BOYCOTT TURKEY CAMPAIGN ECONOMICS

General Overview of Turkey-US Bilateral Trade Relations

The USA has always been one of the major trading partners of Turkey. The commercial relations between Turkey and the USA show a steady increase since 1980's. The trade volume between these two countries has been 9.5 billion dollars in 2004, among which 4.8 billion dollars were Turkish exports while 4.7 billion dollars were US exports. However, in the first 7 months of 2005, the trade figures changed in favor of US exports. Accordingly, Turkey has exported 2.7 billion dollars worth of goods to the USA, representing a 0.9% decrease as compared to the previous year; whereas the USA has exported 3.1 billion dollars worth of goods to Turkey, which is 9.6% more than the previous year. The share of Turkish exports in the total US imports is about 0.3%, whereas US exports represent 4.8% in the total Turkish imports.

Iron and steel, textile and apparel and jewellery are among the major exports items of Turkey to the USA. The USA, on the other hand, exports mainly aircraft parts, nuclear reactors and machinery, cotton, optical and technical instruments to Turkey. A more comprehensive list of trading items between Turkey and the USA is provided below besides the bilateral trade figures.

On the table below, bilateral trade figures are shown.

Main exports items by commodity groups are shown below.

Main imports items by commodity groups are shown below. 

Issues Regarding Bilateral Trade

Generalized System of Preferences (GSP): The USA provides the opportunity for some developing countries to export certain products duty free to the USA under the GSP. Turkey is one of the countries making use of the GSP, which is instrumental in stimulating bilateral trade between Turkey and the USA.

Although the product groups included into the GSP are very limited for Turkey, certain products are enjoying the system’s benefits. Turkey has exported over 700 million dollars worth of products within the GSP and benefited about 40 million dollars worth of tax relief in 2004. This system is very useful for small companies’ exports orientation.

The most important product within the GSP for Turkey was travertine. The use of Turkish travertine was preferred by end-users due to its low cost. Therefore, the export of Turkey in that product had been increased to the level that the so-called competitive limit clause has been imposed on Turkish travertine and as 30 June 2005 Turkish travertine has been left out of the GSP. Turkish side demands that the competitive need limit for that product group should be waved since it does not create any harm to the industry in the USA or in any other country.

On the other hand, Turkey’s GSP benefits have been dependent on the protection of intellectual property rights (IPR). Based on the US Trade Law of 1988 US President can take certain actions against countries, which do affect US trade negatively. In that sense, Office of the United States Trade Representative (USTR) claims that there are certain insufficiencies in Turkey in regard to IPR. In that framework, the GSP conditions of Turkey and the IPR issues has been linked by the USTR since 1992.

Intellectual Property Rights: Turkey has made considerable and even satisfactory progress towards updating and harmonizing its legislation with universally acclaimed principles in a number of trade related fields in accordance with the Customs Union as well as in compliance with its commitments under the World Trade Organization (WTO). At the same time, for more effective protection of industrial and intellectual property rights, Turkey has adhered to certain international treaties.

However, in 1992, Turkey was included in “Priority Watch List” as a result of Special 301 Review made by the USTR (an annual review which examines in detail the adequacy and effectiveness of intellectual property protection in approximately 74 countries). Turkey has been added to the “Watch List” in 2001 due to positive advances realized in that area. However, starting in 2004 and continuing in 2005 Turkey has again been degraded to “Priority Watch List” due to data exclusivity matters in medicine products, although the legal regulations in data exclusivity in Turkey is in accordance with the EU obligations due to the Customs Union with the EU.

Turkey has been one of the few countries in the WTO being appreciated in various platforms for her efforts in that field. Turkey pays utmost attention to the protection of intellectual property rights and is improving implementation gradually in this area.

Anti-Dumping and Countervailing Duties: Although Turkey’s exports regime is fully compatible with its commitments on subsidies under both the WTO and the EU, it is observed that the issue pertaining to antidumping and countervailing duties on Turkish products still continues to occupy the agenda of bilateral trade relations with the USA. Currently, the USA has been applying anti-dumping and countervailing duties against Turkish exports like iron and steel products and pasta. The legal arrangements made with respect to the protection of competition and governmental support on exports, provide sufficient ground for the elimination of these duties.

Textile and Apparel Trade: Textile and clothing industry takes substantial share in Turkey’s economy and foreign trade. It constitutes the largest industry and accounts for 10% of GDP, 22,6% of manufacturing output, and 21% of employment in manufacturing sector. Moreover, Turkey’s exports of textiles and clothing products constituted 29% of total merchandise exports in 2004.

In fact, the elimination of quantitative restrictions on this sector has already brought major adjustment challenges for Turkey, especially in terms of the very high costs in the supply chain. Information on the developments of the EU and US markets show that market share of China increased rapidly in the latest liberalized categories with a radical decline in the average prices. This extreme amount of increase in the exports of China to the world’s two greatest importers in textile and clothing sector seems to be a harbinger of threat of monopolization in this sector. This is a serious concern not only for developing countries, but also for the domestic producers in the developed countries.

In this respect, Turkey welcomes the recent agreement between the EU and China to restrain exports of 10 categories of textile and clothing products originating from China. Likewise, Turkey pays close attention to the negotiations between trade officials of the USA and China to reach a comprehensive agreement regarding this sector.

Besides, it is critical that the WTO members give extensive consideration to the issues related to textile and clothing trade with a view to finding an urgent and collective solution to the problems and at this point, the USA’s clear support for further actions is very important.

Food and Drug Administration (FDA) Regulations: According to the FDA standards, the tolerable limit of lead residues in raisins is 0.25 mg/kg, which is much lower than the prevailing international standards. As a result of this limit, Turkey’s raisin exports to the USA have been adversely affected and are not at the level that otherwise would have been.

On the other hand, as most of the pesticide residues that are not allowed in the USA are placed in CODEX Alimentarius and as these pesticides are widely used in the European Union countries, Australia and South Africa, besides Turkey.

Source: Turksih Ministry of Foreign Trade