Should Turkey protect Vestel?

The political landscape in Turkey is very lively these days. A minister and a mayor are arguing publicly about very personal issues, many people are trying to secure a place for the coming elections and polls are being published one after the other, etcetera. However, none of them is as important as the ongoing Vestel bid for protection against foreign mobile phone operators in the Turkish technology industry.

In December last year, Vestel publicly declared and submitted a bid to be protected against foreign mobile phone manufacturers. Vestel claimed the Turkish mobile phone business cannot flourish under the current regulations. They claimed 99 percent of the market is dominated by manufacturers from China, Taiwan and the EU. Vestel wants to protect its new product Venus from competition. Turkish companies like Telpa, Ova Elektronik and NCB Telekomünikasyon are backing the complaint. These companies are producing and selling other Turkish mobile phone brands such as General Mobile.

According to Tom Miles of Reuters, safeguard tariffs are allowed under World Trade Organization (WTO) rules, subject to strict conditions. One condition is that a country considering their use must solicit opinions from interested parties, whose submissions Turkey published on Monday.

In its submission, the 28-nation EU said Vestel’s petition was “very surprising” because it had only just started making phones so it could not demonstrate it had suffered from a surge in imports - and there had been no such surge in any case.

“It is almost impossible in this case to establish any kind of injury [to Turkey’s mobile phone sector],” said the EU, which Turkey aspires to join.

Taiwan said data submitted by Vestel showed the growth of imports had not been “recent, sudden, sharp and significant,” as required by the WTO to justify safeguard tariffs.

As a consumer, I believe no company should be protected based on their nationality. Vestel should be able to compete with the best of the best to give me products that I would want to use with my free will, not because I have to use it. We have seen in the past that protections only cause the markets to be dominated by over-priced, mediocre products.

However, having said that, I recognize the need to protect Turkish companies from a political and national business community standpoint.  Turkey is not a producer but a buyer of technologies and we have to end this dependence sooner or later.

I believe blocking the sales of foreign brands is not in the best interest of the Turkish people or Turkish companies like Vestel. I believe the government should give them all the incentives it can give but let them compete in a free market atmosphere. I believe in this way we can let Vestel grow and ensure that their products will meet the people’s needs simultaneously. This might be the only way to make sure that Vestel will be able to sell mobile devices to the rest of the world as well. No country has a tariff against mobile phone producers. Let’s not make Turkey the first one to apply tariffs, but rather be an exporter of mobile phones.