It is high time to ask whether the U.S.'s delusional protectionism can be an opportunity for a new world trade regime.
As a matter of fact, a world trade system that could accompany the monetary system that was established post-World War II has never been established in the strictest sense. The General Agreement on Tariffs and Trade (GATT), which regulates the world trade system in favor of developed countries, emerged as a result of the Geneva Convention of 1947, and evolved into the World Trade Organization (WTO) in 1995, through a series of comprehensive regulations called the Uruguay Round that started in 1986, and lasted until 1994.
Both GATT regulations and the global trade regulations of the WTO, which has a more institutional structure, could not develop a fair and acceptable system for all countries with the exception of customs duties.
The WTO failed to end the development negotiations, which started in Doha in 2001, by at least balancing the rights and laws of developing countries. Therefore, there is no higher global trade regulation accepted by all countries today. As a matter of course, it was inevitable that it would end up like this.
This is because developed countries, especially the U.S., did not observe the ideal of absolute liberalism while making anti-protectionist regulations. They thought that developing countries could not threaten them, especially in high-tech areas, and argued for liberalism in global trade accordingly. Meanwhile, they waged an implicit trade war between themselves, especially after the WTO was founded.
Recently, International Monetary Fund (IMF) Managing Director Christine Lagarde said: "No one emerges victorious from a trade war." However, this trade war has already been ongoing since the 1990s. Now, the U.S. has acknowledged that it would not be able to finance itself forever with the current monetary system. So, first it should not run a trade deficit, which is the main deficit in the country. However, the same is true for all developed countries that run deficits against Asian countries. Developing countries were trapped in the circle that treated the theory of comparative advantage that was developed by David Ricardo during the Industrial Revolution as absolute. Of course, it would be out of the question to be advantageous in non-industrial, exportable, lower-value-added products. Now this circle is breaking, and as developing countries catch up with the new industrial revolution, they are gaining a global competitive advantage. This constitutes the current dynamic of new trade wars.
If the U.S. implements protectionism for steel and aluminum as President Donald Trump has put it, it will receive a response from developing countries. For instance, as I explained in my previous piece, Turkey might do this for cotton. Considering the gap between Turkey's cotton production and consumption and the production, import and consumption of cotton over the years, production has fallen while consumption has continuously risen. So, Turkey is importing increasing amounts of cotton from the U.S. and other suppliers. If we support cotton production inside the country and import less of it, will we have taken an important step in industrial agriculture in general terms? Why are we importing nearly $1 billion of cotton annually from the U.S.? For national agriculture, if we support convenient cotton production basins and make enterprises advantageous in terms of input costs and scale, we can achieve significant increases in productivity and production. Moreover, with Turkey's African initiative, we can support cotton production in Mali, for instance, and import cotton from this country, getting both cheaper and better-quality cotton.
Mali was one of the countries that President Recep Tayyip Erdoğan visited as part of his recent visit to Africa. So, Turkey can easily take such steps in these countries now.
I think Turkey will not pin its hope on the EU or WTO in these trade wars. First, there is a customs union problem that Ankara has to solve with the EU. Indeed, Turkey has reached the threshold of its tolerance for this solution.
Just like economic institutions, many of which were built by the U.S. after World War II, the WTO is a failed institution, and it will not be the founder of a new world trade system.
A new world trade system will emerge as a result of bilateral and multilateral trade agreements between emerging economies like Turkey and countries in their regions and then other developing countries.
Apart from that, explicit and implicit restrictions that developed countries place on technology transfer and exchange will be insignificant in the medium and long term, but we must fight these unjust and illegal restrictions on every platform in the short term. Moreover, economic security should also be addressed in this context and should be regarded as a very important element of national security.
Turkey has taken and will continue to take many important steps in this area, especially defense industry technologies, and as a result, the global economy is entering a new phase. The U.S. and EU will face a deeper and more intractable crisis as they try to overcome the crisis with protectionism. However, this will open the doors to a new path of development for countries like Turkey. In other words, the IMF is wrong once again, as someone will emerge victorious from this trade war. Emerging economies are now starting to win.