As trade wars continue to be a hot topic of the world, it once again became the main issue during G20 meetings held in Argentinian capital Buenos Aires, with the participation of Treasury and Finance ministers and Central Bank governors.
Despite the fact that increasing exports and sustaining economic growth continue to be critical issues while all countries, particularly the G20, make endeavors for free trade and the removal of trade barriers, trade wars being discussed all of a sudden is an ill omen for global trade.
Because trade wars narrow global trade and this has a negative impact on global economic growth.
According to calculations made by the International Monetary Fund (IMF), it is predicted that the damage the U.S.-launched trade war has inflicted on world economy will be USD 430 billion by 2020 and will shrink the global economy by 0.5 percent.
That's to say, decline in trade means also decline in economic growth. It is as clear as day that the trade wars will lead to negative consequences if we take into account that the main force behind the economic growth of the sector and many Far East-Asian countries that made the greatest contribution to economic growth of countries in the post-1980 period is exports.
G20 countries with foreign trade deficits with the US
The U.S. expects to reduce trade deficit by launching a war against world trade through the instrument of extreme protectionism.
It is anticipated that the United States' trade deficit, which grew in recent years, will be with G20 countries, which represents 75 percent of the world’s trade and 85 percent of the world economy, and the U.S. and G20 countries alike would be negatively affected from tariffs to be imposed by the U.S.
It is obvious that the U.S.-led trade war will affect many countries including, but not limited to, China, with which the U.S. has the largest trade deficit, Mexico, European Union countries, Japan and Canada, and consequently G20 countries, namely the world's largest economies, might be headed for catastrophe.
G20 and new Turkey
Turkey is one of the most important G20 countries. Therefore, we can say that it will be a prominent summit for Turkey’s Finance and Treasury Minister Berat Albayrak. Because this is the first time in his ministerial office that Berat Albayrak participates in a G20 economy summit.
This summit will be a great opportunity for Albayrak to express his views regarding the priorities of Turkey, its policy regarding the international market in the forthcoming period, and the burning issue of trade wars after Turkey's transition into the executive presidency system.
Since 2008, when the G20 summit was starting to be held under the chairmanship of the government and heads of state, it has become an organization that sets the agenda of the world and where all economic and political issues are discussed.
Although G20 summits don’t have a corporate structure, just a form of initiative, it is important that Turkey and other developing countries, which are insufficiently represented in the IMF and World Bank, have a say in economic and political problems in the world through these summits.
It is important in terms of developing countries like Turkey to have a say amongst the world’s largest economies, for the anger countries have toward the IMF to be abated and for laying the foundations of an alternative to institutions like the IMF.
However, one a way or another, I envisage that a pivotal initiative like the G20 will become a new corporate structure obligated by the long-term representation of the world’s economic power.