Trade preference program for OIC members on the way

At the conference on Thursday, which was organized by Turkish Exporters Assembly (TİM) President Mehmet Büyükekşi and Turkish Confederation of Businessmen and Industrialists (TUSKON) President Rızanur Meral, Çağlayan spoke about Turkey's current trade strategies, especially in regards to the claim that Turkey is shifting away from European markets. “Comments claiming that Turkey is turning from the West to the East are incorrect; we do not have the luxury of ignoring the European market. We do, however, have other markets that we can sell to,” he said.

Çağlayan emphasized that trade strategies such as “trade with neighboring countries, product and market diversification and adherence to the market” did not mean that Turkey had turned away from the European Union.

Noting that Turkey had lost a significant amount of market share in exports to its biggest markets such as Germany, Italy and Russia between January and September, Çağlayan revealed that Turkey increased its trade by 20 percent to 110 percent in untapped markets in Africa and other Islamic countries. He also noted that a trade preference system with OIC countries could greatly benefit trade.

The trade preference system in question was the Protocol on the Preferential Tariff Scheme for TPS-OIC (PRETAS). After 10 OIC members ratified the Framework Agreement on the Trade Preferential System Among the Member States of the OIC in 2002, the Trade Negotiating Committee (TNC) was formed. After the first round of trade negotiations between April 2004 and April 2005, the TNC agreed on PRETAS, which focuses on reducing tariff and non-tariff barriers to trade between countries that have ratified the protocol.

State Minister for foreign trade Zafer Çağlayan is exchanging souvenir ceramic plates with South African Parliament Speaker Max Vuyisile Sisulu in Capetown.

In regards to PRETAS, Çağlayan said: “If 10 out of the 57 members of the OIC approve the agreement, then the deliberation period could start. Eighteen have signed the Framework Agreement for the Trade Preferential System, but only eight have finished the approval process. Bahrain and Bangladesh finished the approval process recently. We are now at the required 10 with Turkey, Jordan, Malaysia, Oman, Pakistan, Syria, Saudi Arabia, the UAE, Bangladesh and Bahrain having approved the agreement. Our goal is to implement this trade preference program by 2010.”

Çağlayan, while highlighting that Islamic countries comprise 7 percent of the world economy but only 1.8 percent of world trade, reminded the audience that the OIC’s five-year goal of increasing trade between Islamic countries from 15 percent to 20 percent could be reached shortly by relying on free trade between these countries.

Çağlayan compared the OIC countries’ share in Turkey’s trade and stated that it had increased from 22.8 percent to 28.9 percent since September of last year. He said they would be exerting themselves to increase cooperation and trade with Islamic countries. Çağlayan also stated the importance of trade with the neighboring region, noting: “The best trade is with neighbors. We’ve increased trade with neighboring countries sevenfold in the span of six years. In the coming years we plan to take advantage of new opportunities in trade with Islamic countries.”

Çağlayan explained that they had, under the new strategic trade framework, determined which countries were affected by the crisis and found that developed countries experienced a shrink in their markets, while closed economics grew and overcame the crisis. On this note, Çağlayan highlighted that “African nations grew and we are now focused on this market. We will take our exporters and have them visit each country in Africa.”

Çağlayan also mentioned that they have shifted toward countries with trade surpluses and high levels of foreign exchange reserves, saying: “Algeria has a trade surplus of $40 billion. China had a trade surplus of between $200 to $250 billion and $2.5 trillion in foreign exchange reserves. Many countries are in similar positions, including Islamic countries. The availability of capital and the fact that they weren’t significantly affected by the crisis led us to seek new opportunities with them.”

Çağlayan, while expressing the difficulties associated with forming free trade agreements, stated: “In 1996 there were some missed opportunities when Turkey joined the European customs union. There were a few topics that were not given enough importance. While the European Union brought down our customs walls, we should have emphasized that there be a clause that included Turkey in all of the free trade agreements the union took part in.”