Topping Turkey’s economic concerns — above stagnation, spiraling unemployment and rising inflation — is the prospect of being left on the sidelines of the developing EU-US Transatlantic Trade and Investment Partnership. Aside from the political isolation for Ankara, being excluded from the deal could cost the nation $20 billion. If they are to avoid this outcome, Turkish stakeholders will have to look further than Brussels for support.
With its accession to the EU no closer than it was a decade ago, and with its Customs Union agreement with Brussels approaching 20 years old, Ankara has hardly seemed motivated in recent years to push for western rapprochement. Rather, it has been an outspoken voice among western peers in the UN and NATO, focusing on regime change in Syria above defeating ISIL, and electing not to impose sanctions on Russia for its annexation of Crimea. Indeed, the German Marshall Fund’s (GMF) 2010 Transatlantic Trends Survey tracked the plummeting support in Turkey for the idea that “EU membership is a good thing,” from 73 percent in 2004 to 30 percent in 2010. In 2014, the figure nudged up a bit, with 51 percent of Turks favoring closer ties with Europe.
The following weeks and months, however, will be pivotal in shaping Ankara’s future relations with the West. Turkey’s interests in the EU and US have been revitalized. Its membership to the European Customs Union is long due for renewal, and talks are underway to expand the agreement beyond merely trade in manufactured goods into agriculture, service and public procurement sectors. Further export opportunities such as these are essential to Turkey’s ambitious aim of becoming a top-ten global economy by 2023.
At the same time, an EU-US TTIP agreement is at once extremely promising and worrying for Turkey, depending on which side of the agreement it falls. The TTIP’s new regulations of negating tariffs, syncing sector regulations and removing non-tariff barriers to trade will raise margins and increase trade for all countries involved.
Yet if Ankara does not qualify, due to its unique position, it will stand to suffer particularly sharp economic blows. As Turkish officials have been quick to point out, as a signatory of the Customs Union the country’s market would be opened up to foreign imports, while its exports would not benefit from the same tax advantages of the TTIP. A study by the Brookings Institute noted Turkey would shoulder a 2.5 percent (or $20 billion) hit to its real income and lose 96,000 jobs.
Turkish officials have therefore been working overtime to secure favorable terms for both a renewed Customs Union deal and for the TTIP.
EU Affairs Minister and Chief Negotiator Volkan Bozkır enthusiastically told journalists, “We wish to expand the Customs Union with agriculture, the service sector and public procurement. We will start the restructuring negotiations at the end of this year. Thus, a trade volume of $300 billion will be reached.” Turkish diplomats have also been playing hardball with Brussels, warning that if Turkey is not included in the TTIP arrangement it will withdraw from Customs Union negotiations.
However, Turkish officials and business stakeholders cannot rely on the ultimately discordant voices of EU members to guarantee the TTIP falls in Turkey’s favor. After more than 15 years of thwarted attempts to achieve EU membership, complicated by the geopolitical maze of two dozen sovereign nation members with diverging interests, Ankara should not be holding its breath for Brussels to ensure Turkey benefits from the TTIP.
Instead, Turkey must communicate directly with the US in order to secure positive trade terms, even if this means creating a bilateral free trade agreement separate from the TTIP. The former chairwoman of the Industrialists’ and Businessmen’s Association, Arzuhan Dogan Yalçındağ, commented recently, “Turkey has withstood the competitive pressures coming from low-cost, third-party countries without much funding from the EU… [But] if Turkey is not included in the TTIP process, we fear our interests will be harmed.”
These valid fears would be better off voiced at Capitol Hill, where stakeholders can more likely be relied upon to respond. Last week’s visit to Washington DC by Turkish Deputy Prime Minister and Economic Chief Ali Babacan is a sign that Ankara is aware of the importance of lobbying Congress, the Obama administration and other US stakeholders. If this tact is to be successful, however, the voices of Turkish businesses must be heard by US ears.
Indeed, it is in the interest of the US to pay attention to these voices: not only from a business perspective, but even more importantly from a geopolitical standpoint. Deepened commercial engagement with the West will necessitate greater liberalization and naturally precede political cooperation. At a time when the US worries about President Recep Tayyip Erdoğan’s rule-of-law architecture, a free trade agreement with Turkey will reengage a key strategic partner in the Middle East toward democracy.
Both Turkey and the US would have something to gain from improving their trade agreements. What seems to be only slowly dawning on both sides is how much they might lose from a failure to do so. If both Washington and Ankara play a smart game, both parties might avoid missing out on a fragile opportunity.
