As governments and global markets struggle to address the deep concerns and disruptions posed by trade tariffs, Rebekah Grinspan, head of the United Nations Trade Development Organization (UNCTAD), told UN News on Thursday that trade shortages have negligible effects — the poorest countries should be exempted.
Grinspan was speaking in the wake of growing concerns that continuous uncertainty could pose to the most vulnerable developing economies.
On Tuesday, UN Secretary-General Antonio Guterres said the “trade war is very negative,” warning that the impact of tariffs could be “catastrophic.”
A customs duties are taxes on imports imported into a country that is normally charged to the exporting country as a percentage of value. This is usually an additional cost given to the consumer.
In an interview with the Financial Times published Thursday morning, the UNCTAD chief appealed for the US to reconsider its strategy, saying the US has donated less than 2% of the US trade deficit and high tariffs would only exacerbate the existing debt crisis.
Speaking to UN News, Grynspan advocated for establishing the way UNCTAD supports developing countries and strengthening regional trade ties, where international trade negotiations can strengthen.
UN News: The two largest economies in the world, the United States and China, are in the process of imposing and threatening huge trade tariffs on each other. How worried do you think we are all?
Rebeca Grynspan: When two major global economies impose tariffs, it affects not only the economy engaged in tariff wars, but everyone. We are already at a “new normal” of low growth and high debt, and we are worried that the global economy will slow down.
Our focus was to pay attention to what would happen to more vulnerable countries, such as the most developing countries and small islands and developing countries. What’s going on in those countries is what really bothers us.
UN News: Some experts say this could be the end of the postwar international financial system. Are those fears guaranteed?
Rebeca Grynspan: I don’t know where I’m going yet. One thing we do is try to give the public a real explanation of what is actually going on and what we are still talking about.
The most important thing is the issue of uncertainty. Knowing the final position allows you to see how you can adjust, have strategies and live with the decisions that are being taken. But when there is long-term uncertainty that things are constantly changing, this can be a loss because you don’t know what to do. Investment is paralyzed as the CEO decides to sit and wait. This means that investments will not return at the scale the world needs.
Our initial call is for making reasonable decisions, so we can plan, strategy and adapt to change, but we still don’t know what that change will entail.
UN News: You argued that poor countries will be able to escape the tariff hikes imposed by the US administration. Have you heard your concerns?
Rebeca Grynspan: I’ve never seen anyone doing the analysis we did. It proves that these countries are not really contributing to the US trade deficit. Most of the exports they send to the US are commodities, and many of these are exempt from customs duties under the new regulations. These products do not compete with the US and support the production process.
What I want to do is that there are many countries that have not actually contributed to the deficit, and it is not important in terms of revenue (which the US can collect from tariffs) and is not a threat to competition or national security to the US.
Therefore, negotiations with new bilateral agreements may be launched to avoid the pain of tariffs.
UN News: What advice can you give to manufacturers in developing countries like Vietnam and Madagascar?
Rebeca Grynspan: It’s hard to say because some countries are subject to higher tariffs than others, as they don’t know the impact of this competition.
Madagascar is a great example of what we are talking about. Because vanilla is the main export of the country to the US. It makes no sense to fine a country like this because the US contribution to the trade deficit is so small that it doesn’t even register.
UN News: Would you like to explain the role UNCTAD plays in supporting developing countries?
Rebeca Grynspan: As an organization, we analyze trade, investment, financing and technology from a development perspective. That is, it helps the country to take advantage of trade opportunities.
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We are not involved in trade negotiations – these are done in the World Trade Organization – but we will help developing countries get better deals in trade and their economy performs better globally.
UN News: You insist on defending more deals to developing countries within regional blocs where you can make more statements in negotiations with rich countries. Does that help in this kind of situation?
Rebeca Grynspan: Africa has a great opportunity in Africa’s free trade zones. Our figures suggest that this could add around $3 trillion to the African economy.
It’s a great opportunity, and if they can accelerate the pace, they can take advantage of the larger market and create economies of scale. African countries need to diversify their economies. Because if they continue to rely on products, they cannot provide their people with the services they deserve and the income they deserve.
There has also been a deepening of trade relations between Southeast Asia and ASEAN (Southeast Asian Countries Association) and parts of Latin America and Mercosur (South Common Market).
These partnerships are especially important at this exact moment.
