Q&A ON GLOBALIZATION…

HÜSEYİN CAHİT SOYSAL 
 UGM Board Member
 

I hope that the West’s tendency to always carve on its side like a horseshoe’s adze will be eroded over time. The periods when global trade peaked have always been periods of peace. I hope that the ongoing wars and human rights violations will end and we will once again face a world pursuing global prosperity.

-Was international trade always done as it is today?

-No. In ancient times, it was done by sea transportation and camel caravans.

-Was it possible to prepare products according to orders and customer demands before?

-No. There were no means of communication in our age. Therefore, it seemed impossible to order by correspondence. Those who wanted to market their products would travel with their goods, sell their products in the markets where they arrived, and then return to their hometown. If they were a very rich merchant, they would have this operation done by their men. In other words, “each supply would create its demand”.

-What changed this trade system?

-Industrialization that emerged in the last two hundred years and the transportation systems that developed accordingly.

-What do you mean?

-After the invention of steam boilers, the first locomotive was produced in 1804 and the first train carried iron ore from the town of Pennydarran in England to Cardiff, where the factory site was located. Later, railway technology developed rapidly, and in 1825, the first freight and passenger train began operating between the cities of Darlington and Stockton in England. Subsequently, railway transportation spread rapidly all over the world.

THE PROCESS OF SPREADING GLOBALIZATION…

-Did globalization spread like this?

-Yes, the development of railways and the ease of transportation from one city to another in a short time, the development of the postal administrations' work, and accordingly, the opening of the way for orders to be placed by letters from distant provinces or countries. Merchants could both order the product they wanted and learn the price of the product in advance. As a result, they had the opportunity to receive the product on the date they wanted.

-Wasn't there a mode of transportation other than railways?

-How could it be? Sea transportation was already the oldest mode of transportation. However, with the invention of internal combustion engines, the seas were introduced to ships traveling at 20-25 nautical miles per hour. Then, during the First and Second World Wars, land transportation and air transportation were also developed for military purposes. When the wars ended, the old war fleets were transformed into commercial fleets. By the middle of the twentieth century, sea, rail, land, air, and pipeline transportation had begun to be used all over the world.

- Was the development of global trade only caused by the development of transportation?

- Is that possible? First of all, industrialization provided the opportunity to produce products not only for the domestic market but also for global markets. At the end of World War II, in 1944, at the “United Nations Monetary and Financial Conference” held in a small town called Bretton Woods in the USA, a system was created that accepted the “dollar” as international money. After the establishment of intensive production, communication, and a global payment system, a great leap was seen in international trade.

- Did all countries adopt this system at the same time?

- No. But it was now known where the wind was blowing from. First, the delivery and payment methods determined by the ICC, then the GATT Agreement, and then the rules introduced by the World Trade Organization and the World Customs Organization based on it, affected the course of development of global trade.

WORLD TRADE BECAME ITS MOST LIBERAL PERIOD IN THE 1980s…

-Did the rules of these organizations alone develop trade?

-No. The negotiations and statements made on these platforms caused country representatives to influence and trust each other. Representatives of developed Western countries, especially the USA, were saying to representatives of developing countries, “If you want to develop, remove the trade barriers. Remove the customs walls. Let them do it, let them pass.” In line with these recommendations, developing countries quickly liberalized their foreign trade and exchange regulations and plunged into the global competitive market. World trade became its most liberal period in the 1980s.

-What happened then?

-Then Western countries became very rich. Their citizens did not want to work in hard labor and did not want to do dirty work, including cleaning. As a solution to this, they first started to have third-world country citizens, whom they called from foreign countries, do these jobs. However, when they were no longer needed, they were not in a position to say, “Okay, now go back to your country.” Because the foreign workers who came to the country were mixing with their citizens and establishing family ties. They were giving birth to mixed-race children. After a while, they were also gaining citizenship.

HEAVY INDUSTRIAL FACILITIES MOVED TO DEVELOP COUNTRIES…

-Aren’t these natural? Were there reactions to this in Western countries?

-There were reactions to this process in Western countries and as a result of the climate crisis, “green transformation” trends increased. The thought “Why don’t we move heavy industry facilities to developing countries instead of disrupting our demographic structure by bringing in foreign workers?” prevailed. In the 1990s, all heavy industry facilities were moved from developed countries to countries such as China, Pakistan, Indonesia, Malaysia, Brazil, Turkey, and Egypt to benefit from cheap labor and have the dirty work that pollutes the environment done by underdeveloped countries.

-So, weren’t Western countries afraid of know-how transfer?

-No, they weren’t. They thought that they could protect all intellectual and industrial property rights if the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement prepared within the World Trade Organization was signed by the underdeveloped countries.

-Didn’t that happen?

-Of course, it didn’t. Is the Western smart and the Eastern stupid? They started to produce and market their products by making small changes to the design or software of Western products whose know-how they learned. They undoubtedly dominated the markets with more affordable prices.

THE IMPOSITION THAT YOU WILL BUY YOUR MOTOR VEHICLE FROM ME

-What was the West's reaction to this?

-This is when the backpedaling from globalization began. Western countries first started to change the technical features of their products instead of alternative products coming from abroad, using the excuse of "green transformation". For example, we do not know where the green transformation in engine technology will stop. They upgraded the engine technology they started from Euro-1 to Euro-7. The worst part is that they started not allowing trucks and buses that did not carry the engines they produced with this technology into their territory. In other words, the imposition of "you will buy your motor vehicle from me" is done in this way.

WHAT WOULD WE REDUCE CUSTOMS TARIFFS TO ZERO LEVEL?

-What would happen if we didn't?

-Then they impose on you "You can't transport people and goods to the European Union with buses and trucks that don't have Euro-5 or Euro-6 engines". As you can see, "Western countries started to create the kind of technical barriers in trade. Then in 2017, a President named Trump was elected to the US. The first thing the US did after the election was to impose heavy additional customs duties on steel and aluminum products originating from China, the EU, and Turkey. The US turned a deaf ear to the complaints "What happened to the GATT Principles? Were we going to reduce customs tariffs to zero level? Didn't these views reflect your approach?" Naturally, the countries and groups of countries mentioned started to take measures against the US.

-Are there any other breaking points on the way back from globalization?

-Of course, there are. In addition to the ongoing Iran embargo since the 1980s, some countries have started to impose embargoes on Russia and Belarus, and some countries have started to impose embargoes on Israel due to the Russia-Ukraine War and the Israel-Palestine War of recent years. As of now, our country continues to impose embargoes on Southern Cyprus, Armenia, and Israel.

-You painted a pessimistic picture. So was globalization a utopia?

-I want to hope that it is not. I hope that the West's tendency to always cut in its favor like a horseshoe cutter's chisel will be reduced in time. The periods when global trade has peaked have always been periods of peace. I hope that the ongoing wars and human rights violations will end and we will once again face a world pursuing global prosperity.