Trump’s Turkey letter and the need for a new trade roadmap

Last Tuesday, U.S. President Donald Trump wrote a letter to Congress regarding trade with Turkey. In his letter, Trump stated that the Turkish economy is now sufficiently developed and it should be removed from the “General System of Preferences” program.

Is there any basis for the letter?

In fact, one would have to be very optimistic to think that there is a legitimate basis for any decision made by the Trump administration. On the other hand, even though Trump states that Turkey is a developed economy in the letter he wrote to Congress, the decision he has made is actually a part of a bigger plan. In the letter, by referring to the “Trade Act of 1974 Section 502(2)” he says that “I would like to express to you my intention to remove Turkey from the GTS Program designed for the developing Economies”.

By pointing out to the significant distance Turkish economy has covered over the past years, he claims that it can no longer be seen as a developing economy. By looking at the increase in the GDP per capita, the level sectors have reached, and the numbers for foreign trade, he states that Turkey is now a developed country. He also states that with the economic level it has reached recently and the deals it has made with other countries, it has already shifted to a profile on par with the developed countries. If you consider these justifications it seems that there is a legitimate basis for his decisions, but this isn’t the case.

Where does the truth lie?

The truth is, the U.S. is withdrawing from multinational trade agreements now. Not only is it withdrawing from these agreements, but it is also trying to render them void. If you look carefully, the first deals he put on the shelf were the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP). Expert had agreed that the TTIP was a vital deal for the EU Economy. Moreover, they were stating that TPP was also a “game changing” agreement. The preparations and negotiations for both of these deals took many years. But Trump canceled them both in a matter of minutes.

The Trump administration sees that the gravity center in the world’s economy is rapidly shifting from West to east and they are trying to stop this. They believe that the multinational trade agreements are making this process faster and they’re trying to alter the conditions as much as they can to render them null and void. On the other hand, they try to bring the countries they push out in the multinational deals to the negotiation table unilaterally. Moreover, the Trump administration doesn’t hesitate to weaponize economy to achieve political gains. (We shouldn’t ignore the internal reasons for writing this letter while the Syrian issue and S-400 deal are still on the table)

What roadmap must Turkey adopt?

Let’s start with a hint; those who planned Brexit and those who managed Trump’s electoral campaign are the same people. We started to question the future of the EU with Brexit, while we started to question the future of the multinational trade agreements with Trump. In this regard, it seems that the spirit of the new term is going to be determined by bilateral trade agreements. The spotlight is on Turkey with its potential in this new period for global commercial balances. Turkey needs to develop new strategies from scratch for its trade with every other country and it has to make preparations for the bilateral trade agreements. Of course, Turkey is not on the side of protectionism in the global trade. But we cannot ignore the necessities of the time.