the US trade deficit—from these tariffs. This came in an interview with UN News, which focused on the growing UN concern about the impact of the current uncertainty on the most vulnerable developing economies.
Tariffs are a tax on imports into a country, typically imposed on exporters as a percentage of the value, an additional cost that is often passed on to the consumer.
UN Secretary-General António Guterres stated in press statements that “trade wars are very negative, and no one wins,” warning that the impact on vulnerable countries could be “devastating.” The UNCTAD chief called on the United States to reconsider its strategy, noting that the world's 44 least developed countries contribute less than 2% of the US trade deficit, and that raising tariffs would further exacerbate its current debt crisis.
She spoke about the ways UNCTAD supports developing countries, calling for strengthening regional trade relations, which could strengthen their position in international trade negotiations.
UN News: The world's two largest economies, the United States and China, are engaged in imposing or threatening to impose massive trade tariffs against each other. How concerned should we all be?
Rebecca Grynspan: When the two major global economies impose tariffs, it affects everyone, not just the economies involved in the tariff war. We are already in a new reality of low growth and high debt, and we are concerned that the global economy will slow down.
We are focusing attention on what could happen to the most vulnerable countries, such as the least developed countries and small island developing states. What happens to these countries is what really worries us.
Q: Some experts say this could mark the end of the post-World War II international financial system. Are these concerns justified?
A: We still don't know where we'll end up. One of the things we're doing is trying to give the public a true picture of what's really happening, and what's still just talk.
The most important point is the problem of uncertainty. If we know the final situation, we'll adapt, we'll have strategies, and we'll see how we can live with the decisions made. But if the period of uncertainty is prolonged, where things are changing all the time, it's harmful because we don't know what to do.
Investment is paralyzed because executives decide to wait and see, which means investment won't return to the level the world needs.
Our first call is to make rational decisions so we can plan, strategize, and adapt to change, but we don't know what that change will entail.
Q: You mentioned exempting poor countries from the tariff increases imposed by the US administration. Are your concerns being heard?
A: I haven't seen anyone do the analysis we did, given that these countries don't actually contribute to the US trade deficit. Most of the exports these countries send to the United States are essential goods, many of which are exempt from tariffs under the new rules.
These essential goods do not compete with the United States; rather, they aid production. The point I want to make is that there are a number of countries that do not actually contribute to the deficit, are not considered significant in terms of revenue (which the United States can collect from tariffs), and are not a threat to U.S. national security.
So, perhaps we can avoid initiating new bilateral agreements and negotiations and spare them the pain of tariffs.
Q: What advice would you give to a manufacturer in a developing country like Vietnam or Madagascar?
A: It's hard to say, because some countries receive higher tariffs than others, and therefore the competitive impact is unknown.
Madagascar is a good example of what we're talking about, because the country's main export to the United States is vanilla. Its contribution to the U.S. trade deficit is very small, so it makes no sense to penalize a country like this.
Q: What role does UNCTAD play in supporting developing countries?
A: We analyze trade, investment, finance, and technology from a development perspective, which means we help countries take advantage of trade opportunities.
We are not involved in trade negotiations—which take place at the World Trade Organization—but we help developing countries secure a better trade deal and improve the performance of their economies globally.
Q: I have called for increased trade among developing countries within regional blocs, as they can have greater influence in negotiations with wealthier countries. Could this be helpful in a situation like the current one?
A: Africa has a huge opportunity with the African Continental Free Trade Area. According to our figures, this opportunity could add around $3 trillion to the African economy. It's a huge opportunity, and if they can accelerate the pace, they can tap into a larger market and larger economies. African countries need to diversify their economies because they will not be able to provide the services and income their populations deserve if they continue to rely on commodities (such as raw material exports). There is also a deepening of trade ties in Southeast Asia with the Association of Southeast Asian Nations (ASEAN) and in parts of Latin America. These partnerships can be very important, especially at this particular time.