Turkey is a hotspot for leading U.S. officials recently. By the end of the month, President Barack Obama, Chairman of the Joint Chiefs of Staff Joseph F. Dunford, and Vice President Joe Biden will have visited Antalya, Ankara, and Istanbul, respectively, since late November, to hold talks with Turkey’s President Recep Tayyip Erdoğan and Turkey’s Prime Minister Ahmet Davutoğlu.
While the central focus of these discussions is rightfully security and refugee cooperation, enhanced commercial and economic integration plays a critical role in helping to stabilize the region. U.S. businesses see the robust bilateral engagement and hope that both governments will seize the opportunity to rekindle high-level talks around tangibly advancing U.S.-Turkey trade and investment.
It was nearly three years ago at the U.S. Chamber of Commerce when Vice President Biden voiced support for a future U.S.-Turkey Free Trade Agreement (FTA) during then Prime Minister’s Erdoğan’s visit to Washington. At the time, U.S. and Turkish governments announced a new committee to address Turkey’s position vis-à-vis the Transatlantic Trade and Investment Partnership (TTIP) negotiations and U.S. corporate leaders launched a U.S.-Turkey Business Council to upgrade bilateral commercial ties.
But not much progress has been made on a bilateral FTA since. As TTIP marches toward its 12th round, Turkey watches from the sidelines while the United States and Turkey have been singing trade policy positions that are largely out of tune with each other. Turkey has called to be part of TTIP due to its Customs Union with the European Union and North Atlantic Treaty Organization (NATO) alliance, while the United States contends that TTIP is a trade pact between the EU and the United States that can only be earned in the future through tough structural reforms. To protect itself against future preference erosion from TTIP, Turkey has moved in the direction of a domestic production model that can harm foreign investment at a crucial time for emerging markets and make it harder for Turkish firms to compete abroad.
The good news is that Vice President Biden’s visit can bring greater harmony to the $20B U.S.-Turkey trade and investment relationship by encouraging Turkey to focus on modernizing its Customs Union with the EU as a clear pathway toward inclusion into TTIP. Turkey has taken to modernize its EU Customs Union with renewed vigor as cooperation deepens with the EU on the regional migrant crisis. Deputy Prime Minister in Charge of the Economy Mehmet Şimşek conveyed this positive message to U.S. officials and the business community in Washington in early January.
DPM Şimşek spoke of the sweeping reforms underway in public procurement processes, intellectual property rights, the patent law, data protection, the judiciary, and other areas. U.S. companies are encouraged by Turkey upgrading its Customs Union with the EU and want to work with policymakers in Ankara to adopt world-class standards in each of these areas that will enhance the competitiveness of the business environment, further enable the country’s manufacturing base to integrate into global value chains, and emerge as a high-tech services hub.
During Vice President Biden's discussions with President Erdoğan and Prime Minister Davutoğlu, the U.S. business community hopes he will urge the Turkish government to make the necessary reforms to fully integrate with the EU single market as TTIP negotiations continue. Next month, the U.S. Chamber of Commerce’s U.S.-Turkey Business Council and the Union of Chambers and Commodity Exchanges in Turkey (TOBB) will hold sectoral roundtables with the Turkish Government to advance cooperation in healthcare, ICT, and Travel/Infrastructure toward this goal.
In a world of slowing growth, Turkey’s economy has propelled forward at a rate of 4.2 percent in spite of the myriad domestic and regional challenges. So while the political and security relationship is layered with complexities, doing business together should be as straightforward as possible.