G-20 Disagreements Spark Fears of World Trade War

Fears of a global trade war have appeared as Group of 20 (G-20) countries, which are the first world and rising countries, wrestled with each over trade in Seoul, South Korea on Friday.

Accusations that both China and the United States are manipulating their currencies has brought back the specter of protectionist economic policies. Such policies were seen in the USA before the Great Depression. The possibility of a return to protectionism has sparked fears that the world may soon return to a higher level of recession.

The United States argued that China should let the value of the yuan rise, making Chinese exports more expensive and American imports in China cheaper for Chinese consumers. It is argued that this would shrink the American trade deficit with China, which is set to tie its 2008 record of $268 billion.

At the same time, other countries found the United States to be hypocritical on this matter. The American Federal Reserve plans to inject $600 billion into the US economy. This would decrease the value of the dollar, making American exports cheaper and giving the US an advantage.

Richard Portes of the Center for Economic Policy Research in London called the low chances of a substantive agreement "dangerous."

Brazilian President Luiz Inacio Lula da Silva spoke out against first world countries trying to export their way to more wealth. He fears that there will be less consumption of goods from rising countries.

Failure to agree on currency and trade could intensify the desire of G-20 countries to manipulate their currencies to gain the upper hand. This could lead to an all out trade war, which would set up barriers to imports.

Gregory Chin, a senior fellow at the Center for International Governance Innovation said that the US Congress "wants to see some blood ... wants a bit of a spat with China on currency wars."

The American House of Representatives recently voted to harm China for keeping its currency low.

South Korea and the United States, so far, have been unable to work out a stalled free trade deal, which is harming the possibility for other agreements. Developing countries have voiced concern over the falling yields of American government bonds. The developing world is vulnerable to economic collapse if investors decide to take their money elsewhere.

China and Taiwan have announced this week that they will restrict the amount of foreign money going into their markets.

Outside of the meeting place, the National Museum of Korea, thousands of protesters rallied against the G-20 and South Korean government and clashed with police. However, the protest was peaceful compared to others.

Bourgeois commentator and author Fareed Zakaria commented in his book The Post-American World that certain international issues, both economic and political, remind him of the tensions that led up to World War One. The First World War was caused by capitalist and inter-imperialist rivalries. What the world is witnessing among the G-20 governments, which usually cooperate a little better with each other, is probably the collapse of cooperation among the world's ruling classes. This could possibly lead to another World War, which, judging from the past two, always results in a Communist Party seizing power somewhere (but in no way is The Partisan trying to be prophetic).