Turkish Exporters Should Rediscover the USA

Despite the fact that Turkish exports have been rising uninterruptedly since the 1980s, the recent global crisis means that Turkish exporters must now direct their activities towards new outlets. While Turkey exports 55 percent of its total exports-- quite a conspicuous share--to the countries of the European Union, the USA has remained below its potential as a trade partner.
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Mehmet Büyükeksi, Chairman of the Turkish Exporters' Assembly

Turkey’s exports to the USA for the period January-September 2008 were around 1.5 billion dollars. US imports during the same nine months, on the other hand, were as high as 1.6 trillion dollars. The top 15 exporters sold goods amounting to 1.2 trillion to the USA. The remaining 500 billion dollars worth of goods were sold by the remaining countries, including Turkey. As for the USA, its exports during the same nine-month period were 1.01 trillion dollars.
 
The most important of the reasons why trade relationships between these two countries are so weak, even though the USA is the biggest importer in the world and Turkey is one of the countries with the fastest growing export volume, is the geographical distance between them. Another element is that the USA does not grant Turkey the trade privileges it grants to countries like Israel, Jordan, and Lebanon.

During the first nine months of the year, even though it did not export as much as it wanted to the US market, Turkey increased its exports to the United Arab Emirates by 209 percent, to Qatar by 203 percent, to Kuwait by 177 percent, to Lebanon by 121 percent, to South Africa by 112.5 percent, to India by 85 percent, and to China by 57.5 percent.

Mehmet Büyükekşi, who was elected Chairman of the Turkish Exporters’ Assembly last September, answered TURKOFAMERICA’s questions.

For the first time in a long period, Turkey's exports declined during October, even if only by a little. Taking the global crisis also into consideration, what are your expectations concerning exports in 2009?

We have to face the fact that the global crisis will not end very quickly and that for a time world markets will stagnate. The economies of the EU were already slowing down even before this latest crisis, which originated in the USA. With the crisis, this slowdown will increase. Remembering that Turkey exports 55 percent of its total to the EU, it becomes obvious that the crisis in the EU will obviously have a negative effect on Turkey’s exports to this area.

If Turkey is to stay ahead of the game during this crisis, Turkish companies will have to develop innovative manufacturing and marketing techniques and, what is more important, Turkey will have to be successful in finding alternative world markets.

Why do you think it is that the share of Turkish exports to the biggest market of the world is small even though exporters have been greatly successful and have taken giant strides forwards during the last 10 years? Will this period of crisis make it even more difficult to penetrate the US market? Or might it create new opportunities?

Turkey is an important ally of the USA. We are talking about two countries that have cooperated in important political matters. However, the USA and Turkey are not so close geographically and for this reason these two countries are not part of the same integrated regional economic union. Turkey is geographically adjacent  to other European countries such as itself and this has led Turkey to joining the EU Customs Union Agreement.  At the same time, Turkey’s aim of being part of the EU has also made Turkey turn its attention politically to EU countries in particular. Today Turkey sends more than half of its exports to the EU. However, in the new world order, focusing on a single area may not always provide positive  results. This is why, as you yourself have said, Turkish exporters should rediscover the USA, which is the world’s biggest market. There are important opportunities awaiting Turkey in this gigantic country. I think that in the next few years trade between Turkey and the USA will get better.

For the first time since September 2001, US imports fell in September 2008 by 12.1 billion dollars, to 211 billion dollars. This was a record. Imports of car components, which is an area of potential interest as far as Turkey’s exports to the USA are concerned, fell to their lowest level. (In February 2004 it had been 18.5 billion dollars, and this last September 18.6 billion dollars.) Could it be that the reduction in the consumption of the products of important sectors like textiles and automotives in the USA will lead to sectoral changes in Turkey's export strategy to the USA?

Even though Turkey’s exports of textiles and automotive products are high, Turkish industry does not consist solely of these two sectors. We manufacture according to world standards all kinds of industrial products and we export them to world markets. Turkey’s present needs are to develop new marketing strategies for the global world, and to expand into new markets. This is why the reduction in the US imports of textiles and automotive products does not reduce the US market’s importance for Turkey. Quite the opposite, by reminding one of the question of how to export the products of other sectors to the USA, it will encourage Turkey.

The prestige of the USA as a country, which had sunk during the last 8 years to its lowest level in almost all countries, has slightly recovered with the election of Obama as president. How did Turkish business circles react to the fact that the son of an immigrant has in these days of global crisis been elected president of the USA? As far as you can see, how will this political change affect the economy during the next years?

The election of Obama has been perceived as a victory for the oppressed throughout the world. The same goes for the way it was perceived in Turkey. However, Obama is not a member of the oppressed classes. The portrait we have is that of a Harvard graduate, with a successful past, fully accepted and a member of the upper classes. This is why I do not think that we should be expecting great changes in America's political and economic policies during the Obama presidency.

Exports make Turkey function. Does the devaluation of the Turkish Lira against the dollar in this period of crisis make exporters the hope of Turkey?

The fall in the value of the Turkish Lira is good news for Turkish exports. The fact that the NTL had been overvalued for a long time had led Turkish manufacturers to produce with expensive NTL and to sell with cheap foreign exchange.

Naturally enough, this kind of a situation minimizes profitability. A more realistic valuation of the prices of foreign exchange will motivate our exporters. Also because an appreciation of foreign exchange will reduce Turkey’s imports, thus contributing favorably to local manufacture. Recently, the low value of foreign exchange had led manufacturers to get their raw materials and semi-finished products from countries other than Turkey, and this  created problems for local providers. With the present level of foreign exchange values, this disadvantage will be partially compensated for.

However, there is another point besides the revaluation of foreign exchange. And that is that for exporters it is the stability of foreign exchange prices that counts rather than their absolute values. Just as in all other financial markets, speculative movements also exist in foreign exchange markets, and they will always exist. However, excessive fluctuations in foreign exchange markets make planning more difficult for the real sector.

Steps taken to alleviate this problem will eliminate the unpredictability facing exporters, and will let them be more optimistic about the future.

In 2009, will Turkey's small and medium scale enterprises, which operate thanks to bank credits, face the danger of the banks refusing to provide loans or raising interest rates? What kind of a financial environment will exporting companies face next year?

The probability of experiencing problems obtaining loans is rather high in the case of the real sector. It is even being said that these problems have already begun.

The minimization of the effects of the crisis requires the strengthening of credit resources for our real sector, not their reduction. It is said by many that Turkey’s banking sector is strong, and this makes us think that the banking sector will understand our problems.

It is very important for our exporters that extra resources be transferred to Eximbank to strengthen its capital structure, and that the limits concerning the credits that companies can get from Eximbank be raised.

In addition to this, it would be good if resources equivalent to 1% of total yearly exports were transferred to the Price Support and Stability Fund.

The deferral of social security premiums and of other similar contributions for companies that do not fire employees in the near future, the freezing of energy prices until the economy is back to normal, and the introduction of advantages for the payment of energy bills to industrialists would all be welcome as palliatives.

Is it possible that the fact that the economy of the European Union, which is Turkey's greatest export partner, is stagnant, that Japan is facing the same situation, and that the same goes for the USA, will make it impossible for us to find alternative markets? Can you say anything about when we will get back to normal?

Every crisis certainly includes opportunities. For example, the crisis will mean that European companies will order in smaller quantities. It is at this point that our geographical proximity to Europe and our logistical advantages will become important.

What I mean is that European countries will prefer to order from Turkey, when the quantities are smaller, rather than from the countries of the Middle and Far East, so as to be able to get better quality products in a shorter time. This is why in 2009 there will be advantageous situations for some of our sectors, and especially for the textile and garment making sectors.

In addition to this, we have also got to increase our efforts to find alternative markets. Recently we have seen that Turkish exporters have become increasingly interested in neighboring countries and regions. The African market has become a center of this interest.

For example, during the first 9 months of the year, Turkey increased its exports to the United Arab Emirates by 209 percent, to Qatar by 203 percent, to Kuwait by 177 percent, to Lebanon by 121 percent, to South Africa by 112.5 percent, to India by 85 percent, and to China by 57.5 percent.

Consequently, we can say that in these days of crisis we have to expect that our main markets will shrink, and focus more on these rising markets. If instead of worrying about the crisis we can take pro-active steps and turn our energies towards new markets, I am confident that nothing will happen to us in this crisis. However, it is not easy to fix an exact date, because this crisis in not centered in Turkey. Consequently, as developed economies continue to try to find solutions for this crisis that they caused, we shall have to act fast and to try to find solutions as quickly as possible.

TURKISH EXPORTS TO THE USA
                                                                              JANUARY - SEPTEMBER 2008
PRODUCT GROUPS                                                                                 Quantity (Kg)      Value (USD)
MİNERAL FUELS, MİNERAL OILS AND PRODUCTS                          342,401,284      307,492,409
IRON AND STEEL RODS                                                                          205,261,964      163,769,867
PROCESSED TRAVERTINE                                                                     263,888,075      153,656,078
IRON AND STEEL PIPES                                                                          107,978,361       130,066,193
GOLDEN JEWELLERY                                                                                          7,828        116,205,429
IRON AND STEEL FLAT HOT ROLLED PRODUCTS                            88,486,399        110,366,135
PROCESSED MARBLE                                                                             116,958,830           94,767,807
COPPER BRAIDED LINES                                                                            8,054,149           72,864,098
IRON AND STEEL WIRE-RODS                                                                 74,818,360           60,040,144
ORGANIC CHEMICALS                                                                                16,296,468           45,006,896
RUBBER, RUBBER PRODUCTS                                                                 9,107,641           34,229,629
PLASTICS AND PLASTIC PRODUCTS                                                        9,964,326          30,740,575
ICE-BOXES, COOLERS, FREEZERS                                                           2,496,611          26,179,252
INORGANIC CHEMICALS                                                                             49,939,851          25,642,404
COPPER WIRES                                                                                               2,017,358          17,928,664
NATURAL BORATES AND THEIR CONCENTRATES                              81,380,000         15,635,150
IRON AND STEEL SECTIONS                                                                      11,454,613         11,150,536
SILVER JEWELLERY                                                                                                6,414         10,966,320
OTHER (IRON AND STEEL)                                                                           4,334,075            8,684,284
ALUMINUM SHEETS                                                                                        2,262,441            7,796,911
OTHER IRON AND STEEL (NON IRON)                                                      1,798,367            7,267,363
SOAP AND OTHER CLEANING AGENTS                                                      5,955,039            5,997,991
PERFUMES AND COSMETICS                                                                        3,059,112            5,849,035
OTHER (ELECTRICAL)                                                                                           56,984            5,579,140
IRON AND STEEL WIRES AND LINES                                                           2,751,421            5,181,825
RADARS AND WIRELESS EQUIPMENT                                                              16,638            4,212,447
OTHER COPPER                                                                                                   255,101             3,737,641
PAINTS, VARNISHES, INK AND DERIVATES                                                 1,666,919            3,415,812
OTHER ALUMINUM                                                                                                 637,970           3,199,693
OTHER METAL PRODUCTS                                                                                 942,433            3,020,857
NATURAL AND ARTIFICIAL ABRASIVE SAND AND RUBBER                        450,514            2,923,103
PHARMACEUTICAL PRODUCTS                                                                            22,692           2,110,295
OTHER (IRON)                                                                                                          767,361           1,934,632
METAL UTENSILS                                                                                                    196,247           1,846,844
METAL GIFT OBJECTS                                                                                            217,330           1,840,302
OTHER LIGHTING EQUIPMENT, MATERIAL FOR SIGNBOARDS                  257,835           1,796,232
OTHER PROCESSED STONES FOR CONSTRUCTION                              1,341,482           1,735,074
GUN-POWDER, EXPLOSIVES AND DERIVATES                                                 19,686           1,674,470
TILES OF NATURAL STONES, GRANULES, PIECES AND DUSTS            1,680,185           1,553,744
IRON AND STEEL CAST PRODUCTS                                                                  987,647           1,507,703
ALUMINUM KITCHEN UTENSILS                                                                          213,949           1,377,592
IRON AND STEEL KITCHEN UTENSILS                                                              220,849           1,351,653
FUSES, ELECTRICAL CONTROL PANELS                                                         261,462           1,337,370
FERTILIZER                                                                                                            3,050,000           1,296,250
 ALUMINUM FOLIO                                                                                                    203,136           1,272,238
WIRES =< 80 V                                                                                                           204,018           1,225,226
MEASURING INSTRUMENTS                                                                                   10,624            1,197,043
IRON AND STEEL PIPE CONNECTION PIECES                                                111,618            1,195,444
MAGNESITE                                                                                                             2,563,130            1,051,226
GLUES, ADHESIVES, ENZYMES                                                                             566,320               881,501
QUARTZ, QUARTZITE                                                                                             5,324,000              802,472
ALUMINUM CONSTRUCTION MATERIALS                                                              40,454              787,265
ALUMINUM RODS AND SECTIONS                                                                           56,598             785,008
ALUMINUM WOVEN LINES                                                                                        222,228             766,174
MEDICAL INSTRUMENTS AND EQUIPMENT                                                           47,980             745,623
WASHING MACHINES                                                                                                   92,829              709,611
TRANSFORMATORS, INDUCTORS                                                                           70,612              698,467
DOLOMITE                                                                                                                 1,547,040              619,171
SOUND AND VIDEO EQUIPMENT AND TAPES                                                      12,078               599,602
IRON AND STEEL NAILS                                                                                           607,245              577,741
WRITING AND OFFICE EQUIPMENT, CALCULATORS                                            8,695              576,383
UNPROCESSED OR SEMIPROCESSED GOLD                                                             20             555,862
METAL FURNITURE ETC.                                                                                            98,736             527,398
IMITATION JEWELLERY                                                                                                  3,294             526,170
HEATING MACHINES, STERILIZERS, WATER HEATERS                                     60,657             477,890
OTHER OBJECTS OF PRECIOUS METALS                                                                   262             470,953
OTHER FERROUS ALLOYS                                                                                      100,100             463,082
IRON AND STEEL CHAINS                                                                                        133,220             456,609
ELECTRIC ENGINES AND GENERATORS                                                               21,066            439,670
COMPUTERS AND COMPONENTS                                                                               1,372            384,188
VARIOUS CHEMICAL MATERIALS                                                                             150,976            376,413
NATURAL PEARLS OR CULTIVATED PEARLS                                                           1,162            369,046
IRON AND STEEL RADIATORS                                                                                  125,977            364,075
IRON ADN STEEL SINKS AND BATHTUBS                                                                26,530            326,535
WIRES > 1000 V                                                                                                               32,772             271,655
INTEGRATED CIRCUITS AND SEMI-CONDUCTORS                                                2,228             259,265
SMALL HOME APPLIANCES                                                                                          11,866             241,908
SCRAP IRON AND STEEL                                                                                              22,595            237,968
WIRES 80-1000 V                                                                                                             31,892            234,555
JOINED CONDUCTORS                                                                                                    6,665           223,114
IRON AND STEEL CONSTRUCTION MATERIAL                                                        74,197           204,944
HALF PROCESSED TRAVERTINE                                                                              544,741           198,505
PRECIOUS METALS                                                                                                                 12            197,241
WASHING AND DRYING MACHINES                                                                             51,942           190,584
HALF PROCESSED MARBLE                                                                                       314,190           189,213
METAL LOCKS                                                                                                                    17,646           173,828
DEFENSE AND FIGHTING EQUIPMENT                                                                             847           160,669
COPPER RODS AND SECTIONS                                                                                   22,378            159,681
PHONE EQUIPMENT AND EXCHANGES                                                                            316           146,698
ELECTROGEN GROUPS AND CONVERTORS                                                              5,004           132,232
WATCHES AND THEIR COMPONENTS                                                                                69            123,324
OBJECTS OF STONE AND OTHER MINERALS                                                           64,651            121,737
OVENS AND KITCHEN RANGES                                                                                       6,647            105,239
FIBER OPTIC CABLES                                                                                                       11,318            102,937
ELECTRICAL HEATERS                                                                                                       7,007              97,703
PHOTOGRAPHIC AND CINEMATOGRAPHIC EQUIPMENT                                          6,839              74,817
OTHER SEMI-PROCESSED EQUIPMENT                                                                     64,116              59,045
PROCESSED GRANITE                                                                                                     20,715              51,093
ALUMINUM PIPES                                                                                                                  5,002              48,319
IRON AND STEEL STOVES, OVENS (NON ELECTRICAL)                                           4,410               42,697
PAVEMENT STONES OF NATURAL MATERIALS                                                       191,520               35,459
MICA                                                                                                                                       57,600               33,871
ROUGH BLOCKS OF MARBLE                                                                                        22,400                28,373
METAL DRILLING EQUIPMENT POINTS                                                                          2,204                27,102
ELECTRICAL ACUMULATORS AND BATTERIES                                                           1,063                23,987
OTHER IRON AND STEEL FLAT PRODUCTS                                                                    580                19,800
IRON AND STEEL WIRES                                                                                                    7,489                16,265
SALT                                                                                                                                    131,572                 14,545
PUMICE                                                                                                                               102,976                13,839
LEAD ORE                                                                                                                          145,360                 13,082
ROUGH SLATE                                                                                                                     42,571                11,263
PERLITE                                                                                                                                 60,000                  6,586
AIR CONDITIONERS                                                                                                                 400                  6,200
NATURAL PAINTS AND NATURAL FERRO OXIDE                                                       36,000                  4,600
BENTONITE                                                                                                                          10,000                  4,563
WATCHES AND THEIR COMPONENTS                                                                               187                  4,362
COAXIAL CABLES                                                                                                                     434                  2,989
OTHER ROUGH STONES USED IN CONSTRUCTION                                                    582                  1,878
SAND PAPER AND OTHER NATURAL ABRASIVES                                                             66                  1,870
ROUGH BLOCKS OF TRAVERTINE                                                                                   9,750                  1,766
IRON AND STEEL COLD ROLLED PRODUCTS                                                                   64                     441
PROCESSED SLATE                                                                                                                   55                     350
SPOOL WIRES                                                                                                                                3                     270
IRON AND STEEL FLAT PLATING                                                                                               7                    188
Source: Turkish Exporters’ Assembly

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