Rules-Based Trading System Is At Risk Of Derailment: UN Chief

Chennai: Amidst protectionism, the rules-based trading system is at risk of derailment, finds UN chief Antonio Guterres in his address to the UN’s Trade and Development body. While global debt is soaring, the international financial architecture is not providing an adequate safety net for developing countries.

Geopolitical divisions, inequalities, the climate crisis, and new and protracted conflicts are rippling across the global economy.

“Uncertainty is growing. Investment is retreating. Supply chains are in turmoil. Trade barriers are rising, with some least developed countries facing extortionate tariffs of 40 per cent, despite representing barely one per cent of global trade flows,” he said.

The world is seeing a rising risk of trade wars for goods. Military expenditure trends show that we are increasingly investing more in death than in people’s prosperity and well-being.

“Global debt has soared. Poverty and hunger are still with us. The international financial architecture is not providing an adequate safety net for developing countries and the rules-based trading system is at risk of derailment,” he added.

"UNCTAD was born when developing countries demanded a voice in a system designed without them. Since then, you have stood beside them and supported their calls for justice. We must continue this vital work. Let’s ensure that all countries can harness the power of trade and development to drive their economies forward,” he said.

According to him, countries should be helped to move beyond commodity dependence and build links to global value chains that drive jobs and prosperity. Developing countries need new tools that allow them to compete and benefit from the explosive growth in services trade.

Many developing countries are victims of limited fiscal space, slow growth, and the debt crisis. About 3.4 billion people now live in countries that spend more on debt servicing than on health or education and hence more finance should be provided to developing countries.

Actions are needed to close the digital divide and ensure that frontier technologies like artificial intelligence and blockchain become more accessible to all countries, not just rich ones.

Further, trade policies should be aligned with climate objectives and ensure that trade supports ambitious climate action and a just transition.