In this column I will focus on the NTE report's critique of Turkish international trade and foreign direct investment (FDI) policies. As its first major complaint, the NTE report is critical of Turkish import policies in terms of both tariffs and quantitative restrictions, especially on food products and agricultural goods. It notes that Turkish tariff rates on these products are high, averaging 25 percent on a most-favored-nation basis but showing a great deal of variation across individual categories. As for quantitative restrictions, it complains about the opaqueness of the Turkish import licensing system, applicable to food products and agricultural goods, as well as the de facto ban on the importation of some products such as livestock and meat. It is worth noting that in November 2005, the United States brought a complaint against Turkey at the World Trade Organization (WTO), claiming that Turkey restricted market access for US rice exports through an opaque discretionary licensing system and occasional total import bans, based on a tariff rate-quota, despite Turkey's Uruguay Round commitment to allow rice imports at a bound tariff rate of 45 percent. This case has not yet been decided. The dispute settlement panel composed for this case is still considering the merits of the US complaint and Turkey's responses to that complaint. Furthermore, the NTE report claims that Turkey's technical regulations and phytosanitary requirements are often opaque and applied arbitrarily, acting as administrative barriers to imports of food products and distilled spirits.
Although the NTE report is also critical of Turkish export subsidies, especially for wheat and sugar, which it claims violate the EU directives and Turkey's WTO commitments, its second major complaint is reserved for Turkey's lack of adequate protection for intellectual property rights (IPRs). Every year, 30 days after submitting the NTE report, the USTR issues its so-called "Special 301" report on the adequacy and effectiveness of IPR protection by US trading partners around the world. In last year's "Special 301" report, Turkey was placed on the "priority watch list" for two reasons. The first reason was US concern about the lack of IPR protection for confidential test data provided by pharmaceutical firms against unfair commercial use. The second reason was the US complaint about continued widespread piracy and counterfeiting of copyrighted materials and trademarks. The 2007 NTE report, in advance of the 2007 "Special 301" report, claims that despite the improvements in Turkey's IPR protection in recent years, serious problems persist. It draws attention to loopholes in the copyright law as well is its weak enforcement and the shortcomings in the recently amended patent law, especially for pharmaceutical products.
The rest of the NTE report contains US criticism of Turkey's import and FDI barriers in services, especially establishment restrictions in financial services, the petroleum sector, broadcasting and maritime transportation. It also criticizes Turkey's policies in the energy sector that are claimed to have harmed the interests of US-owned companies and creditors. The NTE report does note, however, that in recent years Turkey's inward FDI environment has improved significantly and that as a result, inward FDI flows have increased substantially.
The NTE report is not based on independent and unbiased research and analysis. It is, after all, prepared by a US government agency that is required to serve US national commercial interests. It often complains about policies and practices in other countries, policies for which the US itself is not free from blemish and blame. Domestic politics in every country, based on the logic of collective action, plays a major role in how national foreign trade and FDI policies are made and applied. This notwithstanding, the NTE report's criticisms of Turkey's trade and FDI policies are bound to have some degree of legitimacy in some areas. Addressing Turkey's shortcomings in those areas with justifiable US complaints might help both Turkish and US commercial interests, since international trade and FDI are supposed to be win-win activities for both countries.
