The seven countries with the world’s largest economies (the U.S., Germany, Japan, U.K., France, Italy and Canada) met at the 44th G7 Leaders' Summit held this year which was hosted by Canada. Before the summit, it was expected that the subject of the trade wars would be brought forward again and that protectionist economic policies, especially the additional customs tariffs imposed on metals, sanctions on Iran and climate change would be discussed.
But the tension between Canadian Prime Minister Justin Trudeau and U.S. President Donald Trump left its mark on the summit.
The main reason for the tension was the additional customs tariffs imposed on steel (25 percent) and aluminum (10 percent) on products imported from China, the European Union (EU), Turkey, Brazil, Canada and Mexico which was enforced by the United States, triggering trade wars.
Moreover, after Canadian Prime Minister Justin Trudeau criticized the U.S. for imposing tariffs on steel and aluminum, Trump announced that U.S. would not endorse the G7 statement.
Additionally, in the light of the information leaked out of the meeting, in addition to the tariffs, there were interesting dialogues between Trump and the leaders of other G6 countries, especially on terror and immigration issues.
If you interpret the joint press statement made at the end of the meeting, you would tend to think that the World Trade Organization (WTO) has a view on international trade that supports trade based on rules and opposes protectionism, acting as if there is no problem. However, the situation is not like this at all as past events have already proven.
Because, above all, the approach of Trump regarding these matters is known by all in no uncertain terms. In particular, the U.S. withdrawal from the Trans-Pacific Agreement (TPP), the Paris Climate Agreement and the Nuclear Deal with Iran (JCPOA), the renegotiation of NAFTA, suspension of Transatlantic Trade and Investment Partnership (TTIP) and the decision to recognize Jerusalem as the capital of Israel caused a profound rift between the U.S. and the G6 countries. All these had an impact on the course of G7 meeting, and the dispute between U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau made matters even worse.
Trump’s stance on these matters has drawn a reaction from everybody, especially his Western allies. So much so that French President Emmanuel Macron even said, “Maybe the American president doesn’t care about being isolated today, but we don’t mind being six, if need be.”
These and similar reactions, which are the results of the U.S. attitude toward all international institutions recently, the cancellation of the bilateral agreements or the suspension of agreements, are also detracting the U.S. from its claim of being a world leader.
Due to the followed policy, the tension between the countries that constitute a significant part of the world economy, such as the U.S., the EU and China, is increasing and serious problems are arising for global trade and growth.
For instance, the fact that the tendency to protectionism in international trade is increasing causes suppression of risk appetite in the markets due to the uncertainty involved thereof. Once again, the rising trade tension due to additional customs tariffs targeting many countries by the U.S. negatively affects long-term cross-border investments of worldwide companies.
We immediately notice that the first impacts of the commercial tension precipitated by the U.S. can be observed in the UN’s Global Investment Report for 2017. According to this report, the amount of direct investment in the world has decreased by 23 percent compared to the previous year due to the increasing protectionism trend.
It is basically for this reason that it is of crucial importance for countries to resolve their trade disputes by constructive action and to follow the rulings of the World Trade Organization.
If we were to analyze the policy followed by Turkey in this regard, Economy Minister Nihat Zeybekçi stated that some measures were taken against the U.S. decision of additional customs tariffs on iron, steel and aluminum. It was expressed that the biggest businesses in America created unfair competition by receiving a high level of support and subsidies from the state and therefore efforts were being made for anti-dumping investigations against these companies.
Some restrictions were imposed for products such as soybeans, cotton, almonds, walnuts and paddy imported from the U.S., and thus we are obliged to adopt a manner similar to the one adopted against our products.
In connection therewith, it is also reported that a letter of intention was sent to the World Trade Organization regarding this issue, and announced that additional tariffs would be imposed on U.S. imports unless the tariffs on steel and aluminum imposed by the U.S. are not retracted by June 21.
However, there is a troublesome situation for us and that is the fact that the most of the products on which the additional tariffs abovementioned to be imposed are needed for production input. This causes both an increase in prices in the domestic market and the loss of competitive power in the export market due to the increasing costs.
Turkey is at the top of the list of countries to be severely affected during this period, particularly being a country in uttermost need of direct foreign investment. Nevertheless, it will remain strong thanks to investments, exports, agriculture, industry, technology and any other industry imaginable, and it will proceed on its way as a stronger actor in the global economy after the June 24 elections. Our country has the power and the potential to do it.