Holding the Line on the Rules-Based International Trading System

Strategic Insights -

Despite the challenges posed by rising tariffs, record debt repayments, and growing mistrust, the world has so far avoided a devastating tariff war, a top UN trade official said. Rebeca Grynspan, the UNCTAD Secretary-General, emphasized that 72% of global trade still moves under WTO rules, and that efforts to negotiate, reform, and build bridges have helped to prevent a repeat of the devastating global economic downturn of the 1930s. However, with global economic uncertainty at its highest, Grynspan warned that a debt and development crisis is still facing heavily indebted nations, forcing them to make impossible choices between defaulting on their debt or development.

Key Takeaways:

  • 72% of global trade still moves under WTO rules, a testament to the importance of the rules-based international trading system.
  • Rising tariffs, record debt repayments, and growing mistrust are halting development and creating uncertainty for heavily indebted nations.
  • Global investment flows are retreating for the second year in a row, eroding tomorrow's growth.
  • The current investment system favors projects in richer economies rather than developing nations, making one US dollar three times more expensive in Zambia than in Zurich.
  • Freight costs are too volatile, with landlocked countries and small island developing states facing transport bills up to three times the global average.
  • AI has the potential to add trillions to global GDP, but fewer than one in three developing countries have strategies to capture its benefits.
  • A staggering 2.6 billion people remain offline, most of them women in developing countries.
  • Developing country debt reached $31 billion last year, forcing many governments to spend precious funds on servicing debt instead of investing in their people's future.

Statistics:

  • 72% of global trade still moves under WTO rules.
  • Tariffs have jumped this year from an average of 2.8% to more than 20%.
  • 2.6 billion people remain offline, most of them women in developing countries.
  • Developing country debt reached $31 billion last year.
  • Global investment flows are retreating for the second year in a row.
  • One US dollar is three times more expensive in Zambia than in Zurich due to the current investment system.
  • Freight costs are up to three times the global average for landlocked countries and small island developing states.

Sources:

  • Rebeca Grynspan, UNCTAD Secretary-General: UNCTAD
  • Annalena Baerbock, President of the General Assembly: UN General Assembly
  • UN Data: UN Data