UPGRADING THE U.S.-TURKEY
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A Shared Vision towards a U.S.-Turkey Free Trade Agreement
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Upgrading the U.S.-­‐Turkey Commercial Relationship: A Shared Vision towards a U.S.-­‐Turkey FTA Table of Contents Preamble i-­‐viii Executive Summary 1 Pursuing a Shared Vision 6 U.S.-­‐Turkey Trade and Investment–Growth and Potential 7 Growing Trade in Goods 7 Synergies in Services 8 A Growing Need for American Investment 9 Boosting Bilateral Trade and Investment 10 Turkey and the European Union–A Complex Partnership 10 A Union with the EU Customs Union Complications The Benefits of a U.S.-­‐Turkey FTA 11 11 12 12 Turkey–A Large and Dynamic Market Turkey–A Hub for Regional and Global Trade 13 Turkey–Key Opportunities for American Trade 15 Manufactured Goods 15 Farm and Food Products 16 Health Care Products and Services 17 Energy, Environmental, and Other Innovative Products 17 Serving Turkey’s Services Sector 18 Opportunities for Turkey in the American Market 19 Bridging the Gap: Deepening U.S.-­‐Turkey Trade Relations 20 Same Goal, Different Perspectives 20 Turkey’s Perspective 20 The U.S. Perspective 21 Cooperating in the High Level Committee 22 22 Recommendation #1. Building a Base of Support 22 Recommendation #2. Building a Strong Case 23 Recommendation #3. Addressing Turkey’s T-­‐TIP Concerns 24 Recommendation #4. Building Confidence by Addressing Issues 24 Recommendation #5. Building Turkey’s FTA Capacity 26 Recommendation #6. Charting a Course for a Comprehensive Trade Deal Achieving a Shared Vision 27 Appendices 30 Recommendations for a Plan of Action 29 Preamble
to
Upgrading the U.S.-Turkey Commercial Relationship:
A Shared Vision towards a U.S.-Turkey Free Trade
Agreement
and
Recommendations for a Plan of Action
Introduction
In December 2012, the U.S. Chamber of Commerce (USCC) and the Union of
Chambers and Commodity Exchanges of Turkey (TOBB) established a formal
partnership with the goal of strengthening the bilateral commercial relationship
between the United States and Turkey. Shortly thereafter, the two institutions
embarked on a comprehensive research project to assess actions needed to
upgrade bilateral trade and investment, which has culminated in the present
report. With the negotiations of the Transatlantic Trade and Investment
Partnership (T-TIP) between the United States and the European Union
already completing its tenth round, the intent was to identify the best
mechanism for increased U.S.-Turkey commerce and develop a plan to achieve
this goal.
Mr. Edward Gerwin, a leading U.S. trade expert was engaged to lead the
research and writing of the report at the direction of the USCC and TOBB.
Consultations were held with the U.S. Government, the Turkish Government,
the U.S. and Turkish private sectors, as well as the two countries’ think-tank
communities. These consultations greatly contributed to the research and
literature review of the present report.
Bridging the Gap: 2014-2015
The original study was completed in 2014, and while overarching conclusions
drawn remain the same, this prologue accounts for the important
developments affecting the U.S.-Turkey commercial relationship in 2014 up
until August 2015.
i
From a statistical perspective, U.S.-Turkey trade volumes have held steady in
2014 at $19.1 billion.i Regarding this year, until July 2015, U.S exports to
Turkey have been $5.2 billion and imports from Turkey have been $3.9 billion
with a half-year trade figure of $9.1 billion. ii According to U.S Census Bureau
statistics, between the 2013-2014 period, Turkish exports into the United States
have grown by 10 percent, while U.S. exports to Turkey have declined by
approximately 3.5 percent.iii In terms of FDI, the 2014 report, “EY’s
Attractiveness Survey Europe 2014: Back in the Game,” stresses that although
Turkey did not appear in the top 15 FDI destinations in Europe prior to the
2008 economic crisis, the country saw a significant increase in FDI projects, by
129 percent, accompanied by a 162 percent increase in job creation between
2009 and 2013.iv From 2003 until now, FDI in Turkey reached $152.7 billion.
During the 1984-2002 period, this number was only at $14.6 billion levels.v In
the subject EY report, Turkey ranked the 10th most attractive destination for
FDI in Europe in the year 2014, with United States and Germany remaining
the largest investors in Turkey, accounting for 24 percent and 16 percent
respectively.
U.S. Business Perspective
The U.S. business community is generally positive about long-term business
opportunities in Turkey; however there has not been much improvement in
economic conditions or the business environment since 2014. With two
elections in Turkey since 2014 (presidential elections in 2014, followed by
parliamentary elections in 2015), it has been difficult to achieve new reforms
that would stimulate private sector growth and foreign investments. Following
the inconclusive 2015 parliamentary elections, November 1 2015 was decided
to be the date to renew the elections.
With respect to individual sectors, U.S. companies report both positive
developments and outstanding commercial trade barriers. The aviation sector
sees increasing opportunities in Turkey with the continued growth of Turkish
Airlines and Turkey emerging as a regional transportation hub. Megaprojects
such as the 3rd Istanbul Airport, the 3rd Bosphorus Bridge, PPP Health Campus
and City Hospital Projects, Istanbul Financial Center, Istanbul Arbitration
ii
Center, among other large infrastructure projects, are attractive opportunities
that have generated much interest from the U.S. private sector. In the life
sciences, information communications technology, and agriculture sectors, U.S.
companies are growing increasingly concerned with measures in Turkey to
localize production in a manner that inhibits imported goods and Turkey’s
integration into the global value chain.
U.S. companies manufacturing in Turkey are seeking a comprehensive energy
strategy to make manufacturing costs more competitive for value-added
exports. While the pool of human capital in Turkey remains large, U.S.
companies would like to see labor market and education reforms to enhance
Turkey’s competitiveness in high-technology market segments.
Turkish Business Perspective
The Turkish business community is also generally positive about long-term
business opportunities in the United States, however there are concerns about a
number of trade, regulatory, and practical barriers while entering the U.S
market.
The United States is considered an open market for Turkish exports, as
approximately 70% of U.S imports from Turkey are duty free. Turkey’s
traditional export items, however, such as tobacco, textile, fruits, vegetables,
plants, and leather productsvi encounter relatively higher tariff rates. Turkish
exporters are increasingly concerned with antidumping and counter
countervailing duties implemented, especially towards the Turkish steel
industry.vii The U.S. Generalized System of Preferences (GSP) program is an
important, yet underutilized, vehicle for Turkish exports to enter the U.S.
market duty free. Turkey continues to benefit from the program, but reports
significant lapses due to Congressional approval and annual review of eligible
imports for duty-free treatment.viii Turkish businesses note that the United
States excludes an increasing number of Turkish products and that Turkey is
only exporting approximately 1/5 of the GSP eligible articles, with export
opportunities for other eligible items such as agricultural and consumer
products, as well as machinery.
iii
Turkey’s small and medium sized enterprises (SMEs) report complex post-9/11
security rules, U.S trade remedy decisions, product standards that can differ
significantly from EU rules, visa related problems, sanitary and phytosanitary
measures, and a range of business and licensing regulations. Turkish farm
products must also navigate U.S. quotas and farm support barriers, while
Turkey’s service providers and investors face restrictions in sectors including
transport, finance, and communications.
Upgrading the European Union-Turkey Customs Union
In May 2015, the European Union (EU) and Turkey agreed to update the 20year old Customs Union framework. It is widely acknowledged that the
Customs Union has played a significant role in Turkey’s economic
development. The Customs Union addresses a number of issues including
market access and tariff rates. Nonetheless, there are significant updates which
can be made to increase the overall utility of the agreement.
Turkey remains the EU’s 6th largest trading partner. Over 75% of the foreign
direct investment into Turkey originates from the European Union. Despite
the integration of these two economies, the Customs Union requires
improvement.ix Both parties agree that new trade discussions shall address
agriculture, services, and public procurement. Moreover, upgrading the
Customs Union will move Turkey into alignment with other European Union
regulatory practices.
There are a number of areas that are not covered under the current Customs
Union including investment protection, safeguard measures, and a dispute
settlement mechanism. The lack of these chapters is a significant barrier to
foreign direct investment.
iv
In the past, the EU common commercial policy required that every time the
EU initiated a new free trade agreement with a trading partner, Turkey was
obliged to provide preferential access to its market to the new partner even in
the absence of reciprocal treatment. Absent a new bilateral trade agreement
between Turkey and the new partner, Turkey would not secure the benefits of
reciprocal treatment. The current EU-Turkey Customs Union negotiations
should address fair economic integration.
U.S. companies see the Customs Union as an opportunity for moving towards
further realignment of Turkey’s policy with international standards and WTO
norms. Upgrading the Customs Union provides Turkey a platform to engage in
the emerging multilateral trade agreements by updating its own trade and
investment regime. Taking these steps could provide Turkey an accelerated
path to future FTA negotiations with the United States. Within this framework,
Turkey and EU’s announcement in May 2015 of their plans to modernize their
decades old customs union agreement and the ongoing discussions in this
regard should be taken as positive steps in the right direction.
Trade Promotion Authority
On the subject of free trade agreements, the U.S. Congress approved
modernized Trade Promotion Authority legislation (TPA-2015) in June 2015.
The United States has never entered into a free trade agreement or multilateral
trade agreement without TPA. A simple form of TPA was first enacted in
1934, but the latest iteration lapsed in 2007.
While the U.S. Constitution gives Congress authority to regulate international
commerce, it gives the president authority to negotiate with foreign
governments. TPA-2015 squares this circle by directing Congress to set
negotiating objectives for trade agreements and requiring the executive branch
to engage in close consultations with legislators throughout the course of
negotiations. In turn, when an agreement is reached, Congress must approve or
reject but may not amend it.
v
While foreign governments may initiate negotiations with the United States
without TPA in place, they have historically proven leery of making the
difficult political choices associated with the final stages of negotiations in its
absence. In this sense, TPA-2015 provides an assurance to U.S. negotiating
partners that they need negotiations with the United States only once—not
once with the White House and again with the 535 Members of Congress.
Following is a summary of key negotiating objectives included in TPA-2015, all
of which would need to be followed in the event the United States and Turkey
chose to pursue a bilateral free trade agreementx:
• Establishes New Goods and Services Objectives for the Digital Age: New
and expanded negotiating objectives recognize the role of services in generating
benefits across all sectors of the economy and facilitating trade. TPA-2015
updates objectives to facilitate digital trade, including through protections for
cross-border data flows, and to recognize the significance of the Internet in
international trade.
• Strengthens Rules for Agriculture: TPA-2015 updates objectives to seek
robust and enforceable rules on sanitary and phytosanitary measures and
address improper use of geographical indications.
• Maintains Balanced Objectives for Investment: TPA-2015 maintains strong
objectives to eliminate barriers to cross-border investment and protect U.S.
investors from unfair treatment.
• Protects Intellectual Property (IP): TPA-2015 updates objectives to address
government involvement in cyber theft, protect trade secrets, and facilitate
legitimate digital trade, and the negotiating objectives continue to call for trade
agreements to provide a high standard of IP protection, and to ensure that
trade agreements foster innovation and promote access to medicine.
• Addresses Impact of State-Owned Enterprises (SOEs): A new negotiating
objective calls for eliminating trade distortions and unfair competition from
SOEs and ensuring that they act solely on commercial considerations.
vi
• Seeks Strong Enforcement: TPA-2015 directs negotiators to secure strong
dispute settlement mechanisms in agreements.
• Seeks Improved Regulatory Practices: New and updated provisions aim at
improved regulatory practices, regulatory coherence and compatibility, stronger
transparency, and ensure that government regulatory reimbursement regimes
are transparent, provide procedural fairness, and are not discriminatory. For
example, TPA-2015 requires elimination of government reference prices in
foreign markets where the pharmaceutical industry is “[denied] full market
access for United States products” and the new law upholds the principles of
transparency, non-discrimination, and fair rule of law in a drug pricing and
reimbursement system.
• Takes on Localization Barriers to Trade: A new negotiating objective
addresses forced localization of facilities and related barriers to U.S. goods and
services exports.
• Promotes Global Value Chains: New provisions encourage U.S. participation
in global value chains and ensure trade agreements reflect the increasingly
interrelated and multi-sectoral nature of trade and investment activity.
A Path Forward
The Turkish Government has since developed several sectoral growth plans
and the U.S. Chamber of Commerce and TOBB look forward to continuing to
build a comprehensive public-private dialogue that will enhance market access
and increase trade and investment between the United States and Turkey. The
United States is a significant enough trading partner that can help Turkey
surpass the middle income trap. Sights are set high with the eventual goal
being a U.S.-Turkey Free Trade Agreement and both the U.S. Chamber of
Commerce and TOBB stand united in working with the U.S. and Turkish
governments and private sectors toward this end.
vii
i
U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2014 Country Commercial Guide for U.S. Companies.” Accessed August 12, 2015. Available at: http://turkey.usembassy.gov/doing_business_in_turkey.html ii
U.S. Department of Commerce, U.S. Census Bureau, “Foreign Trade – Trade in Goods with Turkey,” Accessed August 13, 2015. Available at: https://www.census.gov/foreign-­‐trade/balance/c4890.html iii
Office of the U.S. Trade Representative, “2014 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 12, 2015. Available at: https://www.congress.gov/bill/114th-­‐congress/house-­‐bill/1314/text iv
Ernst & Young, “Ernst & Young’s attractiveness survey, Europe 2014,” pp. 17, 18. Accessed August 12, 2015. Available at: http://www.ey.com/Publication/vwLUAssets/EY-­‐2014-­‐european-­‐attractiveness-­‐survey/$FILE/EY-­‐2014-­‐
european-­‐attractiveness-­‐survey.pdf v
Ministry of Economy of the Republic of Turkey, “Economic Outlook: July 2015,” Accessed August 20, 2015. Available at: http://www.economy.gov.tr/portal/faces/home/economic-­‐outlook vi
World Trade Organization, International Trade Centre, and United Nations Conference on Trade and Development, “World Tariff Profiles 2014,” p. 165. Accessed August 25, 2015. Available at: https://www.wto.org/english/res_e/publications_e/world_tariff_profiles14_e.htm vii
Namik Ekinci, the Hill, “Protectionist U.S policy hurting Turkish steel,” July 22, 2015. Accessed August 20, 2015: Available at: http://thehill.com/blogs/congress-­‐blog/foreign-­‐policy/248696-­‐protectionist-­‐us-­‐policy-­‐hurting-­‐turkish-­‐
steel viii
Based on discussions with Senior Regulatory Consulting Attorney, Sule Oktenay Akyuz at Arent Fox LLP Law Firm. ix
European Commission, “Enhancement of EU-­‐Turkey bilateral trade relations and modernization of the EU-­‐Turkey Customs Union,”, August 2015, p. 1-­‐6. Accessed August 15, 2015. Available at: http://ec.europa.eu/smart-­‐
regulation/roadmaps/docs/2015_trade_035_turkey_en.pdf x
th
Trade Act of 2015, H.R. 114-­‐67, 114 Congress, Sec 102. Accessed August 15, 2015. Available at: https://www.congress.gov/bill/114th-­‐congress/house-­‐bill/1314/text viii
Achieving a U.S.-­‐Turkey Free Trade Agreement: A Shared Vision and Recommendations for a Plan of Action Executive Summary Turkey and the United States have long maintained strong political bonds. But only in recent years have they sought to build more robust economic ties through a growing trade partnership that could significantly benefit both nations. The launch of Transatlantic Trade and Investment Partnership (T-­‐TIP) negotiations between America and the European Union has brought new urgency to this effort—and highlights the need to inject new energy into expanding U.S.-­‐Turkey trade ties. T-­‐TIP presents significant risks and opportunities for Turkey. Under Turkey’s Customs Union with the European Union, T-­‐TIP could require that Turkey unilaterally extend certain tariff cuts to the United States—without any assurance of benefits in return. Excluding Turkey from T-­‐TIP could also harm Turkey’s economy and its status as a global economic center. But Turkey’s large and growing market and its expanding ties with regional neighbors also make Turkey a very attractive candidate for inclusion in T-­‐TIP—and/or a U.S.-­‐Turkey free trade agreement (FTA). As detailed in the following report, U.S-­‐Turkey trade and investment is significant, but still fails to reflect the potential synergies of the world’s 1st and 17th largest economies. Turkey has recently climbed as high as 16th among the world’s largest economies, but at the time of this report Turkey ranked as the 17th largest economy.i Merchandise trade between the two countries is growing and significant, totaling $19 billion in 2014. Turkey’s leadership as an exporter of tourism, transport, construction, and other services offers major opportunities for synergy with America’s world-­‐leading services sectors. And, although the EU provides the bulk of Turkey’s inbound foreign direct investment (FDI), U.S. companies play a leading role in Turkey’s growing need for project-­‐related FDI. In May 2013, the United States and Turkey announced a new High Level Committee charged with finding additional avenues to enhance U.S.-­‐Turkey trade and investment—while also addressing the potential negative impacts of T-­‐TIP on Turkey under the EU Customs Union. 1 Turkey’s 1996 Customs Union with the EU abolished duties on non-­‐agricultural goods in EU-­‐Turkey trade and required Turkey to adopt the EU’s common external tariff for these goods. The Customs Union deepened Turkey’s economic reforms and enhanced its economic integration with the EU, but it also creates complications, especially in Turkey’s trade negotiations with non-­‐EU countries. Most notably, while the Customs Union obliges Turkey to unilaterally extend tariff benefits to EU FTA partners, it limits Turkey’s ability to enter into similar FTAs with them, since those partners tend to take advantage of their FTAs with the EU to access the Turkish market without reciprocity. Both the United States and Turkey have important incentives to pursue a comprehensive free trade arrangement. Turkey’s large and growing domestic market makes Turkey a particularly attractive destination for U.S. exporters and investors, and a key candidate for an FTA with the United States. Turkey’s economy has tripled in size over the last decade and is poised for continued strong growth. And Turkey’s ambitious plans to become a top-­‐
ten global economy by 2023—through investment in infrastructure and human capital—will power significant additional growth. Turkey’s economic growth will drive tremendous expansion in Turkey’s imports, which are forecast to grow by 9 percent annually through 2018. This growing trade has the potential to power tens of billions of dollars of additional U.S. exports to Turkey and to support tens of thousands of U.S. jobs—especially if America can use a comprehensive, mutually beneficial FTA to expand its share of trade with Turkey. Turkey’s strategic location at the confluence of Europe, Asia, and Africa gives Turkey access to a $25 trillion regional economy that is home to 1.5 billion consumers. A strong U.S.-­‐Turkey FTA would enable both U.S. and Turkish businesses to better use Turkey as a platform to export more goods and services to the rest of the world. 2 As detailed in this report, Turkey also increasingly needs the products, services, and expertise that America excels at providing, including sophisticated manufactured products, high-­‐quality foods, energy and environmental technologies, health care products and services, and a wide array of other innovative U.S. goods and services. But for U.S. companies to fully benefit from these and many other lucrative opportunities, however, America and Turkey must jointly address Turkey’s remaining barriers to trade. Among other things, U.S. exporters point to significant issues with Turkey’s regulatory system, its high farm tariffs, its levels of intellectual property protection, its health care exchange rate and reimbursement system, and its restrictions on digital trade. Ideally, this effort would take place as part of a process leading to a comprehensive, mutually beneficial FTA. A strong FTA would also help Turkey drive additional economic reform and tap its significant, untapped potential as an exporter and investor in the lucrative U.S. market. Government, business, and thought leaders in the United States and Turkey share a strong desire to significantly expand U.S.-­‐Turkish trade and investment relations. But they’ve also expressed different views on how to achieve this key goal—with Turkey seeking quick entry to the T-­‐TIP talks and/or near-­‐term FTA talks, while America appears to prefer a more incremental process. Turkey’s view is driven by its fear that—although it is not a party to the T-­‐TIP talks—it will be bound by the outcome and suffer significant economic harm. The United States, on the other hand, has significant incentives to finish hard negotiations with the EU—before adding third countries like Turkey—and insists that its FTAs be comprehensive, covering many sectors beyond goods. The new High Level Committee can provide an ideal forum for advancing the shared goal of expanding U.S.-­‐Turkey trade—but only if America and Turkey strive to accommodate each other’s concerns in working toward common ground solutions. For the United States, this means advancing practical solutions to Turkey’s urgent immediate concerns while developing a timely and credible path for incorporating Turkey into a comprehensive transatlantic trade structure. For Turkey, this means recognizing that, for America, a free trade deal requires not only political will, but also a detailed process involving extensive talks and a convincing case. Deepening U.S.-­‐Turkey economic relations will require sustained work over an extended period by governments, businesses, and other stakeholders. This report 3 offers six concrete recommendations for a plan of action to expand trade and achieve an U.S.-­‐Turkey free trade arrangement: First, in both America and Turkey, it will be vital to mobilize businesses of all sizes and sectors, as well as policy organizations, local and regional officials, and other stakeholders to explain the benefits of expanded U.S.-­‐Turkey trade. It will be particularly important to build support in the U.S. Congress given the pivotal role of Congress in U.S. trade policy. Second, proponents must build a strong supporting case—based on solid data, sound analysis, and compelling stories—that underscores the benefits to both countries and their people of more open bilateral trade. Third, the United States and Turkey must advance measures to address Turkey’s urgent Customs Union concerns. These might include transitional measures in the T-­‐
TIP context that would include some level of Turkish content under T-­‐TIP rules of origin or expand U.S. duty-­‐free treatment for qualifying Turkish goods. Fourth, Turkey will need to make significant progress on addressing key trade issues that are required commitments under the new generation of trade agreements—including Turkey’s levels of IPR protection and devalued exchange rate for pharmaceuticals—and be prepared to fully address bipartisan U.S. concerns on broader issues. It is the position of U.S. Government and industry officials that Turkey should also carefully consider whether certain proposed new measures (such as those relating to preferential regulatory and pricing measures for locally produced medicines, offsets for commercial aircraft purchases, and restrictions on payment services) might run contrary to current international obligations and complicate efforts to achieve a mutually beneficial free trade deal. Fifth, Turkey must consciously build an awareness to negotiate and implement a comprehensive free trade deal. This effort might include a detailed side-­‐by-­‐side-­‐by-­‐
side comparison of Korean’s FTA with Turkey and Korea’s more comprehensive FTAs with the United States and the EU. America and Turkey might also work on intermediate steps that would be building blocks for an eventual FTA, such negotiating an updated Bilateral Investment Treaty. Turkey’s continued progress on its accession to the EU and the modernization of its customs practices would also be vital, as well. 4 Finally—by the end of T-­‐TIP negotiations at the latest—Turkey and the United States must develop practical mechanisms to add Turkey to the new transatlantic trade architecture once Turkey is ready to make the necessary high-­‐standard FTA commitments. These mechanisms might include a “T-­‐TIP+3” process that would add Turkey, as well as Canada and Mexico, to the T-­‐TIP and/or a stand-­‐alone FTA between Turkey and the United States. 5 Pursuing a Shared Vision In November 1963, President Kennedy commemorated the 25th anniversary of the death of Kemal Atatürk, the father of modern Turkey. Kennedy honored Atatürk as one of the 20th Century’s great men and he agreed with Atatürk that Turkey and the United States were “friends now and will be much closer friends in the future.”ii In the five decades since, Turkey and the United States have maintained strong political ties.iii But U.S.-­‐Turkish economic relations are still far less developed than the two countries’ political bonds. Because deeper economic ties have great potential to benefit both nations, America and Turkey have intensified efforts over the past five years to build more robust trade and investment relations.iv America’s decision in 2013 to launch Transatlantic Trade and Investment Partnership talks with the European Union has further underscored the urgency of this effort—and the need to inject even greater energy into deepening bilateral economic ties. As a potentially game-­‐changing trade deal, T-­‐TIP presents both serious risks and major opportunities for Turkey. Turkey’s Customs Union with the EU would require Turkey to extend certain T-­‐TIP tariff cuts to the United States—without any assurance of benefits in return. Failing to include Turkey in a new transatlantic trade architecture would also negatively impact Turkey’s economy and its status as a global economic center. But Turkey’s large and vibrant market, its deep economic integration with the EU, and its growing role as a regional trading hub also make Turkey a very attractive candidate for eventual inclusion in the T-­‐TIP—and/or a parallel U.S.-­‐Turkey free trade agreement. This report highlights the opportunities and challenges for America and Turkey as they pursue the shared vision of Atatürk and Kennedy in the context of 21st Century trade. It reviews the countries’ current trade relations and the many prospects for enhancing economic engagement in ways that could greatly benefit both countries. The report then analyzes the countries’ different perspectives on their common goal of deeper economic integration, and concludes with six concrete recommendations for a plan of action to achieve a U.S.-­‐Turkey free trade arrangement.v 6 U.S.-­‐Turkey Trade and Investment–Growth and Potential Trade and investment between the United States and Turkey is significant and growing. But—as detailed in this report—the U.S.-­‐Turkish bilateral economic relationship still fails to reflect the untapped potential and significant synergies between the world’s 1st and 17th largest economies.vi Growing Trade in Goods. Merchandise trade between the United States and Turkey has increased substantially in recent years. In 2012, two-­‐way trade in goods between Turkey and the United States was $18.8 billion, down slightly from the 2011 record of $19.9 billion. Bilateral goods trade was up 70 percent from 2007 levels and up 185 percent from 2002. (See Table 1).vii Table 1: U.S.-Turkey Bilateral Trade in Goods ($ Billions)
Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
U.S. Exports
12.5
14.7
10.5
7.1
9.9
6.5
5.3
4.2
3.4
2.9
3.1
Source: U.S. Census Bureau
7 U.S. Imports
6.3
5.2
4.2
3.7
4.6
4.6
5.4
5.2
4.9
3.8
3.5
Total Trade
18.8
19.9
14.7
10.8
14.5
11.1
10.7
9.4
8.3
6.7
6.6
As detailed in Appendix 1, major U.S. exports to Turkey include intermediate goods, high-­‐value manufactured items, and energy and farm commodities. U.S. goods exports to Turkey in 2012 were valued at $12.5 billion, an increase of 92 percent over 2007 levels. The United States has maintained a goods trade surplus with Turkey (averaging $5.4 billion) for each of the past six years. (See Table 1). As noted in Appendix 2, Turkey’s U.S.-­‐bound exports include iron and steel mill products passenger cars, apparel, footwear, household goods, and a growing volume of modern manufactured goods. In 2012, U.S. goods imports from Turkey were $6.3 billion, 37 percent over 2007 levels. (See Table 1). Turkey is far below its significant potential as an exporter of U.S-­‐bound goods, however, ranking an anemic 45th and trailing countries like Trinidad and Tobago (41st). Synergies in Services. The United States and Turkey both have significant strengths as service providers and substantial opportunities to collaborate in expanding their services sectors. The United States is the world’s #1 ranked country for both services exports and imports. In 2011, America accounted for 16 percent of world services trade, with services exports of some $580 billion and a services trade surplus of $186 billion.viii Turkey is a growing force in services trade, with 2011 exports of $38 billion (up 11 percent from 2010) and a services trade surplus of $18 billion. As detailed in Appendix 3, Turkey’s global leadership in tourism, transport, construction, and other key services (and significant and growing demand for services in Turkey’s home market) provide major openings for synergies with U.S. service providers. Opening Happiness in 96 Countries
For Coca Cola, Turkey’s large market, favorable location, multicultural outlook, and
ready access to international consumers makes Turkey an ideal management and
production hub. Coke’s Istanbul-based Eurasia and Africa Business Unit oversees the
company’s operations (including its global “Open Happiness” campaign) in almost half of
the world’s countries, ranging from South Africa to Russia. And Turkey is also home to
Coca Cola’s sixth-largest bottler, which operates 22 plants in Turkey, Central Asia, the
Middle East, and Pakistan and serves a customer base of some 360 million consumers.ix
8 A Growing Need for American Investment. Turkey is seeking to become a top-­‐ten global economy by 2023. To achieve this ambitious goal, Turkey needs major new investment for economic development, new infrastructure, and modern health care, information technology, and education.x Turkey’s stock of inward foreign direct investment has grown significantly in the past decade, up from $20 billion in 2001 to $186 billion in 2010—equal to one-­‐
quarter of Turkey’s GDP.xi Analysts attribute this surge in FDI to Turkey’s strong economic growth; the privatization of sectors like banking, energy, and telecom; and Turkey’s liberal legal rules and robust incentives for foreign investment.xii As noted in Appendix 4, the EU provides the bulk of Turkey’s inbound FDI. But, when portfolio and similar investments are excluded and analysts look at FDI in Turkey those results in establishing facilities and supporting new jobs, American companies have the greatest share. General Electric recently announced a $900 million investment commitment in aviation, energy, health care, infrastructure, and transport. Ford is investing $1.2 billion to expand production in Turkey over the next decade. And a Dow-­‐Turkish joint venture will invest $1 billion in new carbon fiber production over the next five years.xiii To meet its aggressive growth goals, Turkey will need to further accelerate incoming investment. To help attract this increased investment, Turkey announced a series of new investment incentives in 2012.xiv Investing in Hospitality . . . and Growth
Hilton Worldwide has been a key player in Turkey’s travel service sector since 1955 and
currently operates 24 hotels across five brands in Turkey. With 21 new hotels in its
development pipeline, Hilton is poised to be the first hotel operator in Turkey to surpass
10,000 rooms. In announcing this milestone, Hilton stressed that it is “incredibly
optimistic about the ongoing potential in Turkey,” noting “Turkey represents a prime
investment opportunity for international companies.”xv
9 Boosting Bilateral Trade and Investment. Since President Obama’s visit to Turkey in 2009, America and Turkey have been working to elevate their economic relations to a level commensurate with their close political ties. In 2009, the countries established a Framework for Strategic Economic and Commercial Cooperation (FSECC), a cabinet-­‐level forum for advancing mutual trade and investment policy objectives. Under the FSECC process, government and business working groups meet regularly to address specific bilateral trade issues and to identify new areas for cooperation.xvi Trade and investment between the two countries is also governed by three legacy agreements: a Bilateral Investment Treaty (in force since 1990), a Double Taxation Avoidance Agreement (in force since 1997), and a Trade and Investment Framework Agreement (signed in 1999).xvii Despite these and other initiatives, there is wide agreement among government and business leaders in both countries that more needs to be done—especially in an environment in which America is pursuing new trade deals with the EU (under T-­‐
TIP) and 11 Asia-­‐Pacific economies (under the Trans-­‐Pacific Partnership or TPP). To that end, President Obama and then Prime Minister Erdogan announced in May 2013 a new High Level Committee to address Turkey’s very urgent concerns about the impact of T-­‐TIP on Turkey and to explore avenues to further enhance bilateral trade and investment—avenues which could well include a U.S.-­‐Turkey free trade deal.xviii Turkey and the European Union–A Complex Partnership Turkey and the EU have been united in a bilateral trade partnership since 1996. Turkey and the EU are linked by a Customs Union and a Preferential Agreement on Coal and Steel covering trade of those products. The Customs Union was originally intended as a temporary arrangement until Turkey joined the EU as a full member. The Customs Union has deepened Turkey’s ongoing economic reforms and enhanced its economic integration with the EU, but it has also created complications, especially in Turkey’s trade negotiations with non-­‐EU countries.xix 10 A Union with the EU. The Customs Union abolished duties on non-­‐agricultural goods (including processed foods) in trade between Turkey and the EU. It also obligates Turkey to adopt (for non-­‐agricultural goods) the EU’s common external tariff, which governs goods trade with third countries, including the United States.xx As explained in Appendix 5, the Customs Union also requires Turkey to substantially harmonize its laws on competition, customs, and intellectual property, and its technical requirements for industrial goods, with those of the EU.xxi More broadly, Turkey has incorporated over 55 percent EU economic legislation into its legal regime.xxii In the EU accession process, Turkey is also aligning key rules with EU rules for many sectors outside the Customs Union, including agriculture and the environment.xxiii As detailed in Appendix 5, under the Customs Union, the EU is Turkey’s #1 trade partner for both exports and imports. The Customs Union provides a major competitive advantage to key Turkish industrial sectors. Turkey’s auto industry, for example, has been transformed from a sector that was highly resistant to trade liberalization to the flagship sector for Turkish exports. And Turkey’s preferential access to the EU has been a magnet for vital foreign investment. Customs Union Complications. But the Customs Union also creates complications for Turkey, most notably by limiting Turkey’s ability to initiate free trade agreement negotiations with countries outside the EU. Under the Customs Union: • Turkey must extend tariff concessions for non-­‐agricultural goods made by the EU to its new FTA partners, without Turkey being assured of any benefits in return; and • At the same time, Turkey is prevented from entering into its own FTA negotiations with third countries, unless the EU first enters into a deal. Moreover, Turkey can lose significant trade opportunities when the EU’s new FTA partners (e.g., Algeria, Mexico, and South Africa) balk at entering into parallel FTAs with Turkey, despite the EU’s use of a “Turkey Clause” urging them to do so. xxiv These negative aspects of the Customs Union, together with the slow and uncertain pace of Turkey’s accession talks with the EU, have placed significant strains on Turkish-­‐EU relations.xxv While the EU recently requested that the World Bank study the functioning of the Customs Union, it has, as yet, been unable ease the one-­‐sided burdens that its FTAs impose on Turkey.xxvi This is why Turkey is following the EU’s T-­‐TIP negotiations with the United States with particular interest and concern. 11 The Benefits of a U.S.-­‐Turkey FTA Joining together in a comprehensive free trade arrangement could be a win-­‐win for the United States and Turkey. For America, expanding trade with a growing and dynamic Turkey could provide a key source of additional economic growth, exports and jobs.xxvii Enhanced U.S. trade relations would enable Turkey to tap into the largely unrealized potential of the large U.S. market, while enhancing Turkey’s growth and development through the transition to the most modern economic and trade rules. We detail below some of the compelling reasons for pursuing deeper U.S.-­‐Turkey trade and investment ties with even greater urgency. Turkey–A Large and Dynamic Market. As detailed in Appendix 6, Turkey has a large and growing domestic market. Turkey has experienced robust economic growth over the past decade, and is poised for continuing growth. Between 2002 and 2011, Turkey’s GDP more than tripled, from $232 billion to $774 billion, and is forecast to reach $1.2 trillion by 2018. Turkey’s ambitious plans for economic development also make it a particularly attractive destination for U.S. exporters and investors—and a key candidate for a free trade deal with the United States. Turkey is a majority middle class country with a population of 75 million. Turkey has seen robust economic growth over the past decade—tripling both of its GDP and GDP per capita. And Turkey is forecast to grow on the order of 5 percent annually for the next 25 years.xxviii Sweeping economic reforms adopted by Turkey after the country’s 2001 economic crisis have been key drivers of Turkey’s strong growth. Turkey’s sound fiscal policies, well-­‐regulated banking system, skilled workforce, and entrepreneurial culture also contribute significantly to the country’s strong and growing economy. Turkey has also implemented rules and incentives (including new incentives in 2012) designed to make Turkey an attractive destination for foreign investment.xxix Turkey’s young population will be a particular source of economic vitality as Turkey moves forward—powering growing economic demand and a strong workforce, and providing revenue for continued investment. (See Appendix 6). 12 Charging Mobile Phones
Turkey’s young, urban, and increasingly prosperous consumers are driving explosive
growth in Turkey’s consumption of modern goods and services. From 2002 to 2012,
Turkey’s broadband Internet subscribers surged from 100,000 to 20 million, its mobile
phone subscribers grew from 23 million to 68 million, and its credit card users expanded
from 16 million to 54 million.xxx
Turkey’s ambitious plans to build and sustain a globally competitive economy could also generate major openings for U.S. trade and investment. Turkey’s privatization of state-­‐owned companies will create tens of billions of dollars in investment opportunities in sectors including banking, energy and telecom. And Turkey’s “Vision 2023” plan calls for massive new investment in infrastructure, education, health, and technology—much of this through public-­‐private partnerships.xxxi Turkey’s rapid growth and development will generate significant new demand for imported goods and services. The IMF forecasts that Turkey’s imports will grow 9 percent annually through 2018.xxxii Even a broad overview of current trade data and projections illustrates Turkey’s significant potential for supporting increased American exports and jobs. Turkey’s surging demand for imported goods has the potential to power tens of billions of dollars in additional U.S. exports and to support tens of thousands of additional U.S. jobs—especially after the conclusion of a mutually advantageous, comprehensive trade deal. (See Appendix 7). Turkey–A Hub for Regional and Global Trade. Turkey’s strategic location and its growing ties with regional neighbors also make Turkey a uniquely attractive hub for regional—and worldwide—trade and investment. A comprehensive trade deal would enable both U.S. and Turkish businesses to better use Turkey as an export platform to sell more of their products and services to the rest of the world. Turkey lies at the confluence of major economies in Europe, Eurasia, the Middle East, and North Africa—economies with a combined GDP of over $25 trillion. Fifty-­‐
six countries are within a four-­‐hour flight from Istanbul. This region is home to 1.5 billion consumers and has an estimated export potential of some $10 trillion.xxxiii Turkey’s ready access to these important markets makes it an ideal site for locating management, production, and distribution operations that serve the broader region—and beyond. A recent survey by Ernst & Young finds that almost half of global business leaders anticipate that Turkey will become an especially important global business hub in the next decade.xxxiv 13 U.S. companies with operations in Turkey also benefit from the country’s strong entrepreneurial tradition and extensive knowledge of neighboring markets. xxxv Turkey is also deepening its traditional regional ties through new trade initiatives, including a growing network of FTAs. (See Appendix 8). From Turkey to the World
Many leading U.S. companies use Turkey as a platform for management, logistics, and
production operations. Microsoft’s Istanbul regional headquarters manages business
operations in 79 countries in Africa and the Middle East—the most diverse of Microsoft’s
six regions. Turkey is a top domestic market for UPS and has huge potential as a
regional delivery hub, with a transport and logistics sector that is growing by 20 percent
annually.xxxvi And 3M is investing $500 million to build a production facility in Turkey to
serve customers in Europe, Russia, the Middle East, and North Africa.xxxvii Turkey’s strategic location also makes it a critical corridor for transport and logistics, and Turkey is diligently working to seize this geographic advantage through an ambitious infrastructure program. By 2023, Turkey plans to complete 27,500 miles of new roads and 8,500 miles of new rail lines; build new bridges on the Bosporus and the Dardanelles; and construct 16 large-­‐scale logistics centers, a new $10 billion airport, and one of the world’s ten largest seaports.xxxviii According to leading logistics firms like UPS, Turkey will also need to increase its commitment to and investment in “soft” infrastructure—such as fully modern customs practices—to maximize the impact of its major investments in physical infrastructure. The Silk Railroad
Global companies like HP are resurrecting ancient Silk Road trade routes between
Western China and Europe—sending half-mile-long freight trains on the 7,000-mile
journey between these major markets.xxxix Turkey’s European and Asian regions have
long had separate rail networks connected only by a rail ferry in Istanbul. With the
recent completion of the Marmaray rail tunnel under the Bosporus, Turkey’s now-unified
rail network will eventually form a key link in a new Silk Road—a continuous rail system
connecting China with the United Kingdom.xl
14 Turkey–Key Opportunities for American Trade. As detailed below, Turkey increasingly wants the products, services, expertise, and investment that America excels at providing. But America will never fully realize the significant potential of Turkey’s market without extensive joint efforts to reduce remaining trade barriers—ideally through a process leading to a comprehensive and mutually beneficial FTA. Manufactured Goods. Turkey’s growing market offers excellent prospects for an array of U.S. manufactured goods—from consumer products to construction and transport equipment. Turkey’s rapidly expanding manufacturing sector, for example, produces sophisticated, value-­‐added goods for both domestic and regional markets. xli U.S. firms have substantial opportunities to provide the parts,subassemblies, and materials (and services and investment) that Turkey needs for its fast-­‐growing production of autos,xlii machinery,xliii plasticsxliv and other products. But U.S. manufacturers frequently complain that Turkey’s regulatory barriers can impede U.S. exports. They note that Turkey often develops and applies regulations in a non-­‐transparent manner, that it often fails to inform the public of proposed or actual changes in rules, and that Turkey’s regulatory process can be unpredictable, with frequent rule changes (many driven by EU harmonization) and an often-­‐inconsistent application of rules.xlv American exporters note that Turkey’s import licensing and document requirements, for example, regularly lead to costly import delays for a wide range of U.S. products.xlvi 15 “The Future is in the Sky” – Kemal Atatürkxlvii
A visionary like Atatürk would be impressed by the rapid growth of Turkey’s aerospace
sector. Five year ago, Istanbul’s Atatürk Airport was smaller than Salt Lake City’s, then
the world’s 50th busiest airport. By 2012, Atatürk had surged to 20th place, and its traffic
was forecast to grow 20 percent in 2013. To handle this torrid growth, Turkey is building
a third Istanbul airport–a new $10 billion facility that will be among the world’s largest,
with six runways, major cargo facilities, 165 jetways, and passenger capacity of 150
million.
In the air, Turkish Airlines is among the world’s fastest growing carriers, growing at 11
percent annually. From its Istanbul hub, it serves over 230 destinations in 103 countries,
and is rapidly adding new destinations. xlviii Over the next decade, Turkey will need
hundreds of new aircraft to meet growing demand. Turkish Airlines has 207 aircraft on
order through 2020, while Pegasus Airlines, Turkey’s low-cost carrier, has orders for 75.
According to U.S. trade officials, Turkey is a $4.5 billion market for civil aircraft and
aircraft parts and a $1 billion market for airport construction and upgrades, and holds
vast potential for a wide range of American aerospace, systems, and services firms.xlix
Farm and Food Products. Turkey has great potential as an export market for American farm products.l Its increasingly affluent population is driving a growing shift from bulk foods toward high-­‐quality, packaged, and prepared foods—a sector in which American producers have major advantages. li And U.S.-­‐origin cotton, soybeans, and rice make up major shares of Turkey’s farm commodity imports.lii But Turkey’s high tariffs and an array of nontariff barriers keep U.S. farm products far short of their significant potential in Turkey. Turkey imposes duties of 40-­‐50 percent on most U.S. farm goods—with duties of over 100 percent on U.S. meats, grain, and dairy products.liii And Turkey’s nontariff barriers include import bans on U.S. meat, beef, and poultry; major difficulties in obtaining required import certificates; and complex biosecurity rules.liv 16 Health Care Products and Services. Turkey’s growing health care sector presents major opportunities for America’s world-­‐leading drug, medical device, and health care services firms. For example, Turkey’s Health Ministry is building 29 massive new health campuses, each with 2,000 to 4,000 beds. And Turkey is an increasingly important destination for medical tourism, providing high-­‐quality and lower-­‐cost medical care to patients from the Middle East and Europe.lv U.S. health care exporters report that they can face serious barriers in Turkey. A major concern and trade barrier is the devalued exchanged rate that is being used for pharmaceuticals in Turkey. In addition, U.S. trade officials note, for example, that Turkey’s state health care reimbursement process lacks transparency and predictability and mandates high discounts, seriously limiting the ability of U.S. drug and device firms to offer their innovative products in Turkey.lvi U.S. government and industry officials cite other impediments, including the slow pace of Turkey’s required inspections for Good Manufacturing Practice certificates, and unclear IPR protections for test data for drug marketing approvals.lvii Turkey’s Device Decisions
DePuy Synthes is a leading U.S.-based provider of medical implants, devices, and
services for orthopedic and neurological medicine. DePuy recently closed its 25-person
spinal care unit in Turkey, noting that the Turkey’s non-transparent and unreasonable
reimbursement policies have made it impossible for DePuy—and other global firms—to
compete with lower-quality, lower-standard products from China and India. DePuy notes
that it may be compelled to exit Turkey’s trauma care sector for similar reasons.lviii
Energy, Environmental, and Other Innovative Products. Turkey’s booming energy sector presents some of the most significant opportunities for world-­‐leading American products, technologies, and services. Turkey’s electricity demand is expected to double by 2023. To meet this vital need, Turkey has ambitious plans to expand its energy production, to focus on energy efficiency through innovative technologies like smart grids, and to exploit its significant potential for solar, wind, hydro, and geothermal power. As Turkey adopts stricter environmental rules, it also increasingly needs foreign environmental expertise. For example, Turkey offers major prospects for U.S. products and expertise in upgrading its drinking and wastewater facilities.lix Additionally, Turkey is a growing market for a wide range of other innovative U.S. products, including entertainment, software and information and communications technologies. Turkey’s “Fatih Project,” for example, will provide schools with smart boards and 2 million tablet computers, worth some $6 billion over four years.lx 17 But U.S. officials note that insufficient respect for the intellectual property rights that protect American innovation can be a problematic issue in Turkey. As a result, they have placed Turkey on the U.S. IPR “Watch List” based on serious deficiencies in its IPR regime.lxi Among other things, the U.S. Trade Representative has noted that Turkey has serious problems with: (i) copyright piracy, counterfeit goods, and online piracy; (ii) ensuring the legal use of software, including licensed use by Turkey’s government; and (iii) sub-­‐par IPR enforcement due to judicial delay and inadequate resources.lxii Serving Turkey’s Services Sector. Turkey’s service economy also holds vast opportunity for other competitive American products and services. As noted above, Turkey is a fast-­‐growing market for transport and logistics and has significant potential in banking and insurance services. Turkey’s globally competitive contractors need specialized American products, services, and expertise as they build massive new infrastructure, modernize Turkey’s housing stock, and build major projects in neighboring countries. And new laws that permit Turkish business to conduct business electronically (e.g., electronic invoicing, electronic bookkeeping, and e-­‐money services) provide key openings to leading American companies in communications, data, finance, software, and other sectors. But U.S. services suppliers note that Turkey’s regulatory barriers can impede their ability to support Turkey’s services sector. Turkey’s new Payment Service Directive, for example, requires that all infrastructure used to process domestic payment transactions (including necessary hardware and software) be located in Turkey. U.S. firms point out that this rule will require them to needlessly replicate their centralized, global infrastructure and limit their ability to provide cost-­‐
effective services through innovations like cloud computing. They also believe that the rule will not enhance individual privacy and that it sets an unhelpful precedent for restricting the cross-­‐border data flows that are vital for all sectors in the modern global economy. 18 Honeywell: High on Turkey’s High Growth
Turkey is a key target in Honeywell’s strategic focus on high-growth regions. lxiii Its
diverse and expanding economy and growing role as a regional supplier make Turkey a
key consumer—and important export platform—for a wide array of Honeywell products
and technologies. Honeywell makes what Turkey needs in sectors ranging from
aerospace (avionics and airport systems), to automotive (turbochargers), construction
(building automation, emergency, fire, lighting, and ventilation systems), energy (energy
management and smart grid systems, and solutions to enhance the productivity, safety,
and security of refineries, petrochemical complexes, and pipelines), health care (nurse
call and telehealth systems), and manufacturing (industrial controls and processing
technologies).lxiv
Opportunities for Turkey in the American Market. Turkey’s U.S.-­‐bound tradelxv and investment,lxvi while growing moderately, is still far short of its great potential, especially for Turkey’s increasingly sophisticated manufacturing sector. Less than 3 percent of Turkey’s outbound trade and outbound investment is destined for the United States. As noted, Turkey ranks 45th as a goods exporter to the United States—
trailing countries like Trinidad and Tobago (ranked 41st)—and Turkey invests almost as much in Luxembourg as it does in the United States.lxvii America is a relatively open market for Turkish exports, with tariffs averaging less than 4 percent on the categories of goods imported from Turkey. Over 64 percent of U.S. imports from Turkey are duty free.lxviii Turkish traders and investors do, however, face a variety of trade, regulatory, and practical barriers in the American market. Turkish exporters and investors—
especially Turkey’s small and medium enterprises (SMEs)—are confronted by serious regulatory barriers in the United States, including complex post-­‐9/11 security rules, U.S. trade remedy decisions, product standards that can differ significantly from EU rules, and a range of business and licensing regulations.lxix Turkish farm products must also navigate U.S. quotas and farm support barriers, while Turkey’s service providers and investors face restrictions in sectors including transport, finance, and communications. (See Appendix 9). A mutually beneficial trade deal with the United States could eliminate many of these key trade barriers. Additionally, as recommended in a joint report by the U.S. Chamber, Turkey can take related steps to help it prosper in the American market, including more targeted export promotion strategies, better logistics and marketing, and products that better meet U.S. tastes and standards. lxx These important initiatives could enable Turkey to boost its trade significantly with the lucrative U.S. market. 19 Bridging the Gap: Deepening U.S.-­‐Turkey Trade Relations Same Goal, Different Perspectives. Government,lxxi business,lxxii and thoughtlxxiii leaders in both America and Turkey see great potential in expanding bilateral trade and investment and strongly support raising U.S.-­‐Turkish commercial relations to the same high level as the countries’ historically strong political ties. But, while the two countries share this important goal, they’ve often expressed different views on how best to achieve it. Turkey, for example, has urged quickly joining the T-­‐TIP talks and/or the prompt opening FTA negotiations with the United States, while U.S. statements suggest a more incremental process.lxxiv These varied views reflect the different perspectives that the two countries bring to trade and trade deals. Understanding these differences will be critical as the two countries seek common ground in the new High Level Committee on addressing the impacts of T-­‐TIP on Turkey and on expanding bilateral trade. Turkey’s Perspective. Turkey’s approach to expanding U.S. trade—and Turkey’s significant sense of urgency—is driven by a number of factors. As noted previously, Turkey is not a partner in the T-­‐TIP negotiations but would be bound by the outcome. Turkey is concerned that the T-­‐TIP negotiations will not adequately address its legitimate interests, especially given the ambitious pace of the T-­‐TIP talks and the slow and uncertain pace of Turkey’s EU accession process. lxxv Turkey will lose out economically if it is excluded from a transatlantic trade deal. A study for the German Government estimates that a comprehensive T-­‐TIP that excludes Turkey would decrease Turkey’s real income by 2.5 percent (or about $20 billion.)lxxvi The EU Customs Union would require Turkey to cut duties on a wide range of U.S.-­‐origin industrial goods—without the assurance of any benefits in return. And liberalized U.S.-­‐EU trade could divert existing trade, investment, and production away from Turkey and make it more difficult for Turkey to compete for new business in both the United States and EU. Finally, Turkey’s approach to trade expansion is colored by its experience with trade agreements. Turkey’s traditional approach generally limited its trade agreements to trade in goods, especially industrial goods. Turkey is now negotiating broader trade deals that include services and investment, as is the case with its South Korean FTA. This reflects Turkey’s changing development needs, which now dictate that Turkey seek to conclude comprehensive and broad FTAs. 20 The U.S. Perspective. America’s approach to transatlantic trade and Turkey is driven by different factors. First, America stands to benefit substantially from T-­‐TIP.lxxvii But it also knows that reaching a comprehensive T-­‐TIP deal will not be easy, due to major differences with the EU on issues like regulation and agriculture. U.S. negotiating resources are also stretched thin, due to budget shortfalls and the demands of negotiating major deals covering the Atlantic, the Pacific, and key multilateral issues. As a result, the Obama Administration—and many in Congress and the business community—want to focus on concluding hard T-­‐TIP negotiations with the EU before adding (or doing parallel FTAs with) third countries like Turkey.lxxviii Second, while Administration officials have repeatedly acknowledged Turkey’s special Customs Union concerns, they also face pressures to include other countries in the transatlantic talks—especially Canada and Mexico.lxxix Given the high degree of regional economic integration under NAFTA, many American companies are especially concerned that excluding Canada and Mexico from T-­‐TIP would very significantly complicate their business operations. Finally, America’s approach to FTAs differs significantly from Turkey’s. U.S. trade deals have long been comprehensive. (U.S. FTAs, for instance, cover a long list of topics beyond tariffs on goods—including digital trade and customs modernization—and seek to cover emerging non-­‐tariff barriers like “forced localization” rules.) Because the President and Congress share authority over trade under the U.S. Constitution, there is also extensive consultation with Congress before and during negotiations. And America commonly holds lengthy preparatory talks with potential FTA partners before making a decision to open FTA negotiations. South Korea FTA: Same Name, Different Deals
Both the United States and Turkey have an FTA with South Korea. But the two
agreements are very different. Turkey’s two-part deal with Korea consists of an
agreement to substantially eliminate tariffs on goods, together with a separate
“framework agreement” for later negotiations in areas such as services and investment.
The Korea-U.S. FTA (KORUS), on the other hand, is a much more comprehensive
deal—covering not only goods, services, and investment, but also establishing new rules
in areas including e-commerce, farm barriers, financial services, government contracts,
healthcare, technical barriers, and telecom.lxxx The EU’s Korea FTA is similarly detailed.
21 Cooperating in the High Level Committee. The new High Level Committee can provide an ideal forum for advancing the shared goal of expanding U.S.-­‐Turkey trade. But for the Committee to succeed, America and Turkey must each accommodate the other’s concerns as they work to find common ground. The United States must address Turkey’s urgent concerns about the T-­‐TIP and its strong desire to be a full partner in transatlantic trade. This will require America to advance concrete solutions to the real and immediate problems posed by the T-­‐TIP and the Customs Union, while working with Turkey to develop a credible and timely path for eventually incorporating Turkey in a comprehensive trade arrangement. On the other hand, Turkey must recognize that modern, comprehensive trade agreements with the United States require not only political will, but also a highly detailed process. Like the EU with T-­‐TIP and Canada, Japan, and Mexico with the TPP, Turkey must be prepared for detailed preliminary discussions on the full range of bilateral trade issues, and must build a convincing case and a strong coalition in support of its inclusion in a new free trade deal. And like these countries, Turkey must aggressively seize the opportunity to make progress toward freer trade with the United States. Turkey should not view the High Level Committee as “yet another committee,” but as the main route toward success.lxxxi Off to a High Level Start
The T-TIP talks grew out of the EU-U.S. High-Level Working Group on Jobs and Growth,
established in November 2011, and extensive earlier efforts. The Working Group’s initial
task was to examine potential policies for improving bilateral trade, investment, and
regulatory cooperation. After this analysis, it considered options for implementing its
policy proposals and ultimately recommended moving forward with FTA negotiations.lxxxii
Recommendations for a Plan of Action Deepening U.S-­‐Turkey trade relations will require sustained effort over an extended period by governments, businesses, and other stakeholders. We offer below six concrete recommendations for a plan of action to expand bilateral trade and achieve a mutually beneficial, timely, and comprehensive free trade arrangement. Building a Base of Support. First, as America and Turkey begin their work through the High Level Committee, advocates for U.S.-­‐Turkey trade must build a strong and diversified base of support for an eventual free trade deal. 22 In both the United States and Turkey, it will be vital to mobilize businesses of all sizes and from all economic sectors, as well as policy organizations, local and regional officials, and other stakeholders to explain how more open trade can significantly benefit both countries. Educating Members of Congress and building Congressional support will be especially important, due to the pivotal role of Congress in U.S. trade policy.lxxxiii Building a Strong Case. Second, advocates will also need to build a solid case for deepening bilateral trade relations. It will be important to develop additional data and analysis on the significant benefits to both countries of a comprehensive trade arrangement and on the negative impacts that the T-­‐TIP could have on Turkey under the Customs Union. Supporters will also need to explain how a U.S.-­‐Turkey trade deal can advance the broader U.S-­‐Turkey strategic relationship, including its importance in a global economy in which all major players are actively seeking new trade links.lxxxiv But data and diplomacy will not be enough. It will also be vital to tell stories that explain in straightforward, relatable ways how expanded bilateral trade supports key values, and benefits companies, communities, and citizens in both countries.lxxxv Finally, supporters will also need to educate business and the public about the commitments required under modern FTAs. While a comprehensive FTA can be expected to bring very significant benefits to both countries, any trade deal will also require trade-­‐offs, especially for highly protected sectors. Getting Invited to the TPP Party
Canada, Mexico, and Japan are America’s #1, #3, and #4 trading partners and each has
a long history of economic engagement with the United States.lxxxvi But it was neither
easy nor automatic for these countries to land a U.S. invitation to join the TPP talks.
Over many months, government and business leaders from each country (and the
United States) undertook carefully orchestrated efforts to make their case to the Obama
Administration, Congress, and U.S. stakeholders. They explained how their country’s
participation in the TPP would aid the U.S. economy and support key U.S. negotiating
objectives. Government officials also engaged in detailed talks with their U.S.
counterparts on trade irritants of particular concern to the United States.lxxxvii After over a
year of talks, for example, Japan agreed to a series of confidence-building measures on
autos and insurance and to an agenda for parallel bilateral talks on key trade
barriers. lxxxviii Only after these intensive efforts did the Obama Administration notify
Congress and begin the formal process of admitting these key allies to the TPP talks.
23 Addressing Turkey’s T-­‐TIP Concerns. Third, Turkey must extensively and very seriously tap the U.S. offer to consult closely in the High Level Committee, with a particular focus on developing timely and practical solutions to Turkey’s most pressing T-­‐TIP concerns. Solutions might include transitional measures that could be implemented in advance of a comprehensive bilateral trade agreement, such as T-­‐TIP provisions that would include some level of Turkish content under T-­‐TIP rules of origin or expanded U.S. duty-­‐free treatment for qualifying Turkish goods. Possible measures might include: • T-­‐TIP provisions that would count non-­‐agricultural goods originating in Turkey and covered by the Customs Union as originating goods under the T-­‐
TIP;lxxxix • T-­‐TIP provisions allowing specified percentages of Turkish content to be cumulated with U.S. and EU content under T-­‐TIP rules of origin;xc and/or • Creation of a U.S. Qualifying Industrial Zone program for Turkey (like the QIZ program for Egypt, Jordan, and the West Bank in conjunction with the U.S.-­‐
Israel FTA) that would afford duty-­‐free treatment to qualifying Turkish products (including products made with inputs from certain neighboring countries) to offset Turkey’s required Customs Union concessions.xci Building Confidence by Addressing Issues. Fourth, Turkey must make significant progress in the High Level Committee to resolve U.S. concerns about Turkey’s barriers to U.S. trade and investment. Other countries seeking a comprehensive FTA with the United States have, for example, demonstrated their good faith by taking unilateral action to address trade impediments that are especially problematic for the United States. Turkey will need to take a similar approach. The U.S. Trade Representative’s (USTRs) annual National Trade Estimate (NTE) report—and similar reports on technical, farm, and IPR barriers—detail the most pressing U.S. concerns with Turkey’s trade policies. The IPR report, for example, contains a series of specific legislative reforms that the United States has proposed that Turkey adopt to address continuing IPR concerns.xcii 24 It will be equally vital that Turkey continue forward progress toward a comprehensive trade deal by assuring that its new laws and rules meet high international standards and are consistent with expected FTA requirements. Recently introduced legislation in the U.S. Congress, for example, highlights key priorities that Congress would require in future U.S. FTAs. Among other key priorities, the bill would require that trading partners (i) protect intellectual property at levels similar to U.S. law, (ii) eliminate “localization” rules that condition trade and/or provide regulatory advantage to products produced in local facilities or assets in a country, (iii) refrain from rules that impede digital trade or restrict cross-­‐border data flows, and (iv) avoid using exchange rate practices to gain an unfair competitive advantage.xciii U.S. firms point to a number of recent Turkish laws and rules that are potentially inconsistent with these priorities and could seriously complicate FTA negotiations. They note, for example, that: • Turkey has not adjusted its exchange rate for pharmaceuticals since 2011, though Turkish laws require an adjustment in line with market rates. •
Proposals that Turkey mandate offsetting local purchases as a condition for commercial aircraft sales would constitute a “localization” trade barrier;xciv and •
Turkey’s Payment Service directive (and its mandate for local computer infrastructure) would impede digital trade and cross-­‐border data flows. To prevent new laws from complicating trade negotiations, Turkey should, among other things, require an assessment of the impact of proposed laws and rules on future trade with the United States. And it should work to amend new legal restrictions that are inconsistent with modern trade standards. 25 Lessons from the Marshall Plan
The Marshall Plan is a compelling story of the great things that America and Turkey can
accomplish working together. Between 1948 and 1952, America provided $225 million in
aid to Turkey. This aid—and the hard work of the Turkish people—led to vast progress.
The Marshall Plan rapidly modernized Turkey, increasing the number of farm tractors
from 2,200 to 26,000 and expanding Turkey’s all-weather roads from 380 to 10,000
miles. It upgraded Turkey’s mines, ports, and power generation; helped train a
generation of farmers and engineers; and catalyzed rapid economic growth.xcv
But achieving all of this was far from easy. Turkey’s leaders worked tirelessly to remind
America of its heavy burdens in defense of the West, while U.S. leaders had to adapt the
Marshall Plan—designed to rebuild war-torn nations—to a Turkey spared the ravages of
war. And government and business leaders also made extraordinary efforts to convince
a skeptical U.S. Congress of the Marshall Plan’s great promise.xcvi
America—especially the U.S. Congress—also frequently requires potential FTA partners to address issues that go well beyond trade and economic relations.xcvii Congressional and Administration officials will undoubtedly insist that, for Turkey to make progress on deepening bilateral trade and investment, it must be prepared—at the very outset—to address bipartisan U.S. concerns regarding Turkey. Building Turkey’s FTA Capacity. Fifth, it will also be critical for Turkey to reinforce its capacity to negotiate and implement a comprehensive trade deal. This process might begin with a detailed side-­‐by-­‐side-­‐by-­‐side comparison of Korea’s FTA with Turkey and Korea’s much more comprehensive FTAs with the EU and the United States.xcviii (Similarly, it would also be important to review new negotiating objectives contained in proposed U.S. trade promotion legislation.xcix) This exercise would help Turkey identify the many critical new commitments that it would likely need to make to join a new transatlantic trade architecture.c Businesses in both countries must play a leading role in this effort. 26 America and Turkey might also pursue intermediate steps in areas that could furnish key building blocks for a comprehensive free trade arrangement, in line with Turkey’s existing commitments under the Customs Union with the EU as well as with its prospective talks to renew it. These areas could include: (i) negotiating a new Bilateral Investment Treaty (BIT) to lock in Turkey’s recent investment reforms and to add modern U.S. BIT provisions in such areas as transparency and state-­‐owned enterprises,ci (ii) Turkey’s accession to the Government Procurement Agreement (GPA);cii and (iii) intensifying cooperation in global talks on services, environmental products, and technology goods. Additionally, a comprehensive trade agreement should also require that Turkey employ the most modern and efficient customs practices. To assure this, Turkey should continue to make progress in updating its customs rules by, for example, allowing for binding advance rulings, accepting and processing electronically the data required to release shipments, and establishing a de minimis regime. And it will be vital for Turkey to continue to pursue aligning its relevant legal rules with those of the EU, as this would facilitate the negotiation of any comprehensive agreement with the United States. Building Business Capacity
To expand bilateral trade, the U.S. and Turkish business sectors must redouble efforts to
build the capacity of their companies—in areas including entrepreneurship and
innovation—to succeed in both markets. Without these vital business-led efforts,
exporters and investors will be ill equipped to seize the many opportunities that a
comprehensive, mutually beneficial U.S.-Turkey trade deal would create.ciii
Charting a Course for a Comprehensive Trade Deal. Finally, by the end of the T-­‐
TIP negotiations at the latest, Turkey and the United States should agree on a way forward to ensure that Turkey remains firmly embedded in the transatlantic trade structure. Among other things, this will require addressing Turkey’s most urgent concerns, while also ensuring that Turkey commits to and prepares for high-­‐
standard FTA commitments. 27 There are two primary options for achieving this vital goal. Option #1 would establish a formal “T-­‐TIP+3” process that would bring Turkey, Canada and Mexico into a second T-­‐TIP round. This round would incorporate the “+3” countries into the T-­‐TIP structure while addressing bilateral trade issues among all participants. As an initial step in this “+3” process, the EU and the United States might agree to consult more extensively with the T-­‐TIP candidate countries and their stakeholders on the current talks and on related bilateral issues. Option #2 would conclude a separate, comprehensive U.S.-­‐Turkey FTA following the conclusion of any T-­‐TIP agreement between the United States and the EU. Under either option, mutual confidence, dedication, hard work, and cooperation will be the keys to success. U.S.-­‐Turkey High-­‐Tech Partnerships Turkey has emerged as a large and diversified manufacturing hub. Turkey is at a critical juncture in its transformation from an efficiency-­‐driven economy to an innovation-­‐driven economy, in which active policies to promote partnerships with American companies is crucial. This collaboration calls for active intervention in matchmaking for joint technology development projects. A matchmaking mechanism for joint product development will provide the necessary momentum which in return will pave the way for Turkish and American companies to have enhanced market access in both countries. A Turkish–American Industrial Research and Development Foundation could serve both countries. There are various options for structuring and financing such a foundation as a non-­‐profit legal entity. The board of the Foundation could include an equal number of representatives from the Government of Turkey and the Government of the United States, as well as business leaders from the private sector, implementing existing “best practices”. 28 Achieving a Shared Vision Kemal Atatürk was a farsighted leader who brought centuries of change to Turkey in a few short decades. Atatürk was impatient for change, but knew that lasting reform required hard and consistent work. President Kennedy also combined foresight with practical endeavor. He set ambitious goals and launched tangible, long-­‐term efforts that reduced the threat of nuclear war, placed a man on the Moon, and set key templates for U.S. trade policy. America and Turkey have a unique opportunity to build upon the shared vision of Atatürk and Kennedy—by forging stronger economic ties through a modern, comprehensive free trade agreement. Bringing this vision to reality would reinforce the strong bonds of friendship between America and Turkey—while bringing significant benefits to both countries and their people. 29 Appendix 1: U.S. Goods Exports to Turkey In 2012, Turkey was America’s 26th largest export destination, and the United States accounted for almost 6 percent of Turkey’s goods imports (up from 4.8 percent in 2007).civ Major U.S. exports to Turkey include intermediate goods (scrap iron and steel, and chemicals); high-­‐value manufactured goods (aircraft, aircraft parts, industrial machinery, and defense items); petroleum products and coal; and farm commodities (cotton, soybeans, and nuts). (See Table 2). Table 2: Top 10 U.S. Exports to Turkey—2012
Product Category
Steelmaking & Ferroalloying Materials
Civilian Aircraft, Engines, Parts
Petroleum & Products, Excl. Natural Gas
Chemicals, Excl. Medicinals and Food Additives
Coals & Related Fuels
Military-type Goods
Industrial & Service Machinery, n.e.s.
Cotton, Incl. Linters-Raw
Soybeans & Other Oil Seeds & Food Oils
Paper & Paper Base Stocks
Subtotal
All Other Categories
Total U.S. Goods Exports to Turkey
Value (Millions $)
2,511
1,330
1,059
778
751
684
605
589
542
381
9,230
3,297
12,527
Source: U.S. International Trade Commission Dataweb. 30 Appendix 2: U.S. Imports from Turkey Turkey accounts for less that 0.3 percent of U.S. goods imports and is America’s 45th largest source of goods imports, trailing such countries as Iraq (25th), South Africa (40th) and Trinidad and Tobago (41st).cv The United States is Turkey’s 6th largest export partner, accounting for 2.8 percent of Turkey’s exports.cvi Turkey’s U.S.-­‐bound exports include traditional, labor-­‐intensive products (apparel, footwear, rugs, and linens); as well as food products (such as processed fruit) and building materials (especially building stone). A significant and growing volume of Turkey’s exports to the United States consists of more sophisticated manufactured products—iron and steel, vehicles, industrial machinery, and aircraft and parts. Turkey’s passenger vehicle exports, for example, which were nonexistent in 2008, accounted for over a half-­‐billion dollars in U.S. imports in 2012.cvii (See Table 3). Table 3: Top 10 U.S. Imports from Turkey—2012
Product Category
Iron & Steel Mill Products, Semifinished
Apparel, Footwear & (Nondurable) Household
Goods
Passenger Cars, New & Used
Other Agricultural Foods
Household Goods
Industrial & Service Machinery, n.e.s.
Textile Supplies & Related Materials
Civilian Aircraft, Engines & Parts
Unfinished Building Materials
Imports, n.e.s.
Subtotal
All Other Categories
Total U.S. Goods Imports from Turkey
Value (Millions $)
645
606
558
380
351
330
313
312
277
246
4,018
2,152
6,170
Source: U.S. International Trade Commission Dataweb.
31 Appendix 3: Turkey’s Services Trade Tourism (“travel services”) accounts for 60 percent of Turkey’s services exports, and the United States is Turkey’s #3 market (after the EU and Russia) for travel services. Turkey is also a leading and fast-­‐growing global exporter of personal, cultural, and recreational services (which include health care and education); construction services; and transport services. (See Table 4).cviii Table 4: Turkey’s Global Rankings and Growth in Key Services Exports—2011cix
Service Category
Personal, Cultural, & Recreational
Construction
Travel
Transportation
Global Rank
#4
#7
#8
#12
Growth 2010-11 (%)
38
12
9
15
Source: World Trade Organization. (EU countries aggregated as a single exporter.)
Turkey’s globally competitive construction firms could benefit significantly from America’s strength in the engineering and design of energy efficiency, environmental, and security solutions.cx And America’s iconic hotel properties and world-­‐leading logistics firms are also well positioned to benefit from Turkey’s strong growth in the travel and transportation sectors. At the same time, there is still significant under-­‐penetration of banking and insurance services in Turkey’s economy. (The WTO, for example, ranks Turkey 61st globally in providing domestic bank credit and 73rd in insurance penetration.cxi) These unmet needs, together with Turkey’s plans to make Istanbul a global finance center, also present significant opportunities for American and Turkish financial services firms to grow together. 32 Appendix 4: U. S Investment in Turkey Investments originating in the European Union account for 75 percent of Turkey’s total inbound FDI stock, while U.S.-­‐originated investments account for only 8 percent.cxii But, when portfolio and similar investments are excluded and analysts look at FDI in Turkey that results in establishing facilities and supporting new jobs, American companies have the greatest share. According to a survey by Ernst and Young, between 2007 and 2012, America’s share of project-­‐related investment decisions in Turkey increased from 17.5 to 28.4 percent.cxiii (See Table 5). Table 5: FDI Projects in Turkey by Origin Countrycxiv
Source: Ernst & Young.
Country
United States
Germany
Japan
Italy
United Kingdom
China
Switzerland
Projects (#)
2012
27
16
7
6
6
3
3
Share (%)
28.4
16.8
7.3
6.3
6.3
3.2
3.2
33 Projects (#)
2007-12
86
64
19
24
26
8
14
Share (%)
21.8
16.2
4.8
6.1
6.6
2.0
3.5
Appendix 5: Turkey-­‐European Union Trade In 2012, bilateral goods trade between Turkey and the EU was about $158 billion, with a goods balance of about $36 billion in the EU’s favor and a services trade balance of about $7 billion favoring Turkey. The EU was Turkey’s #1 export and import partner for goods, while Turkey was the EU’s #5 destination for exports and #7 source of imports.cxv Turkey’s primary exports to the EU consist of transport equipment and machinery, clothing and textiles, food products, and other manufactured goods. The EU’s sales to Turkey are also led by transport equipment and machinery, and include chemicals, fuels, and other manufactured items.cxvi In recent years, there has been a significant shift in Turkey’s trade away from the EU, both as a result of slow growth in Europe and Turkey’s increasing trade with its Middle East neighbors, Russia, and China. Between 1999 and 2007, for example, over 55 percent of Turkey’s goods exports went to the EU. Turkey’s EU-­‐bound trade plummeted to 39 percent in 2008 and further declined to 29 percent in 2012. cxvii Business and trade analysts expect this trend to continue.cxviii Turkey’s Customs Unions with the European Union requires Turkey to harmonize its laws on competition, customs, and intellectual property, and its technical requirements for industrial goods, with those of the EU.cxix Turkey has, for example, implemented 23 EU directives on industrial products, which cover an estimated 70 percent of manufactured goods imported into Turkey.cxx More broadly, Turkey has incorporated over 55 percent EU economic legislation into its legal regime.cxxi Standardizing Turkey’s Industrial Standards
Turkey has adopted key EU industrial directives, including directives on:
• boilers
• lighting
• radio/telecom
equipment
• construction
• machinery
• refrigerators
equipment
• medical devices
• electromagnetic
• toys
• noise emissions
compatibility
• watercraft
• personal
• elevators
protective
• explosives
equipment
• gas appliances
As a result of these and other harmonization efforts, U.S. government and business
officials report that most U.S. industrial products that conform to EU technical standards
and bear the EU’s “CE” mark should also meet Turkey’s own standards.cxxii
34 Appendix 6: Turkey’s Dynamic and Growing Domestic Market Turkey has experienced robust economic growth over the past decade, and is poised for continuing growth. (See Table 6). Between 2002 and 2011, Turkey’s GDP more than tripled, from $232 billion to $774 billion, and is forecast to reach $1.2 trillion by 2018. The country’s per capita GDP has similarly surged, growing from just over $3,500 in 2002 to almost $10,500 in 2011, and is projected to reach almost $15,300 by 2018.cxxiii Turkey’s GDP ranks fifth among major emerging economies. (Table 7). Table 6: Projected Average Annual Growth in Real GDP: Turkey and Selected
Economies (2014-2018)
Economy
China
Vietnam
Turkey
Brazil
Korea
Russia
Mexico
United States
Euro Area
Japan
Annual GDP Growth (%) (2014-18)
8.44%
5.38%
4.28%
4.14%
3.98%
3.66%
3.32%
3.24%
1.46%
1.2%
Source: International Monetary Fund, World Economic Outlook Database, April 2013
35 Table 7: Ranking by GDP (Billions $): Turkey and Major Emerging Economies
2000 2005 2012 2015 GDP Rank GDP Rank GDP Rank GDP Rank Mexico 787 1 849 2 787 1 1107 4 Brazil South Korea 769 2 882 1 769 2 1227 2 678 3 845 3 678 3 1191 3 India 598 4 833 4 598 4 1632 1 Turkey 386 5 482 5 386 5 712 5 Poland 261 6 304 6 261 6 435 7 Indonesia South Africa 227 7 286 7 227 7 508 6 205 8 247 8 205 8 338 8 Thailand 138 9 176 9 138 9 257 9 Israel 125 10 139 12 125 10 206 Source: TEPAV and Economist Intelligence Unit. (GDP at 2005 prices.) 12 Turkey’s 75-­‐million-­‐person population ranks sixth among major emerging economies. (Table 8). Table 8: Population (Millions) and Rank: Turkey and Major Emerging Economies
2000 2005 2015 Population Rank Population Rank Population Rank Population Rank India 1004.12 1 1093.56 1 1220.00 1 1274.00 1 Indonesia 213.83 2 228.90 2 248.20 2 255.80 2 Brazil 169.80 3 180.28 3 194.70 3 199.80 3 Mexico 99.93 4 106.20 4 114.98 4 118.80 4 Philippines 81.22 5 90.44 5 103.80 5 109.50 5 Turkey 65.67 6 69.66 6 74.70 6 76.68 6 Thailand 62.40 7 65.11 7 68.80 7 70.54 7 South Africa 44.85 9 48.23 8 52.39 8 53.49 8 South Korea 47.01 8 48.14 9 50.00 9 50.20 9 Colombia 40.56 10 10 50.12 10 43.84 10 48.32 Source: TEPAV and UN Population Statistics. 36 2012 Turkey’s young population will be a particularly important source of growth in the coming decades. Half of Turkey’s current population is under age 29, and a third is under 15.cxxiv And with 8.3 working-­‐age people for each retiree, Turkey will collect favorable demographic dividends for years to come. cxxv By the late 2030s, for example, Turkey will still have five workers for every retiree, while Japan and Germany will have less than two.cxxvi (See Table 9). Table 9: Key Demographic Indicators: Turkey and Selected Economiescxxvii
Country
Turkey
France
Germany
Italy
Japan
Korea
United States
Median
Age (Yrs.)
29.2
40.6
45.7
44.2
45.8
39.7
37.2
Working Age (20-64) Persons
per Each Retirement Age (65+)
Person
8.3
3.4
2.9
3.0
2.5
5.6
4.5
Sources: CIA World Factbook, OECD.
37 Appendix 7: Turkey’s Potential to Support U.S. Exports and Jobs A detailed economic analysis of the potential impacts of a U.S.-­‐Turkey free trade arrangement would depend on a great many variables—including the specific sectors and commitments covered in any eventual agreement—and is beyond the scope of this report. But even a broad overview of current trade data and projections illustrates Turkey’s significant potential for supporting increased American exports and jobs. In 2012, U.S. goods exports to Turkey were $12.5 billion and U.S. goods accounted for about 6 percent of Turkey’s overall goods imports. cxxviii For 2012, the U.S. Commerce Department estimates that each $1 billion in exports supported about 5,000 U.S. jobs, cxxix meaning that 2012 U.S. exports to Turkey supported about 60,000 U.S. jobs. The International Monetary Fund projects that the volume of Turkey’s goods imports will expand rapidly—at an average annual rate of almost 9.9 percent—
between 2012 and 2018.cxxx Based on these forecasts, the value of Turkey’s goods imports would surge—in constant 2012 dollars—from $236 billion in 2012cxxxi to $415 billion in 2018. If the United States maintains its current 6 percent share of Turkey’s 2018 import market for goods—hardly a given in the highly competitive global economy—
America’s 2018 goods exports to Turkey would be almost $25 billion (in constant 2012 dollars). Based on the 2012 ratio of 5000 jobs per $1 billion of exports, those 2018 goods exports would support about 125,000 U.S. jobs—an additional 65,000 over current levels. (And growing U.S. services trade with Turkey, which is not included in this data, would support significant further exports and jobs.) A comprehensive FTA with Turkey would significantly open Turkey to additional U.S. exports and would provide a major boost to U.S. efforts to maintain and expand America’s share of Turkey’s imports. Based on the foregoing projections, for every 1 percent increase in the U.S. share of Turkey’s 2018 goods imports, the value of American exports would increase by over $4 billion (in 2012 dollars) and support (based on 2012 ratios) about 20,000 additional jobs. Gaining a 10 percent U.S. share of Turkey’s goods imports, for example, would result in over $40 billion (in 2012 dollars) in U.S. exports in 2018, supporting some 200,000 U.S. jobs. 38 Again, this exercise is far from a detailed economic analysis of the impact of expanded trade with Turkey. But even this broad overview of trends in goods trade with Turkey illustrates Turkey’s substantial potential to support growing American exports and employment. 39 Appendix 8: Turkey’s Regional Trade Agreements As noted previously, Turkey’s Customs Union with the EU provides it with preferred access to EU markets, and increasingly requires that Turkey and Europe speak the same regulatory language. Turkey has also used free trade agreements and other trade promotion initiatives to significantly expand its trade with neighbors in Central Asia, the Middle East, and North Africa, creating substantial new opportunities, as well, for its foreign suppliers and investment partners.cxxxii In addition to its Customs Union with the EU and its trade agreement with the EFTA countries (Iceland, Liechtenstein, Norway, and Switzerland), Turkey has free trade agreements (focused largely on trade in goods) with the following countries: * The Agreements with the Faroe Islands, Lebanon, Kosovo, Malaysia and Moldova will be in effect after the completion of internal ratification procedures. Jordan •
Kosovo* •
Lebanon* •
•
Macedonia •
•
Malaysia* •
•
Mauritius •
•
Moldova* •
Montenegro Turkey has ongoing FTA negotiations with the following countries: • Peru • The Gulf Cooperation • Ecuador Council • Mexico • Mercosur • Japan (Argentina, • Singapore Brazil, • Ukraine Paraguay, • Columbia Uruguay and • Democratic Venezuela) Republic of • The Seychelles Congo • Cameroon •
•
Albania Bosnia-­‐
Herzegovina Chile Egypt Faroe Islands* Georgia Israel •
•
•
•
•
•
•
•
40 Morocco Palestine Korea Serbia Syria (on hold) cxxxiii
Tunisia
Appendix 9: American Barriers to Turkey’s U.S. Trade and Investment Turkish traders and investors face a variety of trade, regulatory, and practical barriers in the American market. Over 18 percent of U.S. imports from Turkey were duty-­‐free in 2012 under the U.S. Generalized System of Preferences (GSP) program. But GSP preferences are also notoriously unreliable. The U.S. Congress has repeatedly allowed the program to lapse for extended periods (most recently beginning on August 1, 2013). And the United States has excluded an increasing number of Turkish products (e.g., certain fruits, stone products, jewelry, and wire) from GSP duty-­‐free benefits.cxxxiv Turkish farm products face a variety of U.S. quotas and farm support barriers, while Turkey’s service providers and investors face restrictions in sectors including transport, finance, and communications. Turkish exporters and investors—especially Turkey’s small and medium enterprises (SMEs)—also face serious regulatory barriers in the United States, including complex post-­‐9/11 security rules, U.S. trade remedy decisions, product standards that can differ significantly from EU rules, and a range of business and licensing regulations.cxxxv The World Economic Forum, for example, ranks the United States 76th in ease of complying with business regulations and 124th with respect to terrorism-­‐related business costs.cxxxvi Finally, while these and other U.S. restrictions on trade and investment with Turkey could potentially be addressed in comprehensive trade agreements, there are also significant additional factors—largely in Turkey’s control—that also significantly limit Turkey’s opportunities in the United States. A joint report by the U.S. Chamber and the Turkish Industry and Business Association, for example, notes that Turkey will need more targeted export promotion strategies, better logistics and marketing, and products that better meet U.S. tastes and standards if it is to prosper in the American market.cxxxvii 41 i World Bank, “GDP ranking: Gross domestic product 2012.” Accessed August 8, 2013. Available at: http://data.worldbank.org/data-­‐catalog/GDP-­‐ranking-­‐table. ii John F. Kennedy Presidential Library and Museum, “Remarks on the 25th Anniversary of the Death of Kemal Atatürk,” November 4, 1963. Accessed August 6, 2013. Available at: http://www.jfklibrary.org/Asset-­‐
Viewer/Archives/JFKWHA-­‐237-­‐001.aspx. iii The two nations are longstanding NATO allies; collaborate closely in promoting peace, combating terrorism, and providing humanitarian aid; and are key partners in international organizations from the G20 to the UN. iv The White House, Office of the Press Secretary, “Fact Sheet: U.S.-­‐Turkey Partnership,” May 16, 2013. Accessed August 7, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/fact-­‐sheet-­‐us-­‐turkey-­‐
partnership. v As explained later in this report, a free trade deal between the United States and Turkey could take a variety of forms, including Turkey’s eventual inclusion in the T-­‐TIP, a stand-­‐alone bilateral FTA, or some combination of these agreements. vi World Bank, “GDP ranking: Gross domestic product 2012.” Accessed August 8, 2013. Available at: http://data.worldbank.org/data-­‐catalog/GDP-­‐ranking-­‐table. vii U.S. Department of Commerce, U.S. Census Bureau, “Foreign Trade – Trade in Goods with Turkey,” Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/balance/c4890.html. viii World Trade Organization, “Services Profiles: United States.” Accessed August 11, 2013. Available at: http://stat.wto.org/ServiceProfile/WSDBServicePFHome.aspx?Language=E. The United States is a global leader in both exporting and importing most key types of services, from transportation and travel to finance and insurance. World Trade Organization, “International Trade Statistics 2012,” pp. 146-­‐184. Accessed August 11, 2013. Available at: http://www.wto.org/english/res_e/statis_e/its2012_e/its12_trade_category_e.pdf. ix Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 33. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. x U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 83-­‐84. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xi United Nations Conference on Trade and Development, “Investment Country Profiles: Turkey,” February 2012, p. 1. Accessed August 11, 2013. Available at: http://unctad.org/en/PublicationsLibrary/webdiaeia2012d6_en.pdf. Annual inflows of FDI have also jumped significantly, increasing from an annual average of $2 billion in 2000-­‐2004 to $15 billion during the 2005-­‐2010 period. Ibid. xii U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” p. 84. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xiii Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” pp. 14, 20, 24. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. Sybel Akbay, “Dow, Aska Akrilik to Invest $1 Billion in Turkey in 5 Years,” Bloomberg, December 20, 2011. 42 Accessed August 12, 2013. Available at: http://www.businessweek.com/news/2011-­‐12-­‐20/dow-­‐aksa-­‐akrilik-­‐
to-­‐invest-­‐1-­‐billion-­‐in-­‐turkey-­‐in-­‐5-­‐years.html. xiv Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” pp. 3,14. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. Upgrading Turkey’s energy and transportation infrastructures will, for example, require $250 billion over the next decade. Ibid. xv Hilton Worldwide, “Hilton Worldwide Will Be First Major Hotel Company To Reach 10,000 Rooms In Turkey,” May 29, 2013. Accessed August 11, 2013. Available at: http://news.hiltonworldwide.com/index.cfm/newsroom/detail/23370. U.S. Commerce Department, U.S. Commercial Service, “U.S. Companies in Turkey: Success Stories 2010-­‐2011,” April 8, 2013. Accessed August 11, 2013. Available at: http://export.gov/turkey/sucessstoriesinbusiness/. xvi U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 82-­‐83. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. The two governments are also pursuing cooperative initiatives in clean energy, entrepreneurship, innovation, and research. Ibid. Turkey’s Investment Support and Promotion Agency (ISPAT) and the U.S. Commerce Department have also agreed to provide mutual assistance–
connecting each other’s investors with industry and investment experts. U.S. Department of Commerce, International Trade Administration, “New Agreement and Bilateral Talks Signal Continued Growth in U.S.-­‐
Turkish Commercial Ties,” March 2011. Accessed August 13, 2013. Available at: http://trade.gov/publications/ita-­‐newsletter/0311/agreement-­‐us-­‐turkey-­‐ties.asp. xvii Treaty Concerning the Reciprocal Encouragement and Protection of Investments, with Protocol, Signed at Washington December 3, 1985, Entered into force May 18, 1990. Accessed August 30, 2013. Available at: http://www.state.gov/documents/organization/43615.pdf. Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, with Protocol, Signed at Washington March 28, 1996, Entered into force December 19, 1997. Accessed August 30, 2013. Available at: http://www.gpo.gov/fdsys/pkg/CDOC-­‐104tdoc30/html/CDOC-­‐104tdoc30.htm. Agreement between the Government of the United States of America and the Republic of Turkey Concerning the Development of Trade and Investment Relations, Signed at Washington, September 29, 1999. Accessed August 30, 2013. Available at: http://www.ustr.gov/webfm_send/2855. xviii The White House, Office of the Press Secretary, “Fact Sheet: U.S.-­‐Turkey Economic Partnership,” May 16, 2013. Accessed August 14, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/fact-­‐
sheet-­‐us-­‐turkey-­‐economic-­‐partnership. xix Sübidey Togan, “The EU-­‐Turkey Customs Union: A Model for Future European-­‐Med Integration,” MEDPRO Technical Report No. 9, March 2012. Accessed August 14, 2013. Available at: http://www.ceps.eu/book/eu-­‐
turkey-­‐customs-­‐union-­‐model-­‐future-­‐euro-­‐med-­‐integration. xx “Decision No. 1/95 of the EC-­‐Turkey Association Council on Implementing the Final Phase of the Customs Union,” December 22, 1995. Accessed August 14, 2013. Available at: http://eur-­‐
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML. The Customs Union does not cover agriculture or services trade. Coal and steel products are covered under separate arrangements. Ibid. The Customs Union has reduced Turkey’s average tariff on covered goods from the EU from about 10 percent to zero and its average tariff on imports of those goods from the United States and other third countries from approximately 10 percent to about 4 percent. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 81-­‐82. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. 43 xxi “Decision No. 1/95 of the EC-­‐Turkey Association Council on Implementing the Final Phase of the Customs Union,” Chapters III, IV, and V, December 22, 1995. Accessed August 14, 2013. Available at: http://eur-­‐
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML. xxii Serdar Yesilyurt and Amanda Paul, “Between a rock and a hard place: What is Turkey’s place in the Transatlantic market?” European Policy Centre, July 9, 2013. Accessed August 30, 2013. Available at: http://www.epc.eu/pub_details.php?cat_id=4&pub_id=3656. xxiii U.S. Department of Agriculture, Foreign Agriculture Service, “Turkey Exporter Guide 2012,” GAIN Report, March 21, 2012. Accessed August 24, 2013. Available at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Ankara_Turkey_3-­‐21-­‐2012.pdf. xxiv “Decision No. 1/95 of the EC-­‐Turkey Association Council on Implementing the Final Phase of the Customs Union,” December 22, 1995. Accessed August 14, 2013. Available at: http://eur-­‐
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML. Murat Yapici, Director General for EU Affairs, Turkish Ministry of Economy, “Turkish Perspective on FTAs under the Turkey-­‐EU CU,” June 18, 2013. Accessed August 26, 2013. Available at: http://www.europarl.europa.eu/document/activities/cont/201306/20130619ATT68026/20130619ATT6802
6EN.pdf. Sübidey Togan, “The EU-­‐Turkey Customs Union: A Model for Future European-­‐Med Integration,” MEDPRO Technical Report No. 9, March 2012. p. 19-­‐21. Accessed August 14, 2013. Available at: http://www.ceps.eu/book/eu-­‐turkey-­‐customs-­‐union-­‐model-­‐future-­‐euro-­‐med-­‐integration. Turkey also charges that these and other aspects of the Customs Union provide EU companies with multi-­‐year head starts over their Turkish competitors in breaking into foreign markets and give short shrift to Turkey’s own trade priorities. xxv Turkey and the EU began formal accession talks in 2005. U.S. officials estimate that Turkey’s EU accession will take an additional 15-­‐20 years. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 2, 73-­‐74. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xxvi Abdullah Bozkurt, “Turkey, EU wait on WB study on Customs Union for possible revisions,” Today’s Zaman, May 8, 2013. Accessed August 15, 2013. Available at: http://www.todayszaman.com/news-­‐314890-­‐turkey-­‐eu-­‐
wait-­‐on-­‐wb-­‐study-­‐on-­‐customs-­‐union-­‐for-­‐possible-­‐revisions.html. xxvii Turkey’s potential to support additional U.S. export trade is underscored by the fact that Turkey is one of a limited number of priority countries under America’s National Export Initiative. “U.S. Commercial Service – Turkey,” Accessed September 5, 2013. Available at: http://export.gov/turkey/. xxviii International Monetary Fund, “World Economic Outlook Database, October 2013.” Accessed November 21, 2013. Available at: http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx. xxix U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 2-­‐3, 81-­‐85. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” pp. 2-­‐3, 9-­‐10, 17, 27. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. xxx The Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Invest in Turkey.” Accessed August 22, 2013. Available at: http://www.invest.gov.tr/en-­‐
US/theagency/Pages/OurServices.aspx. 44 xxxi U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, p. 13. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Turkey Vision 2023.” Accessed August 22, 2013. Available at: http://www.torukotoushi.jp/docs/category1/category1_70.pdf. xxxii International Monetary Fund, “World Economic Outlook Database, October 2013.” Accessed November 21, 2013. Available at http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx. xxxiii The Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Invest in Turkey.” Accessed August 22, 2013. Available at: http://www.invest.gov.tr/en-­‐
US/theagency/Pages/OurServices.aspx. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 44. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐
attractiveness-­‐survey. xxxiv Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” pp. 32-­‐33. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. xxxv U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” p. 4. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. U.S. trade officials note, for example, that Turkish employees and joint venture partners can often provide invaluable help to American traders and investors seeking to navigate the great variety of cultures and business environments in Turkey’s region. Ibid. xxxvi U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, p. 9. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. United Parcel Service, “UPS prepares for growth in Middle East and Turkey.” Accessed September 8, 2013. Available at: http://www.ups.com/media/el/forum_issue_3a.pdf. xxxvii The Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Invest in Turkey.” Accessed August 22, 2013. Available at: http://www.invest.gov.tr/en-­‐
US/theagency/Pages/OurServices.aspx. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” pp. 44-­‐46. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐
environment/Turkey-­‐attractiveness-­‐survey. The White House, Office of the Press Secretary, “Fact Sheet: U.S.-­‐
Turkey Economic Partnership,” May 16, 2013. Accessed August 14, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/fact-­‐sheet-­‐us-­‐turkey-­‐economic-­‐partnership. xxxviii Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Turkey Vision 2023.” Accessed August 22, 2013. Available at: http://www.torukotoushi.jp/docs/category1/category1_70.pdf. Additionally, Turkey is a vital energy link between Europe and the major energy-­‐producing nations to Turkey’s east, and plans to construct new natural gas pipelines through Turkey are also expected to create significant opportunities for American contractors and suppliers. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 48, 58-­‐62. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xxxix Keith Bradsher, “Hauling New Treasure Along the Silk Road,” New York Times, July 20, 2013. Accessed August 25, 2013. Available at: http://www.nytimes.com/2013/07/21/business/global/hauling-­‐new-­‐treasure-­‐
along-­‐the-­‐silk-­‐road.html?pagewanted=all&_r=0. 45 xl U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 58-­‐59. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xli Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 9. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Turkey Vision 2023.” Accessed August 22, 2013. Available at: http://www.torukotoushi.jp/docs/category1/category1_70.pdf. xlii With investments from global leaders like Ford, Turkey has become Eastern Europe’s largest auto producer and a significant importer of auto parts and components. Vehicles comprise 20 percent of Turkey’s total exports, and Turkey exports some 70 percent of its vehicle production (largely to the EU and, increasingly, to markets in the Middle East and North Africa). U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 18-­‐20. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 20. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐
environment/Turkey-­‐attractiveness-­‐survey. xliii Industrial machinery is Turkey’s largest export sector, and is expected to account for some $100 billion in exports to Turkey’s region in 2023. HSBC, “HSBC Global Connections Report – Turkey,” February 2013, p.5. Accessed August 30, 2013. Available at: https://globalconnections.hsbc.com/united-­‐kingdom/en/tools-­‐
data/trade-­‐forecasts/tr. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 47. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐
attractiveness-­‐survey. xliv Turkey’s plastics sector is growing at over 12 percent annually, and has significant need for both raw materials (like PVC) and plastic production machinery. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 51-­‐53. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. xlv Turkey is undertaking significant reforms to increase the transparency, fairness, and efficiency of its administrative system. But, with Turkey ranked 80th in a recent World Economic Forum survey on the ease of complying with administrative requirements (Qatar was 3rd and China 23rd), there is also still much work to do. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” p. 84. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Klaus Schwab, “The Global Competitiveness Report 2012-­‐
13,” World Economic Forum, pp. 350-­‐51. Accessed August 31, 2013. Available at: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-­‐13.pdf. xlvi Office of the U.S. Trade Representative, “2013 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 30, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/NTE-­‐FTB. U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 58-­‐59. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. U.S. Department of Agriculture, Foreign Agriculture Service, “Turkey: Food and Agricultural Import Regulations and Standards – Narrative, FAIRS Country Report 2012.” Accessed August 31, 2013. Available at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Food%20and%20Agricultural%20Import%20Regul
ations%20and%20Standards%20-­‐%20Narrative_Ankara_Turkey_2-­‐12-­‐2013.pdf. xlvii Turkish Air Force, “Atatürk and Aviation.” Accessed September 4, 2013. Available at: http://www.hvkk.tsk.tr/EN/IcerikDetay.aspx?ID=119. 46 xlviii Alex Thomas, “Turkey’s carriers continue rapid growth trajectory,” Airline Business, April 22, 2013. Accessed September 4, 2013. Available at: http://www.flightglobal.com/news/articles/analysis-­‐turkeys-­‐
carriers-­‐continue-­‐rapid-­‐growth-­‐trajectory-­‐384966/. xlix U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 21-­‐23. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. l U.S. Department of Agriculture, Foreign Agriculture Service, “Turkey Exporter Guide 2012,” GAIN Report, March 21, 2012. Accessed August 24, 2013. Available at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Ankara_Turkey_3-­‐21-­‐2012.pdf. li Imports of U.S. packaged snack foods, for example, have seen double-­‐digit growth in recent years. U.S. Department of Agriculture, Foreign Agriculture Service, “Turkey Snacks Sector Brief,” April 30, 2013. Accessed September 5, 2013. Available at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Snacks%20Sector%20Brief_Istanbul_Turkey_4-­‐30-­‐
2013.pdf. lii U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 63-­‐65. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. liii Turkey applies tariffs of 225 percent on U.S. meat cuts and 130 percent on wheat, corn, and other cereals, as well as tariffs averaging 129 percent on dairy products. These tariffs are also subject to frequent change. U.S. Department of Agriculture, Foreign Agriculture Service, “Turkey Exporter Guide 2012,” GAIN Report, March 21, 2012. Accessed August 24, 2013. Available at: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Exporter%20Guide_Ankara_Turkey_3-­‐21-­‐2012.pdf. World Trade Organization, International Trade Centre, and United Nations Conference on Trade and Development, “World Tariff Profiles 2012,” p. 165. Accessed August 30, 2013. Available at: http://www.wto.org/english/res_e/publications_e/world_tariff_profiles12_e.htm. liv Office of the U.S. Trade Representative, “2013 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 30, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/NTE-­‐FTB. lv U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 43-­‐46. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. lvi Office of the U.S. Trade Representative, “2013 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 30, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/NTE-­‐FTB. lvii U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 86-­‐87. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Office of the U.S. Trade Representative, “2013 Special 301 Report,” May 2013, pp. 54-­‐55. Accessed September 1, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐
office/reports-­‐and-­‐publications/2013/2013-­‐special-­‐301-­‐report. lviii DePuy Synthes, “The DePuy Synthes Companies of Johnson & Johnson,” Fact Sheet. Accessed August 31, 2013. Available at: http://www.depuysynthes.com/na/fact-­‐sheet. 47 lix U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 2, 30-­‐37. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 47. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐
environment/Turkey-­‐attractiveness-­‐survey. Republic of Turkey, Prime Ministry, Investment Support and Promotion Agency of Turkey, “Turkey Vision 2023.” Accessed August 22, 2013. Available at: http://www.torukotoushi.jp/docs/category1/category1_70.pdf. U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, p. 11. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐
Report.pdf. lx U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 38-­‐42. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. lxi Turkey has taken incremental steps in recent years to improve its IPR enforcement, but its IPR protection is still substantially below international standards, ranked 86th among all countries by the World Economic Forum. Office of the U.S. Trade Representative, “2013 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 30, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/NTE-­‐FTB. Klaus Schwab, “The Global Competitiveness Report 2012-­‐13,” World Economic Forum, pp. 350-­‐51. Accessed August 31, 2013. Available at: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-­‐13.pdf. lxii Office of the U.S. Trade Representative, “2013 Special 301 Report,” May 2013, pp. 54-­‐55. Accessed September 1, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐publications/2013/2013-­‐
special-­‐301-­‐report. lxiii “Shane Tedjarati Showcases Honeywell’s High Growth Regional Strategy,” Honeywell Now, October 22, 2012. Accessed September 5, 2013. Available at: http://www.honeywellnow.com/2012/10/22/shane-­‐tedjarati-­‐
showcases-­‐honeywells-­‐high-­‐growth-­‐region-­‐strategy/. lxiv Honeywell, “Products & Services: A-­‐Z Index.” Accessed September 5, 2013. Available at: http://honeywell.com/Products-­‐Services/Pages/alpha.aspx. lxv In 2012, Turkey exported $6.3 billion in goods to the United States, a 37 percent increase over its 2007 exports. (See Table 1). Turkey’s U.S.-­‐bound trade also includes a growing proportion of value-­‐added manufactured goods, such as iron and steel, machinery, and vehicles. Turkey’s vehicle exports to the United States have grown from zero in 2008 to over one-­‐half billion dollars in 2012. (See Appendix 2). lxvi Turkish companies like Ozkan Steel and Borusan Mannesmann, for example, are investing hundreds of millions of dollars to establish manufacturing facilities in the United States. The White House, Office of the Press Secretary, “Fact Sheet: U.S.-­‐Turkey Economic Partnership,” May 16, 2013. Accessed August 14, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/fact-­‐sheet-­‐us-­‐turkey-­‐economic-­‐partnership. lxvii U.S. Department of Commerce, U.S. Census Bureau, “U.S. International Trade in Goods and Services, Annual Revision for 2012,” Ex. 13. Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/Press-­‐
Release/2012pr/final_revisions/. European Union, Directorate-­‐General for Trade, “Turkey-­‐EU Bilateral Trade and Trade with the World,” July 5, 2013. Accessed August 14, 2013. Available at: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf. In 2010, Turkey’s outbound FDI was $1.8 billion. Of that amount, $53 million was destined for the United States, slightly more than Turkey invested in Luxembourg ($46 million). United Nations Conference on Trade and Development, “Investment 48 Country Profiles: Turkey,” February 2012, Table 9. Accessed August 11, 2013. Available at: http://unctad.org/en/PublicationsLibrary/webdiaeia2012d6_en.pdf. lxviii World Trade Organization, International Trade Centre, and United Nations Conference on Trade and Development, “World Tariff Profiles 2012,” p. 165. Accessed August 30, 2013. Available at: http://www.wto.org/english/res_e/publications_e/world_tariff_profiles12_e.htm. lxix U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, pp. 20-­‐21. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. lxx U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, pp. 26-­‐28. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. lxxi In launching the new High Level Committee, President Obama and Prime Minister Erdogan ordered the Committee to pursue “the ultimate objective of continuing to deepen our economic relations and liberalizing trade.” The White House, Office of the Press Secretary, “Fact Sheet: U.S.-­‐Turkey Partnership,” May 16, 2013. Accessed August 7, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/fact-­‐sheet-­‐
us-­‐turkey-­‐partnership. lxxii The business community—including the U.S. Chamber’s U.S.-­‐Turkey Business Council—has highlighted how enhanced trade and investment could substantially benefit businesses, workers, and consumers in both countries. U.S. Chamber of Commerce, U.S.-­‐Turkey Business Council website. Accessed August 25, 2013. Available at: http://www.usturkeybusiness.com. lxxiii Leading policy organizations in both countries have recommended negotiating an FTA or other trade arrangement to significantly strengthen the economic pillar of the U.S.-­‐Turkey strategic relationship. See Council on Foreign Relations, “U.S.-­‐Turkey Relations: A New Partnership,” Independent Task Force Report No. 69, pp. 11-­‐13. Accessed August 25, 2013. Available at: http://www.cfr.org/turkey/us-­‐turkey-­‐relations/p28139. lxxiv The White House, Office of the Press Secretary, “Joint Press Conference by President Obama and Prime Minister Erdogan of Turkey,” May 16, 2013. Accessed August 25, 2013. Available at: http://www.whitehouse.gov/the-­‐press-­‐office/2013/05/16/joint-­‐press-­‐conference-­‐president-­‐obama-­‐and-­‐
prime-­‐minister-­‐erdogan-­‐turkey. Nick Tattersall, “Turkey seeks seat at U.S.-­‐EU trade table,” Reuters, May 16, 2013. Accessed August 28, 2013. Available at: http://www.reuters.com/article/2013/05/17/us-­‐turkey-­‐usa-­‐
trade-­‐idUSBRE94F1CA20130517. lxxv Murat Yapici, Director General for EU Affairs, Turkish Ministry of Economy, “Turkish Perspective on FTAs under the Turkey-­‐EU CU,” June 18, 2013. Accessed August 26, 2013. Available at: http://www.europarl.europa.eu/document/activities/cont/201306/20130619ATT68026/20130619ATT6802
6EN.pdf. lxxvi Gabriel Felbermayr, Mario Larch, Lisandra Flatch, Erdal Yalcin, and Sebastian Benz, “Dimensions and Effects of a Transatlantic Free Trade Agreement Between the EU and US – Executive Summary,” Study Commissioned by the German Ministry of Economics and Technology, February 2013. Accessed August 26, 2013. Available at: http://www.cesifo-­‐group.de/ifoHome/infoservice/News/2013/02/news-­‐20130228-­‐Freihandel.html. lxxvii The German Government study noted previously estimates that a comprehensive T-­‐TIP would increase U.S. welfare by over 13 percent. Gabriel Felbermayr, Mario Larch, Lisandra Flatch, Erdal Yalcin, and Sebastian Benz, 49 “Dimensions and Effects of a Transatlantic Free Trade Agreement Between the EU and US – Executive Summary,” Study Commissioned by the German Ministry of Economics and Technology, February 2013. Accessed August 26, 2013. Available at: http://www.cesifo-­‐
group.de/ifoHome/infoservice/News/2013/02/news-­‐20130228-­‐Freihandel.html. lxxviii U.S. Chamber of Commerce, “Next Steps for the American Trade Agenda,” (Remarks of U.S. Trade Representative Michael Froman), July 31. 2013. Accessed August 27, 2013. Available at: http://www.uschamber.com/webcasts/next-­‐steps-­‐american-­‐trade-­‐agenda-­‐2. lxxix Studies indicate that being excluded from the T-­‐TIP would impact Canada and Mexico even more severely than Turkey. The German Government study noted previously estimates that a comprehensive T-­‐TIP would decrease Canadian and Mexican welfare by over 9 percent and 7 percent, respectively. Gabriel Felbermayr, Mario Larch, Lisandra Flatch, Erdal Yalcin, and Sebastian Benz, “Dimensions and Effects of a Transatlantic Free Trade Agreement Between the EU and US – Executive Summary,” Study Commissioned by the German Ministry of Economics and Technology, February 2013. Accessed August 26, 2013. Available at: http://www.cesifo-­‐
group.de/ifoHome/infoservice/News/2013/02/news-­‐20130228-­‐Freihandel.html. lxxx Framework Agreement Establishing a Free Trade Area Between the Republic of Korea and the Republic of Turkey, Entered into force May 1, 2013. Accessed August 22, 2013. Available at: http://rtais.wto.org/UI/PublicShowRTAIDCard.aspx?rtaid=699&lang=1&redirect=1. Free Trade Agreement between the United States of America and the Republic of Korea, Entered into force March 15, 2012. Accessed August 22, 2013. Available at: http://www.ustr.gov/trade-­‐agreements/free-­‐trade-­‐agreements/korus-­‐fta/final-­‐
text. On the key issue of intellectual property protection, for example, KORUS and the EU-­‐Korea FTA include significantly more detailed and stringent rules on matters such as enforcement and data protection than the Turkey-­‐Korea FTA. Ibid. lxxxi Kemal Kirisci, “Turkey and the Transatlantic Trade and Investment Partnership, Brookings Institution, September 2013. p. 19. Accessed September 4, 2013. Available at: http://www.brookings.edu/events/2013/09/03-­‐turkey-­‐transatlantic-­‐trade-­‐investment-­‐partnership. lxxxii European Commission, “EU-­‐US Summit: Fact Sheet on High-­‐Level Working Group on Jobs and Growth,” Memo/11/843, November 28, 2011. Accessed August 28, 2013. Available at: http://europa.eu/rapid/press-­‐
release_MEMO-­‐11-­‐843_en.htm. lxxxiii Defense and foreign policy experts can also play a vital part in explaining how expanded trade will bolster strategic and diplomatic cooperation. And government and business in Canada and Mexico would be natural allies, in view of the significant, negative impacts that the T-­‐TIP would have on those important economies. lxxxiv This will help Americans understand, for instance, why America should not simply pocket the unilateral concessions that T-­‐TIP and the Customs Union would require from Turkey. lxxxv For an analysis of the importance of employing stories and values to advocate for increased global engagement by the United States, see Anne Kim, John Lageson, and Jim Kessler, “Why Lou Dobbs is Winning,” Third Way, November 2007. Accessed August 28, 2013. Available at: http://www.thirdway.org/subjects/8/publications/90. lxxxvi U.S. Department of Commerce, U.S. Census Bureau, “Foreign Trade – Top Trading Partners,” Accessed August 6, 2013. Available at: http://www.census.gov/foreign-­‐trade/statistics/highlights/top/index.html. 50 lxxxvii Jason Fekete, “Secret documents show how hard Conservative government lobbied to get into TPP talks,” o.canada.com, June 19, 2012. Accessed August 6, 2013. Available at: http://o.canada.com/2012/06/19/secret-­‐
documents-­‐show-­‐how-­‐hard-­‐conservative-­‐government-­‐lobbied-­‐to-­‐get-­‐into-­‐tpp-­‐talks/. lxxxviii Office of the U. S. Trade Representative, “Statement by Acting U.S. Trade Representative Demetrios Marantis Regarding Japan and the Trans-­‐Pacific Partnership,” April 12, 2013. Accessed August 6, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/press-­‐releases/2013/april/amb-­‐marantis-­‐japan-­‐tpp. lxxxix Murat Yapici, Director General for EU Affairs, Turkish Ministry of Economy, “Turkish Perspective on FTAs under the Turkey-­‐EU CU,” June 18, 2013, p. 23. Accessed August 26, 2013. Available at: http://www.europarl.europa.eu/document/activities/cont/201306/20130619ATT68026/20130619ATT6802
6EN.pdf. xc European Centre for Development Policy Management, “Comparing EU free trade agreements – Rules of origin,” 2006. Accessed August 28, 2013. Available at: http://www.ecdpm.org/Web_ECDPM/Web/Content/Navigation.nsf/index2?readform&http://www.ecdpm.org
/Web_ECDPM/Web/Content/Content.nsf/0/F58ABF0BDF233FEAC12570DC0049AC9F?OpenDocument. xci Mary Jane Bolle, Alfred Prados, and Jeremy Sharp, “Qualifying Industrial Zones in Jordan and Egypt,” Congressional Research Service Report, July 5, 2006. Accessed August 28, 2013. Available at: http://www.au.af.mil/au/awc/awcgate/crs/rs22002.pdf. xcii Office of the U.S. Trade Representative, “2013 National Trade Estimate Report on Foreign Trade Barriers.” Accessed August 30, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/NTE-­‐FTB. Office of the U.S. Trade Representative, “2013 Special 301 Report,” May 2013, pp. 54-­‐55. Accessed September 1, 2013. Available at: http://www.ustr.gov/about-­‐us/press-­‐office/reports-­‐and-­‐
publications/2013/2013-­‐special-­‐301-­‐report. xciii Bipartisan Congressional Trade Priorities Act of 2014, H.R. 3830, 113th Congress, Sec. 2(b)(5), (6), and (9). Accessed February 25, 2014. Available at: http://beta.congress.gov/bill/113th-­‐congress/house-­‐
bill/3830?q=%7B%22search%22%3A%5B%22hr.+3830%22%5D%7D. xciv Boeing, for example, notes that requiring offsets for commercial aircraft purchases would be inconsistent with U.S. and EU plurilateral trade commitments and would complicate Turkey’s efforts to join the T-­‐TIP. Additionally, such required offsets are inefficient—they effectively raise aircraft costs for Turkey’s airlines, while doing little to support the kinds of sustained economic development that more open markets can provide. xcv Barry F. Machado, “In Search of a Usable Past: The Marshall Plan and Postwar Reconstruction Today,””” The George C. Marshall Foundation, 2007, pp. 86-­‐95. Accessed August 6, 2013. Available at: http://www.marshallfoundation.org/library/doc_in_search.html. At the same time, Marshall Plan cooperation provided vital geopolitical benefits to America and the West, enabling Turkey to maintain a large army as a deterrent to Soviet expansion. Ibid. xcvi Barry F. Machado, “In Search of a Usable Past: The Marshall Plan and Postwar Reconstruction Today,” The George C. Marshall Foundation, 2007, pp. 15-­‐22, 86-­‐95. Accessed August 6, 2013. Available at: http://www.marshallfoundation.org/library/doc_in_search.html. xcvii For example, in the run up to the U.S.-­‐Columbia FTA, there was extensive discussion of Colombia’s labor, human rights, and judicial practices and its planned reforms. Office of the U.S. Trade Representative, “Columbian Action Plan Related to Labor Rights,” April 7, 2011. Accessed August 29, 2013. Available at: http://www.ustr.gov/webfm_send/2787. 51 xcviii Leading analysts have noted that comparing the U.S. and EU FTAs with Korea might be a good starting point for identifying common ground and remaining conflicts in the current T-­‐TIP talks. Jeffrey J. Schott and Cathleen Cimino, “Crafting a Transatlantic Trade and Investment Partnership: What Can Be Done,” Peterson Institute for International Economics, March 2013. Accessed August 29, 2013. Available at: http://www.iie.com/publications/interstitial.cfm?ResearchID=2352. xcix See, for example, the Bipartisan Congressional Trade Priorities Act of 2014, H.R. 3830, 113th Congress, Sec. 2(b)(5), (6), and (9). Accessed February 25, 2014. Available at: http://beta.congress.gov/bill/113th-­‐
congress/house-­‐bill/3830?q=%7B%22search%22%3A%5B%22hr.+3830%22%5D%7D. c For example, Chapter 5 of KORUS contains detailed provisions to assure transparency, procedural fairness, and public participation in government pricing decisions for pharmaceuticals and medical devices. ci Office of the U.S. Trade Representative, “2012 U.S. Model Bilateral Investment Treaty.” Accessed August 30, 2013. Available at: http://www.ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf. Recent U.S. BITs closely parallel the investment chapters of recent U.S. FTAs. cii The United States requires its potential FTA partners to join the GPA as a condition for entering into an FTA. ciii U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, pp. 26-­‐28. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. civ U.S. Department of Commerce, U.S. Census Bureau, “Foreign Trade – Trade in Goods with Turkey,” Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/balance/c4890.html. United Nations Commodity Trade Statistics Database. Accessed November 22, 2013. Available at: http://comtrade.un.org/db/. U.S. Department of Commerce, U.S. Census Bureau, “U.S. International Trade in Goods and Services, Annual Revision for 2012,” Ex. 13. Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/Press-­‐
Release/2012pr/final_revisions/. cv U.S. Department of Commerce, U.S. Census Bureau, “U.S. International Trade in Goods and Services, Annual Revision for 2012,” Ex. 13. Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/Press-­‐
Release/2012pr/final_revisions/. cvi European Union, Directorate-­‐General for Trade, “Turkey-­‐EU Bilateral Trade and Trade with the World,” July 5, 2013. Accessed August 14, 2013. Available at: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf. cvii U.S. International Trade Commission Dataweb. Accessed August 11, 2013. Available at: http://dataweb.usitc.gov. cviii World Trade Organization, “Services Profiles: Turkey.” Accessed August 11, 2013. Available at: http://stat.wto.org/ServiceProfile/WSDBServicePFHome.aspx?Language=E. World Trade Organization, “International Trade Statistics 2012,” Tables III.4, III.7, III.8, III.17, III. 38. Accessed August 11, 2013. Available at: http://www.wto.org/english/res_e/statis_e/its2012_e/its12_trade_category_e.pdf. cix World Trade Organization, “International Trade Statistics 2012,” Tables III.4, III.7, III.8, III.17, III. 38. Accessed August 11, 2013. Available at: http://www.wto.org/english/res_e/statis_e/its2012_e/its12_trade_category_e.pdf. 52 cx U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” Chapter 4. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. cxi World Trade Organization, “Services Profiles: Turkey,” p. 3. Accessed August 11, 2013. Available at: http://stat.wto.org/ServiceProfile/WSDBServicePFHome.aspx?Language=E. cxii United Nations Conference on Trade and Development, “Investment Country Profiles: Turkey,” February 2012, p. 1. Accessed August 11, 2013. Available at: http://unctad.org/en/PublicationsLibrary/webdiaeia2012d6_en.pdf. cxiii Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 24. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. cxiv Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 24. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. cxv European Union, Directorate-­‐General for Trade, “Turkey-­‐EU Bilateral Trade and Trade with the World,” July 5, 2013. Accessed August 14, 2013. Available at: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf. cxvi European Union, Directorate-­‐General for Trade, “Turkey-­‐EU Bilateral Trade and Trade with the World,” July 5, 2013. Accessed August 14, 2013. Available at: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf. cxvii European Union, Directorate-­‐General for Trade, “Turkey-­‐EU Bilateral Trade and Trade with the World,” July 5, 2013. Accessed August 14, 2013. Available at: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf. “Turkish Trade Shifts from Europe,” Forbes, February 20, 2008. Accessed August 14, 2013. Available at: http://www.forbes.com/2009/02/19/turkey-­‐europe-­‐eu-­‐business_oxford_turkey.html. cxviii HSBC, “HSBC Global Connections Report – Turkey,” February 2013. Accessed August 30, 2013. Available at: https://globalconnections.hsbc.com/united-­‐kingdom/en/tools-­‐data/trade-­‐forecasts/tr. cxix “Decision No. 1/95 of the EC-­‐Turkey Association Council on Implementing the Final Phase of the Customs Union,” Chapters III, IV, and V, December 22, 1995. Accessed August 14, 2013. Available at: http://eur-­‐
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21996D0213(01):EN:HTML. cxx U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 73-­‐74. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. cxxi Serdar Yesilyurt and Amanda Paul, “Between a rock and a hard place: What is Turkey’s place in the Transatlantic market?” European Policy Centre, July 9, 2013. Accessed August 30, 2013. Available at: http://www.epc.eu/pub_details.php?cat_id=4&pub_id=3656. cxxii U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 73-­‐74. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. Despite this, conforming American products still, on occasion, face discriminatory treatment at Turkish Customs. Ibid. 53 cxxiii Ernst & Young, “Rapid-­‐Growth Markets Forecast,” July 2013, p. 49. Accessed September 6, 2013. Available at: http://www.ey.com/Publication/vwLUAssets/EY_Rapid-­‐Growth_Markets_Forecast/$FILE/EY-­‐Rapid-­‐
Growth-­‐Markets-­‐Forecast-­‐July-­‐2013.pdf. Ernst & Young, “Rapid-­‐growth markets forecast: Autumn 2012, High-­‐
potential economies: Indonesia, Turkey and Vietnam,” Accessed September 6, 2013. Available at: http://www.ey.com/GL/en/Issues/Driving-­‐growth/Rapid-­‐growth-­‐markets-­‐forecast-­‐-­‐Autumn-­‐2012-­‐-­‐-­‐High-­‐
potential-­‐economies-­‐-­‐Indonesia-­‐-­‐Turkey-­‐and-­‐Vietnam. Soner Cagaptay, “The Middle Class Strikes Back,” New York Times, June 5, 2013. Accessed August 21, 2013. Available at: http://www.nytimes.com/2013/06/06/opinion/turkeys-­‐middle-­‐class-­‐strikes-­‐back.html?_r=0. cxxiv Central Intelligence Agency, “The World Factbook,” 2013. Accessed August 21, 2013. Available at: https://www.cia.gov/library/publications/the-­‐world-­‐factbook/fields/2177.html. OECD, “Country statistical profile: Turkey 2013.” Accessed August 21, 2013. Available at: http://www.oecd-­‐ilibrary.org/sites/csp-­‐tur-­‐
table-­‐2013-­‐1-­‐
en/index.html?contentType=/ns/KeyTable,/ns/StatisticalPublication&itemId=/content/table/20752288-­‐table-­‐
tur&containerItemId=/content/tablecollection/20752288&accessItemIds=&mimeType=text/html. cxxv OECD, “OECD.StatExtracts, Population, 2013.” Accessed August 21, 2013. Available at: http://stats.oecd.org/Index.aspx?DatasetCode=CRSNEW. cxxvi Ernst & Young, “Ernst & Young’s attractiveness survey, Turkey 2013,” p. 32. Accessed August 12, 2013. Available at: http://www.ey.com/TR/en/Issues/Business-­‐environment/Turkey-­‐attractiveness-­‐survey. cxxvii Central Intelligence Agency, “The World Factbook, 2013.” Accessed August 21, 2013. Available at: https://www.cia.gov/library/publications/the-­‐world-­‐factbook/fields/2177.html. OECD, “OECD.StatExtracts, Population, 2013.” Accessed August 21, 2013. Available at: http://stats.oecd.org/Index.aspx?DatasetCode=CRSNEW. Median age estimates are for 2013. Worker-­‐to-­‐retiree ratios are for the latest available year. cxxviii U.S. Department of Commerce, U.S. Census Bureau, “Foreign Trade – Trade in Goods with Turkey,” Accessed August 11, 2013. Available at: http://www.census.gov/foreign-­‐trade/balance/c4890.html. United Nations Commodity Trade Statistics Database. Accessed November 22, 2013. Available at: http://comtrade.un.org/db/. cxxix Martin Johnson and Chris Rasmussen, “Jobs Supported by Exports 2012: An Update,” International Trade Administration, U.S. Department of Commerce, February 26, 2013. Accessed November 22, 2013, Available at: http://www.trade.gov/mas/ian/build/groups/public/@tg_ian/documents/webcontent/tg_ian_004021.pdf. cxxx International Monetary Fund, “World Economic Outlook Database, October 2013.” Accessed November 21, 2013. Available at: http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.aspx. cxxxi United Nations Commodity Trade Statistics Database. Accessed November 22, 2013. Available at: http://comtrade.un.org/db/. cxxxii U.S. Department of Commerce, U.S. Commercial Service, “Doing Business in Turkey: 2013 Country Commercial Guide for U.S. Companies,” pp. 73-­‐79. Accessed August 11, 2013. Available at: http://export.gov/turkey/doingbusinessinturkey/. U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, p. 17. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. cxxxiii Republic of Turkey, Ministry of Economy, “Turkey’s Free Trade Agreements.” Accessed August 30, 2013. Available at: http://www.economy.gov.tr/index.cfm?sayfa=tradeagreements&bolum=fta&region=0. 54 cxxxiv The Trade Partnership, “The U.S. Generalized System of Preferences Program,” Report for the Coalition for GSP, February 2013, pp. 6, 8. Accessed September 2, 2013. Available at: http://tradepartnership.com/pdf_files/GSP%20Annual%20Report-­‐February%202013.pdf. “Harmonized Tariff Schedule of the United States,” 2013, Rev.1, General Note 4(d). Accessed September 2, 2013. Available at: http://www.usitc.gov/publications/docs/tata/hts/bychapter/1301gn.pdf#page=11. cxxxv U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, pp. 20-­‐21. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. cxxxvi Klaus Schwab, “The Global Competitiveness Report 2012-­‐13,” World Economic Forum, p. 361. Accessed August 31, 2013. Available at: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-­‐
13.pdf. cxxxvii U.S. Chamber of Commerce and Turkish Industry and Business Association, “U.S.-­‐Turkish Economic Relations in a New Era: Analysis and Recommendations for a Stronger Strategic Partnership,” Report by Sidar Global Advisors, 2012, pp. 26-­‐28. Accessed August 22, 2013. Available at: http://www.uschamber.com/sites/default/files/reports/20120312-­‐USCC-­‐Report.pdf. 55 E
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