Mon, 20 May 2019
| Usbed Usbed  |  Experts  |  About SO  |  Executive Board  |  Advisory Board  |  Collaborating Bodies  |  Contact Us  |  CALL FOR PAPERS  |  Policy Brief
Logo
 

TIME FOR REVISION: TRANSATLANTIC TRADE & INVESTMENT PARTNERSHIP AND TURKEY

Time for Revision: Transatlantic Trade & Investment Partnership and Turkey
Concerning Turkish foreign policy, the year 1995 has a special meaning. Through the negotiation process with the European Union (EU) which have been active since the Ankara Agreement and the 1/95 decision of the Council of Association through which the Customs Union was launched, a significant integration level partnership was ensured.  Though, under the framework of partnership, it was not stated that the two parties would have equal rights in integration, Turkey was isolated from decision taking mechanisms, and a system based on Turkey obeying, regardless of its benefits, EU’s foreign economic policies concerning third parties, was formed. In this context, Turkey, while becoming a party to EU’s third party Free Trade Agreements (FTA) and other trade and investment partnerships in granting “privileges to the opposing party”, were left with the risk of receiving unequal privileges due to the “rules of origin”.
Herein, under the contemporary economic development, “other trade and investment partnerships” delineate a significant meaning. The reason is the “Transatlantic Trade and Investment Partnership- TTIP” negotiations between the EU and the United States.  The two giant economies that constitutes the half of the world’s GDP, is also the two most significant trade partners of Turkey. Between 2005 and 2012, EU-27 states constituted 49.5% and 39.9% of Turkey’s total exports and imports respectively, whereas Turkey’s export and imports with the United States were 7.7% and 5.6%.  Thereby, Turkey has a dynamic and enlarging economic relations with two actors that constitute half of its total foreign trade.  The quadruple enlargement of Turkish-EU dual trade potential from 1996, the coming into force of the Customs Union, to 2014, is a significant data that displays the meaning of integration and the impact of economic integration processes on state economies. 
In forming the TTIP project, the 2008 economic crisis has had a profound effect. In addition, counter to the US-EU bloc, which we can call the western Bloc, the rise of the Chinese and Indian economies together with the Russia, has prompted the parties to take new economic actions. In the partnership, apart from enhancing the sustainable development joint venture between EU and US, the decreasing/abolishment of tariffs regarding certain industries is also being planned.  Turkey, even though a partner to the Customs Union, can not take part in the negotiations since, it is not yet a member to the EU. Under these circumstances, when TTIP comes into force, a situation in which US goods flowing into Turkey without any tax or with low tax, and Turkish goods entering the US without any privileges, while its rivals have economic rights, is being expected.   According to the Central Bank assessments, after the coming into force of the TTIP, and under the scenario of tariffs being abolished and other protective measures being diminished, Turkey’s GDP would witness a fall of 0,561% or even higher.  Concerning this instance, Turkey’s EU Minister Volkan Bozkır, under the situation of US goods entering Turkey without any tax, stated that Turkey’s GDP would decrease by 3%.  Given the level of trade between the parties, if the abovementioned circumstances would occur, it is clear that Turkish economy will receive a heavy blow. 
At this juncture, it is necessary that Turkey to revise its economy policies with the EU and US. One of the policy prescriptions is that without any modifications on the Turkish-Customs Union status, the formation of a FTA between Turkey and the US.  It is assessed that if Turkey becomes a party to TTIP with a FTA, its GDP would receive a 4,6% increase.  One major factor that damages Turkish bargaining position is the Turkish membership to the Customs Union, which prevents Turkey to take unilateral action in signing a FTA with the US. Turkey would only receive the opportunity to strike a deal with the US only if its unique position within the TTIP project becomes active when TTIP is formed. It is here that a second complication arises. This factor is the situation that the US is already having a surplus in its trade with Turkey. Thus is it not in possibility that, “under all else equal”, the US, having an advantageous position in its trade with Turkey, would grant such a privilege.
One factor that strengthens Turkey’s hand is the status of other factors being constant. It is here that Turkey’s NATO membership may be brought into consideration. While the international instances, such as the Middle Eastern disturbances and Iran Crisis, takes places within the Turkish near environment, Turkey’s NATO membership, first time after the ending of the Cold War is in a position to actually make meaning. Turkey, without self-questioning its NATO membership, might try to channel this political and military shadow to an economic opportunity. Forasmuch, as it is seen from the Greece’s SYRIZA government’s projects, NATO has become a controversial organization. The second policy prescription is the revision of the Turkish-EU Customs Union.  Under this framework, the first possibility would be the substitution of the Turkish-EU Customs Union with a FTA level partnership. Already criticized for not including areas such as unprocessed agricultural products and services sectors in which Turkey might show an advantage, the Customs Union, by bringing of a new burden together with a TTIP, would legitimize Turkey’s such demands. Turkey, through these legitimate reasons can open its FTA proposal with the EU party.
The second possibility is to try preventing losses by enlarging the Customs Union. The enlargement of the Turkish-Customs Union with the inclusion of unprocessed agricultural products and services sector is an option that can be brought to the negotiation table. As a matter of fact, the media has already started to talk about the formation of a communication of such kind between Turkey and the EU.   Assumed that Turkey would refrain from suspending its negotiation process of EU membership, actions which would be taken to make the Customs Union more meaningful would be a more realistic solution option for the Turkish economy. 
Consequently, Turkey-Customs Union relations, with regards to the EU-US negotiations concerning TTIP, and possible revision opportunity, has assumed an additional significance. Under this framework, to let go from this unequal status in its relations with its larger economic partners, Turkey, has to take action either with the EU concerning the Customs Union, or with the US regarding the TTIP.
References
1)Didem Güneş, Merve Mavuş, Arif Oduncu, AB-ABD Serbest Ticaret Anlaşması ve Türkiye Üzerine Etkileri, http://www.tcmb.gov.tr/wps/wcm/connect/e23c8575-44bd-4eab-ab52-c14286482258/EN1330.pdf?MOD=AJPERES&CACHEID=e23c8575-44bd-4eab-ab52-c14286482258(Erişim Tarihi: 26.03.2015 , Türkiye Cumhuriyet Merkez Bankası Ekonomi Notları, Sayı 2013-30, Kasım 2013, s. 4.
2)Didem Güneş, Merve Mavuş, Arif Oduncu, AB-ABD Serbest Ticaret Anlaşması ve Türkiye Üzerine Etkileri, http://www.tcmb.gov.tr/wps/wcm/connect/e23c8575-44bd-4eab-ab52-c14286482258/EN1330.pdf?MOD=AJPERES&CACHEID=e23c8575-44bd-4eab-ab52-c14286482258(Erişim Tarihi: 26.03.2015 , Türkiye Cumhuriyet Merkez Bankası Ekonomi Notları, Sayı 2013-30, Kasım 2013, s. 4.
3)Evaluation of the EU-Turkey Customs Union, World Bank Report, No: 85830-TR, 28 March 2014, pp. 9.
4)The Top 10 Myths about TTIP: Separating Fact from Fiction, European Commission Report, 2015, pp. 8-12.
5)Mustafa Şahin, TTYO’nun Gölgesinde Gümrük Birliği’nin Yeniden Değerlendirilmesi, İktisadi Kalkınma Vakfı Dergisi, Şubat 2015, Sayı 199, s. 23.
6)TCMB, a.g.m., ss.8
7)“Gümrük Birliğini dondururuz”, www.hurriyet.com.tr/ekonomi/27518315.asp (Erişim Tarihi: 26.03.2015)
8)Kemal Kirişci, Turkey and the Transatlantic Trade and Investment Partnership: Boosting the Model Partnership with the United States, Brookings Institute Turkey Project Policy Paper, No: 2, September 2013, pp. 18.
9)TCMB, a.g.r., ss. 10.
10)“FT: AB  ve Türkiye Gümrük Birliğini genişletmek istiyor”, 11)www.bbc.co.uk/turkce/ekonomi/2015/03/150323_ft_gumruk_birligi (Erişim Tarihi: 26.03.2015)
Oğuz Özdaş, Analyst, Strategic Outlook
7.07.2015 - Hit : 1662


  • Find us on Facebook


  • CALL FOR PAPERS

    Call For Papers

 
All Rights Reserved - 2012 © Strategic Outlook | Editored By ertugruloztarsu