UNOG RUSH NEWS ITC 08JUL2025 Continuity

[Other language spoken]

Thank you for joining us here at the UN office at Geneva for this prequel to the regular press briefing.

I'm very pleased to to introduce to you somebody you know well already, Pamela Coke Hamilton, who's Executive Director of the International Trade Centre, the ITC.

Miss Coke Hamilton is joined by Julius Peace, who is the Chief of Trade and Market Intelligence at the ITC.

They will speak to the state of play on the impact of the US tariffs.

As you know, the the pause is expiring soon, so this is an opportune time to speak with you.

We'll have a hard stop at around 10:25 to allow for the regular press briefing to to, to commence, in fact.

But over to you, Miss Coke Hamilton.

And thank you very much again for having this opportunity with the media.

Thanks so much Orlando.

It's great to be here again and hello to the media, everybody joining us.

The last time I was here, the US had just announced a 90 day pause on the so-called reciprocal tariffs on imports from dozens of countries, bringing down rates to a baseline of 10% from a range that was between 11 and 50%.

Of course, a lot has changed since then, including last night while I was up reading, which we'll get to a bit later.

While the pause did offer some relief compared to the reciprocal tariffs, the 10% levy was added to existing duties, meaning countries, mostly developing countries, faced higher costs to export goods like apparel and agricultural products to the US.

And while the reciprocal tariffs will no longer go into effect tomorrow as originally announced, but be extended for another few weeks until 1st of August, this move actually extends the period of uncertainty, undermining long term investment and business contracts and creating further uncertainty and instability.

Economic uncertainty has real world consequences as we all know on countries and on sectors.

One telling example of the current uncertainty in global trade is a fluctuation in gold and pressures metal flows In anticipation of higher tariffs.

We saw a significant outflow from Switzerland to the US since December, but that trend has reversed after it was announced that gold and other precious metals were exempt from the reciprocal tariffs announced in April.

According to US import data released last Friday, trade flows have now rebounded, with imports into Switzerland up by 800% year on year in May, which also gives its own message, 800% is a lot.

These changes in the trade landscape are part of a bigger trend.

Since the beginning of the year, we've tracked more than 150 restrictive trade measures that have been introduced globally.

These measures layered on top of a general decline in World Trade since the onset of the war in the Ukraine, with its sorry, with its related supply chain disruptions, insecurity and rising commodity prices have put strains on all economies.

But not all countries, of course, feel the impact in equal measure.

All these factors hit those with the most to lose the hardest.

The countries facing the highest reciprocal tariffs are also the least developed, with the Soto, Lao, Madagascar and Myanmar facing rates between 40 and 50%.

Lao PDR and Myanmar now both face a 40% rate as announced yesterday, which is lower than the initial 48% and 44% respectively, but still among the highest announced thus far.

The Soto, which sends close to 60% of its apparel exports to the US, is set to face is set to face a 50% tariff overriding the duty free access provided by the African Growth and Opportunity Act.

Their goal, which may in any case expire in September.

The future of the country's top industries in question and 10s of thousands of jobs are at risk.

Vietnam on the other hand, one of three countries that has negotiated a new rate with the US.

This developing country, which according to our data sends more than 1/4 of all exports to the US, now faces a 20% tariff.

While it is lower than the 46% reciprocal tariff that it was originally facing, the rate is still double the current 10% and our data is showing that Vietnam's auto and auto related exports to the US totalling around 937,000,000 last year.

The newly agreed upon tariff could reshape trade between the two countries with implications for other countries in the region.

It was also announced over the weekend that countries aligning with certain policies of BRICS countries would face an extra 10% tariff.

Note that BRICS is a group of countries from the Global South.

Now to widen the discussion a bit.

Adding to the uncertainty created by the tariffs and related trade measures, we're simultaneously seeing deep cuts in development aid, creating a dual shock for developing countries in the world of trade and aid.

G7 countries, which together account for around 3/4 of all official development assistance, are set to slash their aid spending by 28% next year compared to 2024 levels.

This would be the biggest cut in aid since the G7 was established 50 years ago.

And this is from Oxfam.

In short, in today's context, a perfect storm is brewing.

Just as trade becomes more unpredictable, external support through aid is also shrinking.

So the question is, what can developing countries do?

There are three, three actions that we suggest that countries can take to restore a sense of stability and predictability and even find new opportunities to grow.

The 1st is to strengthen regional integration.

In other words, your relationships with your neighbours.

Countries can invest in building up and strengthening regional value chains in key sectors, from critical raw materials and electric vehicles to pharmaceuticals.

On this, I want to highlight what I think is one of the most consequential decisions made by Heads of Government in our generation, the African Continental Free Trade Area.

The FCFT is not just a regional instrument, it's the redefinition of Africa's place and relationship in the world with the potential to change the terms of trade.

Intra African trade is now between 14 to 16%.

The the consequences of rising to 40 to 50% would be transformational in a great in in the extreme, we've seen the power of intra regional trade in accelerating and revolutionising economic growth in Europe and Asia, where intra regional trade makes up to 75% for Europe and 60% for Asia of total trade respectively.

Secondly, we need to double down on value addition.

Countries need to commit to processing goods in country before export to retain more value at a time when external factors put pressure on export revenues.

Our data show that commit commodities make up 59% of exports of least developed countries.

This share is around twice as high as the share of commodities in exports of other developing and developed countries.

There's a direct correlation between the commodity dependent developing countries and the least developed countries.

There are opportunities for growth by pivoting from commodity dependence to value addition.

Least developed countries have strong export potential in manufacturing.

Our estimates show that 43% amounting to $109 billion of the export potential of least developed countries in manufacturing is currently untapped.

Opportunities for their export growth in manufacturing can be found in well known sectors such as textiles and apparel and in metal or mineral products, but also in less traditional sectors such as machinery and electronic equipment and chemicals.

Countries can use our export potential map relaunched last week with new data, design and functionalities to find new markets for priority sectors.

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the US tariffs are influencing the trade landscape from the top down, but stability can come from the ground up.

When small businesses of developing countries are able to continue and even scale their operations, they help bring about stability as they make up 90% of all companies and 2/3 of jobs worldwide.

For small businesses to participate more meaningfully in global markets, it's not enough to just equip them with relevant information, skills and resources.

Their insights, innovations and challenges need to be reflected in policies.

And that's why we're partnering with the Government of South Africa to convene more than 50 ministers to raise the political importance of the small business agenda at the global level through the first ever Global SME Ministerial Meeting in Johannesburg on the 22nd to 24th July.

There isn't a better time to host this ministerial as South Africa also holds the G20 Presidency this year, prioritising themes like inclusive economic growth, financial stability and climate change.

So let me just conclude by saying that although uncertainties lie ahead in both the trade and aid landscapes, developing countries can still find ways not only to navigate those challenges but to take on an active role in bringing about greater stability.

Thank you for your attention.

Thank you very much.

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We'll turn it now for questions.

And, and both Miss Coke Hamilton and and Miss Peace will be available to respond starting in the room.

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We have a question on line from Olivia of Reuters.

[Other language spoken]

Thank you very much for this briefing.

I just had a question that I thought was really interesting.

What you were saying about how you know this perfect storm is, is is growing and aid is becoming unpredictable.

But you're also saying actually the this kind of delay of imposing reciprocal tariffs is still actually causing as much kind of harm and instability.

Perhaps you could just explain in some detail on why even this the the delay is still causing problems for global trade?

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Essentially, let's maybe we can just bring it down to our business.

If our business is not clear on what costs they're going to be required to pay for exporting or for bringing in certain goods into a particular market, they cannot plan, they cannot decide on what who will invest.

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There are two companies who are the major carriers for the US exports of textiles and apparel.

They have withheld their investment for the time being.

There's no commitment to moving forward.

There therefore is no stability in the industry or for employment.

In other words, what it has created is a lack of predictability for businesses.

And one thing businesses need more than anything else is to know.

If they do not know, if they cannot clearly state what their export markets are going to be, what their costs will be, how long, or if those costs will be rescinded in the next week or two, or if they will be delayed for another three months, there's absolutely no way that a business can plan.

And so as a result, there is this.

And, and let's multiply this by a a million fold.

Let's look at all the major businesses across the world who at this point expecting a certain decision by tomorrow are now shifting again to August 1st, which is 3 weeks from now.

Some countries have already gotten their letters.

The letters have outlined several different levels of tariffs, which it's not clear whether they're open to negotiation or not between now and August 1st or if it's the final deal.

So in other words, there is no clear ground the, the, the sand keeps shifting.

And if the sand keeps shifting, there's no way that you can make firm decisions for your for your business.

So in essence, that's it.

That's that's the crucial challenge.

Thank you very much.

[Other language spoken]

Yeah, thanks for this briefing.

I was wondering, you spoke to us in April, I think and I'm wondering what the what's changed since then in your estimation of of the situation, if you're more or less pessimistic and if you see any signs that developing countries are are facing the challenge are are following your advice or?

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It's hard to say things have changed.

They may not have changed in terms of raw data because there's a little soon to say, but I think attitudinally there have been shifts, very clear shifts on the part of several governments on issues of how are we going to engage more in the regional integration space, how are we going to find new markets.

The, the cross Atlantic trips that Canada has been taking are not by accident the UK love fest now with EU.

It's not, it's also not something that should be taken for granted.

I think that there's a a kind of recalibration of relationships taking place across the world.

And I think this is being driven to a great extent by the need to, to realign and reassess trade relationships.

But in addition to which, I also think that what has changed is the recognition by even countries, especially in Africa, that they need to really enhance and and turbocharge the regional integration under the AFCFTA.

Because the level of of vulnerability that they face, particularly with the ending of a goal which has driven most of their trade with United States for over 20 years seems to be coming to an end.

And if it does come to an end and the current tariffs as they stand remain, it will be devastating for their economies.

So that's what has changed.

In terms of pessimism.

I, I'm an eternal optimist because I'm from an island.

And, you know, island people are always happy, generally speaking.

But what what I think is, is happening may not be such a bad thing in the sense that it's forcing decisions that should have been made a long time ago.

And it's it's promoting diversification, it's promoting regional integration, it's promoting looking at new markets, it's promoting, you know, an investment in themselves rather than the dependence.

And in addition, I think what is even more important is the fact that China, as you know, one would think that that would have been one of the major issues.

China has now announced that they are going to give full tariff free access for Africa.

That is a major, major, major development and it it can swing things in a way that was not anticipated 3 months ago.

So there, there, you know, there are changes that have taken place systemically and I think those will begin to reflect soon in the actual trade flows.

[Other language spoken]

Just a quick follow up, I was just wondering if your thoughts on how this might impact the US particularly because it seems like all the shifts that you're mentioning are moving away from the US.

If you have any thoughts on that.

I think in the long run it it, it will have a negative impact on the US economy broadly speaking.

I'm not clear on what the plan is.

You know what the long term plan is and I, I presume there is one, but from my perspective at this point, I don't see a win here in the long term.

But once again, I, I may not be aware of what the plan is.

[Other language spoken]

You once again for the Yes Jeremy launch Radio Force International.

[Other language spoken]

Go back to what you.

Said on on gold trade you you mentioned that one the one of the example.

Of the uncertainty is is is the gold.

Trade after we we we saw since December, you said a lot of gold exported from Switzerland to the.

US and now.

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I'd like to understand how big of a problem is that for the US and Switzerland, but more broadly for, for general trade.

Well, I could try to go to Julia, but let me give it a shot essentially.

And, and growing up, I always knew this because I remember when many years ago in the, in the 70s when there was a lot of capital flight from Jamaica during the great manly days.

And you know, that's a long story, but there, there was a lot of capital flight and what a lot of people did was invest in gold to take it out.

That's how it worked.

And generally the flow of gold tends to tell you a lot about global economic flows and, and what is happening.

People hold their value in gold.

It is still a currency that is held against the, you know, the value of the dollar.

Switzerland is the largest refiner of gold in the world.

The fact that that it was flowing towards the US was an attempt to avoid what they thought were going to be tariffs on on these metals.

Once it was recognised that these were now exempt, the flow not only shifted back, it multiplied 800 fold, which kind of tells you something else, which is that there is now clearly an intent to, I don't want to use the word horde, but to to shift to a place which is considered safe and which is considered stable and where the gold can retain it's it's value.

Julia, I think this is just an example and a reflection of the general uncertainty that we have been seeing in trade and maybe.

Adding to what was discussed before, whether you, so if you have already received a letter of if you have already strike the deal with the US, what matters for you, whether you win or lose is not only the tariff that you are facing yourself, but it's also the tariff that will be imposed on your competitors.

And a lot of that is yet unclear and will remain unclear until first August.

This is why it's hard.

Of course, our estimates changed by the day, but it's hard to have a final figure that would allow us to say some something about the impact of a certain country or or sector because Vietnam has already made a deal.

But Vietnam also has competitors that have not yet received the received new tariffs, tariff announcements.

So there is, we still have to wait a bit until everything stabilises until we have rates announced for all countries to really release new estimates and have some something that is a bit more robust.

Thank you both very much.

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We have a question from Satoko Adachi of Yomi Oishima in the Japanese daily Satoko.

Yes, thank you very much for doing this.

First of all, could you share the your statement that would be helpful.

And then also could you talk about a little bit more about the US trade policy with ASEAN countries?

You talk about the Laos and Myanmar actually faced initially a very high calculate 48% and 46%.

And it seems to me the ASEAN countries are now face a difficult decision, whether you are the camp of the United States or the camp of the China.

So what does the the Trump administration's trade policy mean to the ASEAN countries and sub secondary how the ASEAN countries decision would impact in the in the Pacific region?

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I, I can't speculate as to what the US policy is in ASEAN.

I, I, it's not clear I and I'm, I'm not even sure if there is an ASEAN policy per SE.

I think the policy is one that is driven by what has been conveyed as a a loss of jobs, a loss of investment due to mainly the Asian countries.

So it's driven by the feel that they have lost investment, they've lost companies, they've lost competitiveness because of the Asian tigers, if you want to call it that.

And I think the attempt is to try to pull back some of that perceived loss back to the United States.

It is not clear that this is necessarily a strategy that will be successful.

It does not seem to be the case.

But I think, and I'm not sure if it's as as, as black and white as between China and the USI think ASEAN is a little more nuanced in terms of its internal trade mechanisms and how it will respond to, to, to these to these tariffs.

What is clear is that the tariffs, for example, the 25% on, on South Korea and on Japan are pretty onerous compared to what it was before.

And in fact, the 25% is higher than Japan had under the original announced tariff, which was 24%.

It's not, it's negligible in terms of difference, but it sends a signal that, you know, countries should be concerned about.

I think the negotiations that ASEAN will have to look at is how do they protect their internal their their markets, How do they find new markets for the products that are being made?

Is it just the US or can they diversify to other markets that have the same kind of demand for their products?

A lot of it is also linked to the fact that a lot of the the trade between ASEAN and the US is based on U.S.

companies investing in ASEAN.

And so are you going to have those companies leave or are they going to stay and find other markets in which to diversify?

We're not clear on what these companies decisions will be, but I think that will once, hopefully August 1st, once they're clear on what the implications are, then I think companies will begin to decide.

I mean, we looked at Apple, the fact that they moved all their iPhone production to India for the most part because at the time the Chinese tyres were incredibly high.

We still haven't seen what the result will be on from India, what will be negotiated.

So it's still, as I said, that's the problem.

It's still very, very fluid.

Nobody's clear on on what will emerge, but I think for ASEAN it will be an important discussion with respect to diversifying markets, diversifying investment flows and looking at whether the companies that currently invest will remain or if they will divest outwards.

Thank you once again.

I, we may have time for just one last question, if any.

I'm looking in the room 1st and online.

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I don't see that's the case.

In that note, I'd like to thank you very, very much, both of you for coming here.

It's supremely important opportunity for the journalists here and good luck with the upcoming conference in Johannesburg and with all the rest of your work.

So thank you so very much, colleagues.

We're going to stay For those of you connected on Zoom, please don't get off the signal.

We're going to resume in just a few minutes with the regular press briefing, but we're going to take a short technical pause, so please stay with us.

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