EU-Turkey Trade Relations 31st Meeting of the EU-Turkey Joint Consultative Committee Dimitris Tsarouhas Jean Monnet Chair Assistant Professor, Department of IR Bilkent University www.bilkent.edu.tr/~dimitris 20 December 2012, TOBB

Free Trade: an Evolving Idea The EU’s Trade Policy Presentation Outline Free Trade: an Evolving Idea The EU’s Trade Policy EU-Turkey Trade Relations Global Business Bridges: Innovative Initiatives Adding Value to the EU-TR Partnership

Free Trade: An Evolving Idea 1701, Considerations Upon the East India Trade (Henry Martin): Technological progress and imports allows for an efficient use of resources 1817 David Ricardo: Comparative Advantage, trade as a non-zero sum game Mid-19th Century: repealing the UK Corn Laws, the Cobden-Chevalier Treaty of 1860 – MFN Clause Free Trade reliant on ideology and interests This is a fragile coalition at best (e.g. Interwar period, protectionism in most of Europe till 1945). Bretton Woods and WTO: trade as a welfare-generating mechanism

The EU’s Trade Policy Goal: to create a fair and open trade system by use of WTO mechanisms and procedures Assessment: benefits of globalization and open markets outweigh the costs How? Generates growth, reduces prices and enhances quality, offers more employment opportunities (trade sector employs 18% of EU workforce) The EU accounts for 20% of global exports and imports EU imports more agricultural products from the developing world than the US, CAN, AUS, JPN, and NZ put together EU and M-S account for more than half of all development aid EU trade market share: 19.4% (US 12.5%, Japan 8%). Trade volume doubled from 1999 to 2010

EU-TurkeyTrade Relations:Overview Economic Relations date back to the 1963 Association Agreement – enhancing economic and trade relations 1970s Additional Protocol, 1996 Customs Union EU Turkey’s No.1 imports and exports partner; Turkey Europe’s 7th largest importer and 5th largest exporter Turkey exports machinery and transport equipment EU exports machinery, transport materials, chemical products and manufactured goods EU primary source of FDI in Turkey (75%)

EU Trade with Turkey: Going Strong Despite The Crisis Year Imports (in mill. of €) Share of Total Imports Exports (in mill. of €) Share of Total Exports 2008 45.960 2.9% 54.093 4.1% 2009 36.197 3.0% 44.101 4.0% 2010 42.323 2.8% 61.253 4.5% 2011 47.588 72.588 4.7%

Turkey’s Trade with the EU: Robust Despite the EU Crisis Year Imports (mill. of €) EU Share of Total Imports Exports (in mill. of €) EU Share of Total Exports Trade 2007 49.910 40.8% 43.974 56.8% 93.884 2008 50.559 37.3% 42.916 47.9% 93.475 2009 40.432 40.5% 33.585 45.9% 74.017 2010 54.610 39.3% 39.754 46.3% 94.364

EU Remains Turkey’s Most Important Trade Partner: By Far Turkey’s Imports Partners Turkey’s Exports Partners Major Trade Partners 1) EU-27 54.610 39.3% 1) EU-27 39.755 46.3% 1) EU-27 94.364 42.0% 2) Russia: 16.291 11.7% 2) Iraq 4.564 5.3% 2) Russia 19.788 8.8% 3) China: 13.000 9.4% 3) Russia 3.497 4.1% 3) China 14.715 6.5% 4) USA 9.338 6.7% 4) USA 2.906 3.4% 4) USA 12.244 5.4% 5) Iran 5.791 4.2% 5) UAE 2.522 2.9% 5) Iran 8.092 3.6%

Global Business Bridges Promoted by the EUD – a Positive Business Agenda Aims to facilitate EU-Turkey business matchups, reaping the benefits of the CU Economic and investment synergies of enterprises Joint Ventures in neighbouring markets A win-win approach, supported by M-S and TR authorities (TOBB, MoE etc.) Aims: business alliances, PP partnerships, technology and know-how transfer, cross-border service provisions, joint investments and ventures

Global Business Bridges II: the Salience of Synergy Target Regions Phase 1: Tunisia, Egypt, Palestine Target Regions Phase 2: Iraq, Kazakhstan, Azerbaijan Arab Spring and global political change pose huge challenges to economic governance EU-TR partnership a uniquely placed stabilizing factor Ideal to facilitate investment, support local infrastrcuture and promote a business-friendly environment