Geneva: Holding the line on the existing rules-based international trading system remains an essential challenge if the world is to keep a damaging tariff war at bay, a top UN trade official said on Monday. Addressing the UN Trade and Development (UNCTAD)’s 195 Member States in Geneva, Rebeca Grynspan highlighted that 72% of global trade ‘still moves under WTO rules,’ referring to the World Trade Organisation, whose agreements are negotiated and signed by trading nations.

According to Emirates News Agency, Grynspan emphasized the importance of continued negotiations and protection of the rules-based system to avoid a repeat of the tariff escalation that severely impacted the global economy in the 1930s. Her comments come amidst months of economic uncertainty caused by tariff declarations from the United States and other major economies.

Grynspan pointed out the detrimental effect of rising tariffs, record debt repayments by heavily indebted nations, and growing mistrust on development. Nations face ‘impossible choices’ between defaulting on debt or development, as tariffs have increased from an average of 2.8% to over 20%, further discouraging investment and slowing growth.

In Geneva, the UNCTAD chief economist warned about the retreat of global investment flows for the second consecutive year, leading to diminished growth prospects. She noted that the current investment system favors richer economies, with costs significantly higher in developing countries, exemplified by the disparity between Zambia and Zurich.

The volatility of freight costs is another concern, with landlocked countries and small island developing states facing transport bills up to three times the global average. Grynspan also underscored the potential of AI to boost global GDP, but lamented that fewer than one in three developing nations have strategies to harness this potential, while 2.6 billion people, mostly women in developing countries, remain offline.

Echoing Grynspan’s concerns, Annalena Baerbock, President of the General Assembly, revealed that developing country debt reached $31 billion last year. This financial burden diverts resources from critical investments in education and healthcare toward debt servicing.

Baerbock further noted the erosion of trust in the international system, highlighting that despite the global economy’s valuation of over $100 trillion annually, half of the world’s population has experienced little to no income growth for a generation.