Economist Hugo Maul, analyst at the National Economic Research Center (one hundred), reviews the juncture for the Implementation of tariffs that during the afternoon of Wednesday were suspended for several countries.
He acknowledges that Guatemala must convince the United States with a program that improves competitiveness and due compliance, in circumstances that also paints with a possible recessive cycle of the world economy and how it can be transferred to other areas.
This is the balance that makes Free press:
How to analyze the situation for tariffs?
The first thing is to understand that the claim made by the Office of the United States Commercial Representative (USTR) in a publication comes to call in principle that have two or three decades in Guatemala. We know that processing, bureaucracy and trade facilitation is a pending task.
In that sense, we cannot say that the UST is claiming Guatemala is new, but that it has been known for a long time and is little of what has been done.
What position should Guatemala assume before the negotiation with the US?
There you have to understand that it is not to look good with the US, but that the country is convenient to reduce these times, procedures and costs to do business, to export and import. If this claim, if possible, serves to give a whip to complete a task that has not been completed, I consider that it is convenient and important to do so.
What would be the art of negotiating with the US?
Depending on these claims and the problem I see, they already know us, so it is not worth it, that it is exposed that the reforms will be made and that they will fulfill; But they already know what we fail. First, the evidence that was made by what all these changes must be planned, although it is difficult in the public sector, but it is important to reach a negotiating table, exposing the specifications of compliance with what was pointed out to me.
Otherwise, what Guatemala can offer for a 10% reduction of the tariff that already knows is the commercial relationship with the US, it is favorable, but it is something that was not taken into account. Trade is practically open and there are quotas or contingents in very specific products, which are not the interest of selling them to Guatemala.
In the road map that began the government, what results can be expected?
You have to do it, because other countries are doing it. We must go beyond offers, we must take concrete results of what we know that bothers the US government, but that also loads us. So, it really has to be done, because it favors Guatemala and not because it looks good.
A positive effect is that there is an approach between public and private sector, because the problem is of such a dimension that remains of another, more than working together. It is a positive sign, which generates a climate of stability, reduces conflict and you have to take the party in peace.
What can be offered in specific terms, I would play the card of the card of the Secretary of State Marco Rubio in which it is requested to develop port and strategic infrastructure.
There are two versions: one of carrying something that, if interest, that, if they are to solve all those problems of bureaucracy and processing and the other is to make the approaches, the round of visits, because perhaps all this can be a strategy to “scare with the duffel bag of the dead” that in the end the tariff rate can be eliminated.
“A positive effect is that there is an approach between public and private sector, because the problem is of such a dimension that there is no other, more than working together. It is a positive sign, which generates a climate of stability, reduces conflict and you have to take the party in peace”
Hugo Maul, one hundred analyst
In this context, what is an important element?
The tariffs that Asian countries have in some products can benefit Central America, as long as Mexico does not have a preferential treatment.
What could be the main effects?
There may be some kind of effects in the global supply chains in the world, which in the last 20 years have made their production plants place outside the perimeter of the United States in which there are subcomponents of the products in different places and then assemble themselves elsewhere.
The problem of now is that a plant that is in Vietnam has a 40%production, in China 104%, in Nicaragua 18%and one in Panama 10%, and all that the world production was planned, relocating the factories in all countries is a serious problem, because some countries will pay a tariff, some other percentage and others are not subject.
World global companies are waiting to see what happens before making decisions, since if it is definitive, an recomposition of global supplies chains will be observed and that Central America can benefit from that.
The problem is all the uncertainty that causes at a global scale, and it is certain that it will bring a global economic contraction associated, a possible recession in the US, which ends up affecting nearby countries.
Do you observe any recessive cycle in the short or medium term?
In the United States, most experts agree that the probability of recession already existed on the horizon with an appearance that was not despicable. But with all these actions, the specialists agree in the US, which is imminent a recession, an economic contraction.
That is explained why the US consumer will have to pay higher prices, will have less purchasing power, not only stops consuming locally, but, of all the suppliers of the world, so countries like us will not market because they are more expensive, and consumers will not have enough money to make their purchases, hits us twice, so there is the contagion effect and the contractive phase is entered.
There the key are the oil prices that have come down and in general it would be that the global economy could enter a recessive cycle without knowing the duration.
The problem is that we do not know that if these measures that are being taken are the definitive and last or that there will be changes to the changes.
What will the transmission effect be like?
What could be reflected in Guatemala, for example, are in the direct foreign investment flows, because now they will suddenly be aware of observing how it is resolved and to the extent that the “murky waters” are not dissipated they will not make decisions.
When it is clarified they will no longer come to the country but to the US, or towards other countries especially for Mexico since more than well they have respected the free trade agreement and closeness.
The other is that it can happen with financial investments and as world capitalists perceive the economy of the United States, because historically the debt of that country has been the financial instrument “King” in the world, but if investors begin to have doubts it will cost you more to place your debt, which will take effect in the interest rate and if there is inflation will cause distortions in global flows.
In any case, it is still very soon to see it, but that are eventually the type of considerations that are being held.
Do you consider that there are symptoms of a US staplation?
In the United States, the recession could occur and due to tariffs that prices rise. It happens that it can be a different stagflation than what is spoken, because the price increase would be caused by the increase in tariffs.
If price increase can coincide, but some steps that rise prices of critical products and along with it the economic contraction.
For economic agents in Guatemala, what do you recommend?
In first not panic, because each company, each exporter, sector and subsector must make their calculations to put value in dollars to the expected losses, and although 10% is negative “it is not the apocalypse.”
At the population level it is important to understand what inflationary effect in Guatemala, the product of tariff policies in the United States does not have to do with the price level in the country.
So, maybe products that cannot be marketed there have to be sold in the local market, and that can stabilize prices.
At the particular export level, the first thing is to understand how their business is, because there are those who sell to end customers have a different reality from those that sell to intermediaries (broker) and there you will have to negotiate in the chain between the producer, exporter, intermediary and final consumer especially in agricultural products as it is done to absorb the tariff.