Bright prospects for Turkish trade

Date: 13/06/1996

By Elizabeth Wise

THE customs union between Turkey and the EU is only six months old, but Turkish business already sees signs of a significant boost in two-way trade and investment.

TÜSIAD, the country's largest industrialists' and businessmen's association, opened an office in Brussels last week designed to act as a hub for contacts between Turkish and European entrepreneurs. The 25-year-old association, whose nearly 400 members represent half of Turkey's industrial output and 40&percent; of the country's exports, wants to help transform the EU-Turkey relationship from a customs union into a true single market.

After harmonising its economic legislation with that of the Union, including competition rules, “Turkey is becoming part of the legal order”, says Dr Bahadir Kaleagasi, TÜSIAD's permanent delegate in Brussels.

A member of UNICE since 1987, TÜSIAD keeps a close eye on EU industrial policy but also monitors economic policy in Ankara, maintains a dialogue with Turkish legislators and contributes to efforts to ensure the country's adherence to market economy rules.

While Ankara sees customs union with the EU as a step towards full membership, TÜSIAD has different goals. It wants Turkey to benefit from what Kaleagasi describes as the three tenets of the EU's single market: economic interdependence, economic and social cohesion, and the development of solidarity and mutual interests.

“The three must be applied to Turkey,” he says. “We would like to see the customs union functioning under the guiding principles of the European integration process.”

While it is still too early to judge whether the customs union, which ensures virtually free trade in industrial products, has added to the volume of two-way trade and investment, and therefore to interdependence between Turkey and the EU, TÜSIAD has high hopes for growth in many sectors.

“All the major ingredients for a European interest boom in Turkey are there,” says Kaleagasi.

Services are not yet integrated in the customs union, but Turkey is creating EU-style legislation for that sector.

European services are more and more evident in Turkey, particularly in the banking and tourism sectors. Although there is still room for improvement, says Kaleagasi, Ankara's policy encourages European companies to establish themselves in Turkey.

If European entrepreneurs are worried about government instability in Ankara, he argues, they should be reassured that Turkey is stable ground for investment.

“In the past ten years, the economy has functioned independently of political developments,” he insists.

The privatisation of the state-owned transportation and telecoms sectors are the areas most linked to political stability.

“It will take more time for privatisation than for other changes,” warns Kaleagasi. But, he insists - unlike in other countries where, as they wait to be privatised, state industries collapse - Turkey's public sector will remain viable and a good investment when the time comes.

Incentives already exist for investment in the private and public sectors and for establishing joint ventures, and there is room in government legislation for creating new incentives, he maintains.

Property legislation allows EU firms to buy land and factory plants and, while not giving foreign buyers complete equality with domestic firms, does not put them at a competitive disadvantage.

In the area of public procurement, Turkey is now harmonising its legislation with EU rules to treat Union firms in the same manner as national ones.

TÜSIAD wants European business to see Turkey not only as fertile ground for investment, but also as a large and growing consumer market.

“Consumption is growing,” says Kaleagasi, adding that private and industrial consumption of energy is rising, private television channels are multiplying fuelled by advertising, and “GSMs and laptops are more common in Turkey than in some European countries”.

“The external signs of a growing market are all present in Turkey and not just for a minority,” he says. “For Europe, a continent in recession, a market of 60 million consumers should be an enticing prospect.”

Turkey is also a good base of operations for companies wishing to trade around the Mediterranean, the Black Sea and the Middle East.

Polls reveal that Turkish companies in the region expect stiff competition from EU firms now that the customs union is in place, but that they also feel a competitive environment will be good for their industries in the long run.

“There is a self-confidence and a readiness for opening up the market,” says Kaleagasi.

“They see this as an important challenge. The political will and the public opinion support are there to guarantee the future of investments and the future of business relations.”