From good to great: Fernandez says US-Turkish trade can grow
US Assistant Secretary of State for Economic and Business Affairs José Fernandez says mutual investment and trade between the US and Turkey have gained unprecedented momentum over the past few years. (Photo: Reuters)
Even after a record 34 percent jump in bilateral trade volume last year, the US and Turkey still have room to expand dramatically their commercial ties, says US Assistant Secretary of State for Economic and Business Affairs José Fernandez.
“The question is whether ties will be good or really good,” said Fernandez, who also chairs the US-Turkey Economic Partnership Commission (EPC), a government-sponsored platform for strengthening the two countries’ trade and investment ties. “Currently there are a number of areas where we cooperate very well, but now we’re thinking about how we can help expand and improve bilateral ties,” Fernandez told Today’s Zaman in a recent interview.
The plan to expand those ties was first presented by US President Barack Obama and Prime Minister Recep Tayyip Erdoğan during Obama’s 2009 visit to Turkey, where the two agreed to find ways to create bridges and deepen investment between the two countries. Over the past three years, Fernandez said the original vision of the two leaders has developed into a number of specific proposals that demonstrate there is plenty of room to grow.
“One of our chief projects has been helping İstanbul achieve its ambitions to become a major financial center. We’re getting them in touch with members of the Securities and Exchange Commission, showing them the regulations, so they can see how it works,” the secretary said.
The EPC has also looked to help improve Turkey’s energy sector. “Turkey’s goal is to be a top 10 economy by 2023. Experts have said that Turkey will have to triple its electricity production if it wants to do so,” Fernandez said. “What we’ve done is talked about efficiency -- you can raise production, but you can also work on efficiency.” To that effect, the State Department helped set up a “Near zero zone” on the outskirts of the city of İzmir, where energy industry experts from the US will audit Turkish firms and make recommendations about how to raise efficiency. “It’s designed to promote efficiency. It will also dramatically reduce the area’s carbon footprint,” Fernandez said.
Just as Turkey might gain from American expertise, the secretary also emphasized the strong opportunities that US and Turkish firms might have if they seek more joint ventures. “We’re specifically thinking about the construction sector here, specifically in the developing world, like Libya. How can we bring them together? There are things both sides could bring to the table.” “Another growth area is pharmaceuticals. The number for drug research and development in Turkey is minimal, drug testing by Turkish pharmaceuticals is very low, given its potential. The US pharmaceutical industry says that Turkey could receive up to a billion in foreign investment a year, but they don’t get anywhere near that.” Fernandez suggested that there is a strong need for companies from both nations to develop deeper ties with their counterparts.
Despite the often limited cross-country connections between Turkish and US firms, the secretary suggested that investment is nonetheless gaining unprecedented momentum. Fernandez cited a deal late last year in which the Turkish-based company Kermit USA LLC opened up a “Turkish Business Center” in Muncie, Indiana. The company plans to invest $12.5 million for the opening of the 44,000-square-foot center and headquarters, and will produce roofing systems and slate tiles for the housing market, according to The Trade and Industry Development magazine report in November. “At its inauguration, they even had a Turkish member of Parliament,” adds Fernandez.
The episode is part of a growing trend of Turkish investment in the US, but does not exactly reflect the majority of the bilateral trade between the two states. Trade is highly imbalanced to the benefit of the United States, and Turkish exports to the US last year accounted for less than $5 billion of a $20 billion total trade volume. There are currently some 1,200 US companies registered in Turkey, against some 800 in the lead-up to the 2008 global financial crisis.
Turkey is currently the 16th-largest economy of the world with a gross domestic product (GDP) of nearly $800 billion at the end of last year. Between 2002 and last year, its average rate of economic growth was 5.4 percent. This year the government expects another 4 percent of GDP expansion and aims to sustain a growth rate of 5 percent in the long term. Other than the top 10 economies goal, the country also seeks to bring its export volume up to $500 billion -- it was $135 billion last year -- and to develop its own national car and airplane brands by 2023.