Transatlantic alliance to cost Turkey ‘$20 billion’
Turkey, which will be forced to open up its markets to the US in the event of a EU-US free trade partnership, should engage in a parallel deal with the US, Kemal Kirişçi, the author of the study, said in research published by the Brookings Institute and the Turkish Industry and Business Association. REUTERS photo
A transatlantic free deal trade currently being negotiated between the European Union and the United States could cause the Turkish economy to lose $20 billion if Turkey is left out of a final agreement, an analysis prepared by the Brookings Institute and TÜSİAD has shown.
The EU and the U.S. kicked off the talks to initiate a Transatlantic Trade and Investment Partnership (TTIP) in July.
Since the potential partnership would force Turkey to open up its market to export goods from the U.S without being granted reciprocal preferential access for Turkish goods, the Turkish government and business leaders have been advocating that Ankara be included as well.
Turkey, which will be one of the main losers in the U.S.-EU trade alliance, should engage in a parallel deal with the U.S., Kemal Kirişçi, the author of the study, said in research published by the U.S. Brookings Institute and the Turkish Industry and Business Association (TÜSİAD).
The research demonstrates that Turkey’s potential income loss would be 2.5 percent, which would amount roughly to a $20 billion loss based on Turkey’s GDP last year.
“One immediate consequence that would be expected is that the current $8.5 billion deficit that Turkey had in its trade with the U.S. in 2012 would most probably grow,” the study said.
This is because of the Customs Union agreement’s terms between Turkey and the EU. According to the union deal, the goods of any third party that the EU has a free trade deal with can enter Turkey with zero duties, but the decision to provide the same privileges to Turkey is up to the third party.
Other free trade deals
The report also points at other ambitious free trade talks that the U.S. has been involved in since the deals would deal a blow to Turkish goods’ further competitiveness in the American market. Besides the TTIP, the U.S. is also negotiating the Trans-Pacific Partnership (TPP) with 11 East Asian and Pacific countries.
“This is highly likely to happen because the top export items from Turkey to the U.S. [vehicles, machinery, iron and steel products and cement] overlap to a large extent with the major exports items of the EU as well as South Korea and some Asia-Pacific countries,” Kirişçi said.
The exclusion of Turkey in the TTIP mechanism would cause a significant trade diversion in Turkey’s trade alliance with the EU, its top export market with whom it runs a $28 billion trade deficit, to the disadvantage of the former, the study indicated.
“There is a clear recognition that Turkish companies would be seriously disadvantaged by the competition from the U.S. and other third-party companies benefiting from preferential access to the EU,” it said.