Obama’s legacy on Turkish-US trade ties

If you ask me, the most important contribution the US administration made under the watch of President Barack Obama to improve bilateral relations with regional power Turkey is the renewed focus on trade and investment, a crucial element that was lacking considerably between the long-time allies. Realizing that trade has been a hostage to the military-industrial complex existing in both countries for a long time, Obama made an attempt to change the old dynamics by ordering his economy and trade tsars to lay the foundation for future economic cooperation between the US and Turkey.

The US sees this as a “strategic partnership,” as reiterated by Obama in a December 2009 meeting with Turkish Prime Minister Recep Tayyip Erdoğan. Both leaders agreed to establish the US-Turkey Strategic Economic and Commercial Cooperation (FSECC) dialogue. The process was co-chaired by US Trade Representative Ron Kirk and Secretary of Commerce Gary Locke on the American side and Deputy Prime Minister Ali Babacan and Minister for Economy Zafer Çağlayan on the Turkish side.

In other words, the Obama administration is trying to beef up the weak economic component of bilateral ties in order to complement the strong political and military relationship it has long enjoyed with Turkey. This is a very smart move on both sides, and it will make the relations sustainable, putting them on a solid footing and reducing the risk of tension likely to be caused by current political developments. This diversified approach that includes the involvement of senior-level officials and key agencies across the bureaucracy as well as the private business community was seriously considered for the first time, with tangible results already on the way.

Just on Monday, we saw the latest in a series of meetings held this year between Turks and Americans. The seventh meeting of the Economic Partnership Commission, which has been regularly held since 2002 between Turkey and the US, was convened on Monday with a new focus: How to flesh out the FSECC framework. The meeting was co-chaired by Selim Yenel, deputy undersecretary for bilateral political affairs and public diplomacy, and US Assistant Secretary of State for Economic, Energy and Business Affairs Jose Fernandez.

I was encouraged from the conversation I struck up with Yenel back in April about the prospect of economic cooperation with the US. He was quite upbeat on the promise of the new cooperation heralded by Obama and described the mood in the meetings with his American counterparts as a “very receptive audience.” We later ran a full-page interview with him saying, “Obama’s policy towards Turkey trickled down to economic sectors.” The assessment of the situation by Yenel, who is among the new generation of rising stars in the Turkish Foreign Ministry, is valuable input because of his expertise in dealing with EU diplomats during his career. “Americans are ready to listen to our concerns, while EU diplomats are all about lecturing,” he said during the interview.

If Americans mean real business this time, then we are on the right track to solidify our ties with the US. It would be naïve to expect the change to occur right away, but the course set since 2009 would not really be hampered by a change in the White House. As a trading nation since colonial times, America knows the value of trade and investment in generating revenue for the Treasury and creating employment back home. No matter who is in charge of the Oval Office, be it internationalist or isolationist, it would not be easy to discard flourishing economic ties with an emerging economic power in the Middle East. Americans have come to understand that Turkey is not only a promising market for US goods with a booming consumer market of 74 million people and a young population but also a key valuable partner in exploring new opportunities in third markets like the Middle East, Central Asia and North Africa, where the US and Turkish companies may very well work together in joint endeavors.

In the meantime, we need to keep an eye on the trade figures between the two countries to see how much of the pledge of “strategic economic cooperation” is fulfilled. We ought to understand that we are in this new game for the long haul, but there will surely be early signs of what comes next. The latest data from the Turkish Statistics Institute (TurkStat) indicate some encouraging news in that regard. In the first eight months of the year, Turkish exports to the US jumped 23 percent compared to the same period last year, reaching $3 billion, up from $2.4 billion. Imports from the US, however, soared to $11 billion from $7.3 billion in the same period, an increase of 51 percent. The overall trade volume last year also saw an increase of 36 percent from $11.8 in 2009 to $16 billion in 2010.

The sheer increase in trade figures does not tell the whole story, unfortunately. There are some concerns that need to be raised here. First, the US targeting of the Turkish consumer market as a priority because of its potential — as described in the export enhancement strategy of the US by a key interagency Trade Policy Coordination Committee (TPCC) — should not come at the expense of widening Turkey’s trade deficit. Currently, trade heavily favors the US side and would likely remain so for some time because we mostly import aircraft, machinery, textiles and agricultural products. The US should further open up its market for Turkish products such as cars manufactured here and remove trade impediments to pave the way for more balanced cooperation in the long run.

Americans should also try to avoid creating a perception that the US is only interested in making sure its products are protected and its companies are more competitive in the Turkish market. Focusing on intellectual property rights and the biotechnology, energy and pharmaceuticals industries where US firms clearly have the edge are understandable from the Washington perspective, but negotiations must go hand-in-hand with a vision to improve and enhance the capacity of Turkish industries in these fields as well as to level the playing field.

My last but not the least concern is how much priority should be given to support small and medium-sized enterprises (SMEs) in this joint endeavor. As a strong believer in the power of SMEs in driving bilateral relations in a positive sense, I was alarmed when I heard some US diplomats in Ankara talking rather less enthusiastically about the role of these companies in making strides in economic cooperation. The success of the Turkish economic boom today is very much credited to the rising power of SMEs in Turkey that put the country on the map of emerging economies. To discount their role in the words of one Ankara-based US diplomat, “You hardly make a dent in the picture by spending time and energy on SMEs,” would be a huge mistake.

There are many success stories in which Turkish SMEs of a decade ago have graduated today into the major leagues of leading companies, transforming many cities in the heartland of the country into a hub of exporters and traders. Trade was rescued from the monopolistic grip of the big wealthy club based only in few cities like Istanbul, Ankara and Izmir. Therefore, I am very much hopeful that officials on both sides give considerable emphasis to SME collaboration. In that regard, the talks between the US Small Business Administration (SBA) and its Turkish counterpart, the Small and Medium Industry Development Organization (KOSGEB), should be further explored. KOSGEB is also pursuing similar talks with the US Department of Commerce’s Minority Business Development Agency. Let’s give these SME boys a chance to prove themselves in furthering economic partnership between Turkey and the US.

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