The quiet death of globalization

Published 08.03.2019 21:50
Updated 09.03.2019 00:19

I do not know how many academics, business people or politicians around the world are spending enough time on this, but we are in a period where the signs of "the silent death of globalization" are surging rapidly. A limited number of emerging economies such as Turkey that are leaving their mark on the global system argue that world geopolitics and global economy politics should move towards a new phase based on principles of multilateralism. The globalist movement, which has taken Washington under its full control for the last 40 years, is not at all pleased with either the emerging multilateral process or new rising power centers in the international ecosystem. Thus, they are demonstrating this discontent with the present global picture via U.S. President Donald Trump and to a certain extent, by surrounding Trump entirely, by displaying a state of discontent, rudeness and authoritarianism that was never seen before in the U.S. administration.

The North-West union represented by the Atlantic Alliance cannot reach an agreement either on the isolation strategy that the U.S. is trying to dictate to stop the newly emerging multilateral ecosystem. The U.S. cannot get the support it expects from its allies in different regions to isolate Russia and China. Particularly, its discrepancies and disagreements with the European front have turned into style where the current U.S. administration is now directly threatening Europe at every international platform or summit. Europe, as an aging continent, is exposed to heavy pressure from the U.S. for the cooperation it would like to have with Russia for energy and with China for trade to survive and for sustainability.

The U.S. is determined to halt any project or initiative that will prevent it from isolating Russia and China, as they officially announced, "They pose a clear and open threat to their global interests." This includes the "Belt and Road" project. Thus, Russia and China, aware of the U.S. attitude, need to carefully and attentively manage the occasional roughness between them and the countries with which they have new rapprochement models. To eliminate risks caused by and that will be caused by this chaotic uncertainty environment, it's important for the European Union and the future of the EU project to construct a more constructive familiarity model toward Turkey.

Trade wars fail

In spite of the trade war that President Trump carried out with such a strong will, the U.S. economy closed 2018 with a $621 billion foreign trade deficit, the highest in the last decade, an increase of 12.5 percent. The reason is simple; the world economy has internationalized beyond the forecasts of the last 20 years.

Today, every world citizen can order any product they want from anywhere in the world with e-commerce, digital and mobile payment systems. A trade war may be an effective fighting method for the Cold War period of the 1970s or 1980s to protect producers in countries. However, in today's world, consumers now have a stronger will than their own government.

The U.S. could not prevent a deficit of $419.2 billion in favor of China in 2018 even though it increased the tax on Chinese goods by $250 billion. In the light of the basic doctrines of economics, the fundamental fact that the 21st century puts forward is that cost competition is the main success criterion that separates countries and companies from each other rather than price competition. Our exporter companies, which are the field soldiers of Turkey's trade diplomacy on a global scale, are also aware of this. Even if the U.S. puts additional taxes on Chinese goods, as Chinese companies create opportunities to maintain cost competitiveness and the American people demand these products, this situation will not change. As long as the U.S. administration does not come up with new solutions to make many sectors more competitive, the U.S. will continue to keep its title of highest importing country at $3.2 trillion.

I can also say that the U.S. administration is seriously aware of these facts. Thus, the U.S. delaying its move to put additional taxes on $200 billion worth of Chinese goods with the excuse that the negotiations are ongoing points to the possibility that its main agenda is to leave Chinese currency, renminbi or yuan, to free fluctuation. If China leaves the yuan's value at free market conditions and the yuan strengthens in value, then China's competitive advantage will be weakened. While using an obsolete weapon such as the trade war, we must understand what the U.S. is actually trying to get out of Mexico, Canada, the EU and China.

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