Renewed vision for US-Turkey relations
The United States and Turkey have had a complicated relationship in recent years. Yet, events over the last few months suggest both countries understand the strategic importance of their ties and the need to place a renewed focus on strengthening the relationship. Commercial ties between the U.S. and Turkey represent one of the pillars of enduring shared interests and offer a path to regain traction in the relationship.
Private sector ties continue despite inactive formal commercial dialogues between the U.S. and Turkish governments. Fortunately, high-level statements from the U.S. and Turkish leaders suggest there are plans to incorporate the commercial relationship into the bilateral dialogue. U.S. President Donald Trump and Turkish President Recep Tayyip Erdoğan reportedly spoke about a future Free Trade Agreement between the United States and Turkey. During his January trip to Ankara, Senator Lindsey Graham (R-S.C.) also discussed the possibility of such an agreement as well as a goal for future trade volumes totaling $75 billion.
The U.S. Chamber of Commerce encourages the U.S. administration to utilize this positive momentum to initiate a new commercial dialogue with Turkey that will bring economic growth to both countries. While high-level talks are focused on U.S. defense exports, such as the F-35 Joint Strike Fighter and the Patriot Missile Defense System, there are a number of additional U.S. industries ripe for expansion in Turkey – and vice versa.
To demonstrate the U.S. business community’s interest and commitment in expanded trade relations with Turkey, the U.S. Chamber recently led a delegation of U.S. business executives and CEOs to Turkey.
Such a delegation had not traveled to Turkey since 2014, and it offered the United States and Turkey a unique opportunity to recommit to the bilateral commercial partnership. The delegation explored the vast opportunities available in Turkey and made the case for why the United States remains a key economic partner.
In fact, the U.S. Chamber’s U.S.-Turkey Business Council has identified a pipeline of approximately $40 billion in future U.S. exports to Turkey over the next several years. U.S. companies have a robust footprint in Turkey.
Approximately 1,700 American businesses operate in Turkey in a number of sectors, including the digital economy, health care, agriculture, energy, travel and tourism, finance, advanced manufacturing, and services.
These companies view Turkey as a dynamic emerging market with a diversified industrial base and entrepreneurial private sector that creates value for global supply chains. Turkey’s economic activity creates jobs here in America, while U.S. companies bring to bear unique expertise and cutting-edge technologies to facilitate a competitive, 21st century growth model.
Significant challenges still exist and are preventing the U.S.-Turkey commercial relationship from reaching its full potential. Turkey maintains a spot in the G20 as the 17th largest economy in the world, but the $20 billion in trade volume between the U.S. and Turkey is lower than that of U.S. trade with smaller economies, such as Belgium, Colombia, and the Philippines. High tariffs and market access barriers on both sides of the Atlantic limit the free-flow of goods and services.
Regulatory burdens and complex legal hurdles restrict value-added investment projects. Customs and trade facilitation reforms offer feasible opportunities that each country can seize upon in order to boost the trade volume.
Turkey maintains its strong commercial relationship with the West through the EU-Turkey Customs Union. U.S. companies gain duty-free access to Turkey’s market when exporting through EU subsidiaries.
However, these benefits are not available for U.S.-based manufacturing or agriculture.
With U.S.-EU trade negotiations scheduled to kick off this year, timing and scope are aligned for the U.S. to begin commercial talks with Turkey. This is especially true since Turkey’s Customs Union with the EU requires the country to grant the United States the same terms of any deal reached in a future U.S.-EU trade deal unilaterally.
Starting a high-level economic and commercial dialogue between the U.S. and Turkish governments would enable both countries to continue to support what has been a key political and security partnership. While diplomatic and security negotiations intensify, anchoring the bilateral relationship in trade and commerce will serve as an important reminder of these enduring shared interests.
* Khush Choksy is senior vice president for Middle East and Turkey Affairs at the U.S. Chamber of Commerce