Silk Road countries to grab a greater share of world trade
by Hayati Yazıcı*

It is also an embodiment of common historical and cultural assets of the peoples living in this area. Being one of the world’s longest and oldest international trade routes, the Silk Road has historically helped the regions it passes through develop in economic terms and boosted their economic welfare, and at the same time served as a bridge and a meeting point for Eastern and Western cultures and civilizations.

The Silk Road project will serve as a means for countries that have had long and enduring friendships to forge stronger ties at a time when international relations and the world system are being reshaped anew. As countries located along the historic route of the Silk Road, China, Azerbaijan, India, Iraq, Iran, Kazakhstan, Kyrgyzstan, Mongolia, Uzbekistan, Pakistan, Russia, Syria, Tajikistan, South Korea, Taiwan, Vietnam, Thailand, Afghanistan, Georgia and Turkey should continue to maintain our historical strong bonds of friendship.

The Silk Road is actually a result of geopolitics. It is the economic artery of the area stretching from China, located on one side of the ocean, to the Mediterranean Sea, which is closer to other oceans and seas, to India and Europe. Today, we are on the brink of a new transformation. This transformation consists of efforts to revive the Silk Road via an extensive railway network, transportation lines, customs gates, energy corridors and natural gas pipelines, making this area a major player in the world economy. When this project is completed, large amounts of goods and production means will be able to be transferred from Central Asia to Europe or vice versa. The Silk Road will become one of main economic routes of the world economy.

In 2011 and 2012, the rate of increase in world trade is expected to decline. Economic estimates concerning the second half of 2011 and future years are mostly negative around the world. As of today, the world economy is expected to grow by 4 percent on average this year and next. However, growth rates in developed countries are dropping to much lower levels. On the other hand, the participating countries in this area, i.e., the Silk Road countries, are experiencing a rise in their share of world trade. The anticipated growth around the world will in the countries located in this region.

Turkey’s stable growth

China is the world most rapidly growing country. Likewise, India is a nation that represents the power of the region. Russia, Iran and Azerbaijan are arousing the world’s attention with their economic growth figures. As for Turkey, despite the economic troubles that Europe and developing countries are experiencing right next door, Turkey continues to exhibit stable growth. We are currently Europe’s fastest growing economy. Our average growth rate was 9 percent last year, and it is 10.2 percent for the fist half of this year. We foresee an average growth rate of 7.5 for this year.

This area of the Silk Road is becoming the hub of the world economy once again, and it has the potential to become the lifeblood of this hub. Our region has major energy resources, the energy lines routes that carry these resources to other parts of the world, the transportation corridors that connect continents to each other and most importantly, a young and dynamic population and rapidly growing economies.

The Silk Road countries have 22 percent of approximately $30 billion worth of total world trade volume. Given the growth rate of the countries in the region, it is clear that the region will have a greater share of world trade. They have the dynamism and resources to take the initiative. Despite the increasing share of the Silk Road countries in world trade, the share of the historic Silk Road in the transportation traffic between Asia and Europe is below 1 percent. Today, in the traffic between Asia and Europe, 80 percent of industrial products are transported by sea, while the landlocked Silk Road countries cannot make use of the sea for shipping.

I am noting these facts not to draw a pessimistic picture, but to clearly point out what must be done in the first place. We need to correctly identify the current situation of the historic route before making our plans properly in the fastest way possible to achieve our goals. Inadequate infrastructure at border crossings, intense physical controls, frequent changes in administrative procedures and legislation are the most prominent problems concerning the current situation.

Customs procedures constitute about 15 percent of the costs of world trade. A study performed by the Organization for Economic Cooperation and Development (OECD) found that even a 1 percent decrease in this rate will contribute about $40 billion to the world economy. In the light of this finding, we can conclude that the smooth operation of the supply chain has positive consequences for welfare and development. Another OECD study estimated that a one-day wait at customs creates an additional burden corresponding to a 0.05 percent customs duty. Another study showed that a four-day waiting period brings an additional cost that is equal to the customs duty for manufactured products.

We have demonstrated our determination in the meetings held first in Antalya in 2008, then in Baku and Tehran, respectively in 2009 and 2010, and finally in Batumi, Georgia, today. The road to co-development of the peoples living in this area is to simplify customs procedures and facilitate trade. Our goal is to modernize border crossings, reduce route costs, increase the efficiency of customs administrations and improve international cooperation. Any facilitation and harmonization at customs administrations will give momentum to the Silk Road countries, directly boosting their welfare. Our basic goal is to ensure that products we produce in this region are transported to recipient countries in Eastern-Western axis in the fastest, easiest and safest way.

*Hayati Yazıcı is Turkey’s customs and trade minister.