50 billion reasons to think big on U.S.-Turkish relations

50 billion reasons to think big on U.S.-Turkish relations

Barın Kayaoğlu, Eli Lovely
Last weekend’s G-20 summit in Antalya brought together leaders of the world’s largest economies. Although the summit originally aimed to cover global economic growth, small and medium-sized enterprises, and climate change, Friday’s tragic terror attacks in Paris changed the tenor of the conversation.

Paris and the G-20 illustrated the critical links between freedom, security, and prosperity, as well as the need for closer cooperation between the United States and its global allies.

Turkey is one such critical partner. Although the host of the recent G-20 summit and the United States have been allies since 1952, their commercial relations improved only recently. U.S.-Turkish trade, at $6.5 billion in 2002, peaked at $20 billion in 2011.

Much of that growth owes to Turkey’s recent transformation from regional backwater to a global economic and political leader. With a population of 75 million people, Turkey sits in the heart of a $25 trillion market that straddles Europe, the Middle East, Africa, and Central Asia. Although its growth has slowed down in recent years, the country remains an attractive trading partner. Turkish imports are forecast to grow by 9 percent annually through 2018, presenting a great opportunity to American exporters. A 2014 study by the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the U.S. Chamber of Commerce argues that the two sides could create billions of dollars in revenue and tens of thousands of jobs if they could sell more goods and services to each other.

To be sure, U.S.-Turkish relations have had their ups and downs in recent years; Washington and Ankara have important disagreements on many issues.

But the relations have faced more “downs” than “ups” partly because the two nations have not reached their full commercial potential. With more stakeholders invested in prosperity, trade would get Turks and Americans to not dwell on their differences at the expense of their common interests.

To get there, we need to change and expand the scope of U.S.-Turkish commerce. Traditionally, the United States exported defense and aerospace items to Turkey, and imported various chemicals, cement, machinery, and agricultural produce from the NATO ally. 

This year’s American-Turkish Council Annual Conference, held in Washington on Sept. 27-30, demonstrated how U.S.-Turkish commercial ties could deepen and expand. Experts from over 10 industries met in 17 panels and discussed partnerships in the fields of finance, alternative energy, information and communications technology (ICT), tourism, and healthcare. The ATC Conference showed that there is a real chance for the United States and Turkey to grow their bilateral trade from $20 billion to $50 billion within the next ten years.

There are two strategies to enhance commercial ties between the two countries: one involves Washington and Ankara signing a bilateral free trade agreement. Although this idea is likely to meet opposition in both capitals, it should be possible for the U.S. Congress to pass Congressman Alex Mooney’s H.R. 3685, which authorizes the U.S. Trade Representative to conduct free trade talks with the Turkish government. H.R. 3685 would be a noncommittal step that would at least initiate a process of recalibrated U.S.-Turkey trade discussions that have unfortunately gone astray in recent years. 

Turkey’s inclusion in the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union is another option. TTIP, however, requires Brussels to expand its customs union with Ankara to ensure that the NATO ally is not left out of the prospective U.S.-European free trade deal. Turkey has much to lose if it were excluded from an eventual agreement, which would force it to extend tariff cuts to U.S. goods and services without receiving any benefits in return. According to a report prepared at the Brookings Institution in 2012, if Turkey were to remain out of TTIP, it would lose 2.5 percent of its GDP, $20 billion worth of foreign trade, and 100,000 domestic jobs.

It is clear that expanding trade relations between the United States and Turkey would be mutually beneficial for the overall relationship. The United States would gain from Turkey’s increasingly dynamic and expanding economy, creating growth and jobs. Turkey’s foray into the U.S. market would catalyze its economic expansion further and facilitate positive new developments in their political affairs. We have 50 billion good reasons to think big on U.S.-Turkish relations.

*Barın Kayaoğlu is an analyst and consultant in Washington, D.C.
**Eli Lovely is director of communications and marketing at the American-Turkish Council.