Possible Impacts of TTIP on Turkey
The impacts of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and US are very crucial for their economies, but it is also obvious that TTIP will impact non-members as well. If Turkey is a part of TTIP, the relationship between Turkey and the EU would be more active. On the other hand, if Turkey is excluded from TTIP, there will be negative impacts for Turkey. In this article, the possible impacts of TTIP on the Turkish economy are examined.
According to Business Europe's position paper, Turkey is a fast growing entrepreneurial European economy and its inclusion into TTIP would be an added value for the business communities of both sides. According to Nuray Terzi, if TTIP between the EU and US were to include Turkey, the increased economic integration would have a positive influence on the Turkish economy; and both the trade volume and output would be increased in Turkey. Terzi also claims that FDI from the EU and US into Turkey would be higher than before. Also, it would be good to include Turkey into TTIP because being a part of TTIP would strengthen the will of Turkey towards the membership to the EU. This means that if Turkey is a part of TTIP, the relationship between Turkey and the EU would be more active.
On the other hand, if Turkey is excluded from TTIP, there will be negative impacts for Turkey. The empirical data shows that Turkey's trade deficit with the EU in 2012 was $28.259 million; in 2013 was $29.418 million. Its trade deficit with the US in 2012 was $8.526 million; in 2013 was $6.956 million. This indicates that if Turkey is not a part of TTIP, these deficits would increase even more.
In terms of investments, between 2002 and 2012, Turkey's total investment in the US and the US's total investment in Turkey were $1.1 billion and $8.5 billion respectively. With the EU, in 2012 the outward stock of Turkey was €73.1 billion while the inward stock was €11.9 billion. This imbalance in the light of Turkey means that if Turkey is not a part of TTIP, the investments would decrease; therefore the Turkish economy would go to a more difficult way.
Furthermore, as Turkey has a Customs Union with the EU, when TTIP takes force, goods from the US would enter the Turkish market without any tariff, but Turkey would not enter the American market without any tariff. Since there is no free trade agreement (FTA) between Turkey and the US, and since it is unlikely that the US could establish a FTA with Turkey in such a short time frame, this would undoubtedly be a serious blow for Turkey in terms of its foreign trade balance. Related to this, the recently published World Bank evaluation argues that if the EU and US remove all tariffs on bilateral trade, but with Turkey continuing to face restrictions in the US market and maintaining tariffs on US imports, Turkey would face a welfare loss of $130 million. Additional research shows that TTIP would lower the welfare of Turkey by an estimated rate of about -2.5%. Real GDP per capita would suffer a 0.3% drop with; 95.000 people at risk of unemployment, which is near 0.38%. Thus, those empirical data indicate that Turkey has to take precautions very immediately to eliminate those possible impacts of TTIP.
Also, it is very obvious that TTIP would require a monumental effort for the harmonization of the bilateral legal structures. This means that TTIP would lead new and more stringent regulations to be imposed on several different business sectors; therefore the fall out of such a legal process for Turkey is the need for a painstaking process of harmonization of the local laws, regulations and technical standards with the ones that would be imposed by TTIP.
Finally, there would also be political impacts of TTIP for Turkey because according to Kader Sevinç, Representative of the Republican People's Party in Brussels, TTIP represents a new Western world order. From her statement, it could be deduced that through TTIP the US would be able to create the new Western axis against China economically and against Russia politically. In this respect, by including Turkey in TTIP, it would strengthen this new possible axis for the sake of the triangular relations between Turkey, the EU and US. Reversely, excluding Turkey in the TTIP negotiations could weaken this new possible axis for the sake of the triangular relations.
Briefly, if Turkey does not integrate itself into the Transatlantic Trade and Investment Partnership, it is clear that the economy will be deeply affected.
Hacı Mehmet BOYRAZ is a Bachelors student at Gediz University, double majoring in International Relations and Political Science & Public Administration. He was the President of Gediz University European Union Club from 2013 to 2014. His research areas include Conflict Resolution, the European Union, Foreign Policy of Turkey, and Sub-Saharan Africa.
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