Rising trade walls and the threat to peace - AHMET ULUSOY

Rising trade walls and the threat to peace

As is known, World War II broke out as a result of patriotism that was intensified primarily by the U.S. and U.K.’s protectionist policies especially against Germany and Japan.

The IMF and World Bank were established immediately after World War II to regulate fiscal and monetary flows, and operations were launched to establish the International Trade Organization (ITO), in efforts to regulate international trade.

As the U.S. was not too fond of the ITO, an organization called the General Agreement on Tariffs and Trade (GATT) emerged to temporarily regulate and manage world trade. This organization continued its operations until the World Trade Organization (WTO) was established in 1995 and played a serious role in expanding world trade. The establishment of the WTO in 1995 paved the way for the formation of the infrastructure necessary for fairer global trade and its liberalization.

The WTO was actually built upon the GATT experience. The DTO, which currently has 164 members, consists of 96 percent of global trade within its scope. With especially China and Russia also joining the WTO, this organization is now almost controlling the entire world trade.


While global trade was proceeding along its normal course, the election of Donald Trump as U.S. president and the trade wars that started with him are the reasons behind the eruption of a major trade crisis.

The Trump administration wants to narrow their foreign trade deficit, which has reached $800 billion. Hence, it is trying to reduce its foreign trade deficit, primarily with China, by putting up tariff walls.

Of course, China, Turkey, Russia, the EU, Canada, Switzerland, Norway, Mexico and other countries have started to take certain measures against the customs tariffs.

These trade disputes are also leading to the questioning of the WTO's reputability. If this aggressive attitude continues, the U.S. will also start the collapse of the WTO, the establishment of which it led to encourage international trade.


It would be of use to reiterate some information at this point.

First, Trump’s statement that the WTO is a disaster for the U.S. and amazing for the rest of the world, primarily China, says that they can question leaving the organization. The aim is to prevent any decisions that may be taken by an independent WTO against a country that stands up against the world on its own, in terms of trade, and applies tariffs that are subject to complaint.

The U.S., which has a say in the WTO, is preventing new appointments in the organization’s Appellate Body. This, in a sense, is blocking the WTO's decision-making mechanism.

The U.S. has announced that it will take action at the WTO against China, Turkey, Iran, the EU and certain countries, with the claim that they are conducting unjust and protectionist trade.

In reaction to this, Turkey applied to the WTO with the complaint that the latest tariffs applied by the U.S. are unjust. Many countries have complained to the WTO about the U.S. or they are preparing to do so.

It should be clearly stated that complaints to the WTO will soon reach numbers never seen before. In an environment which efforts are made to render the organization dysfunctional, its past regulatory image that organized just and unbiased trade has been overshadowed.


We can reach three important conclusions from the developments.

The first is that Trump and the U.S. administration are applying a new administration understanding that pushes aside human relations, country alliances, strategic partnership and free foreign trade and, in connection to this, risks world peace. The continuation of this understanding will drag the world toward massive chaos.

One other conclusion reached here is that the trade wars are intensifying the idea to carry out international trade using local currency. Russia, China, India and Turkey are already in search of formulating the trade among them with a common currency unit or a payment system alternative to the dollar.

The third conclusion is the serious change in how the public has started to view the dollar and U.S. (import) goods in Turkey after the dollar coup. It has made the Turkish public lean toward local products. Also, the necessity to periodically reduce and eliminate foreign dependency via domestic production, which has been expressed by relevant circles for years, has become clearer.


The danger awaiting the world is harsher nationalistic movements, countries rising their customs wall to become self-sufficient, thus leading to an interruption in international trade, which in result weakens ties between countries and threatens world peace.

As the problem is political, its solution must also be sought at the political level. Otherwise, all the progress made since World War II for world peace and to develop trade will be wasted.


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