Minister Kursat Tuzmen: ''The U.S. Should be More Willing''

Kursat Tuzmen, the Minister of State in charge of Customs and Foreign Trade emphasizes that the government is working hard to increase the appeal of investment opportunities in Turkey for foreigners.

He thinks that the U.S. did not demonstrate a strong determination to improve the economic and trading relations with Turkey in the past. “The Turkish side was much more enthusiastic from day one. We led the way for the signing of a Preferred Trading Agreement (PTA) between the countries. I believe that the U.S. side will have to revise its “conservative” status soon as did other countries,” said Mr. Tuzmen. In an exclusive interview with Turk of America, Mr. Tuzmen said that although the Turkish economy is well equipped to compete in the premier league of exporters, current level of trade between Turkey and the U.S. is far from the expectations of both countries.

What are the main efforts of the government geared towards addressing the needs of Turkish businessmen in the US?
Our government is well aware that the entrepreneurs in and outside Turkey need to be supported in order to reach Turkey’s full potential and to boost investment, production, exports, and employment. As the political authority, we are determined to fight all obstacles that hinder the entrepreneurial spirit and creativity of our businessmen. We will resolve outdated minds and bureaucratic procedures as well as other problems that hold back and wear off the entrepreneurial spirit of the individual. The first sign of our determination was to decrease the number of ministers to 23 from 38 during the early days of our administration.

There are many wealthy Turkish businessmen living abroad. What are you doing to encourage these businessmen to invest in Turkey?
A sound investment environment is a precondition for investment inflow. The administration built the much-needed trust in national and international markets and reestablished macroeconomic parameters in a healthy way. Last year the Turkish economy grew by almost 6 percent while the inflation went down.

The Foreign Direct Investment Act has liberalized the legal framework for foreign investment to a great extent. We have made great progress towards international standards. As a result, the formalities are reduced and the investment client became trustworthier for foreign investors.

The 2005 lifting of quotas makes one think about China. What should be done to protect the local industry in Turkey? How difficult is it for companies to survive with such a threat from imports?
The primary threat is of course China’s global competitiveness. Unfortunately in many cases the competition becomes unfair.

The pressure from Far East originated imports, especially those from China, cannot be overlooked. Anti-damping measures, reference price conditions, and obligatory submission of certificate of origin are designed to fight such unfair practices. However, the administration does not have full discretion over measures against imports. WTO regulations and our responsibilities arising from our special relationship with the EU create certain restrictions. We do have to control and discipline the level of imports. This is a sensitive role.

Were the trading relations between Turkey and the U.S. hurt as a result of fluctuations in political relations? What are your predictions for the next five years when compared to past years?
Our relations with the U.S. are strong and deep enough to withstand short-term fluctuations. The volume of trade between the two countries was $7.2 billion in 2003 with a trade surplus of $316 million. Both exports and imports are growing in balance. It is obvious that the growth in mutual trade volume is far from the expectations of both parties.

The U.S. has a quite protective foreign trade policy. It prefers to conduct trade relations on a bilateral cooperation basis rather than under the WTO regulations. Their $1.25 trillion of imports is used as a diplomacy tool. On the other hand the U.S. has always been strict and inflexible in its trade relations with Turkey.

Unfortunately the U.S. side was not very willing to improve its trade relations with Turkey in the past. On the other hand the Turkish side has always been more enthusiastic and innovative in its approach. For example, the Preferential Trade Agreement (PTA) between the two countries was our idea. Our side demonstrated its initiative to make sure that this agreement was signed.

The U.S. will have to revise its conservative stance soon, as did other countries. The most important concern is establishing influence in a growing and dynamic market. As Turkey is expected to become more central in the American policy towards in the region, it should obviously enjoy a more distinctive status in an exclusive relationship network. I believe that this will be shaping the next five years.

How much more time does Turkey need to move from currently driving industries such as textile, leather and tourism to information intensive industries?
Product groups that fall into categories such as textile, apparel, leather, and steel are not as hot as high-tech product groups. However, this is where Turkey generates its income. A great portion of our export revenues are coming from these products. This is how we are financing our future investments.

We must clearly move towards exporting more value added, information-intensive products. However, our industrial structure needs to change first and this is a long process. Our objective is to export high value-added, sophisticated products. In order to succeed, we must move towards new technologies because it is usually easier to close the information gap in new technologies. We should look beyond 2004 and 2005 only and concentrate in new horizons.

WHY TURKEY WILL NOT BECOME INDIA!
It is widely argued that Turkey should take India and Malaysia as examples of technological breakthrough. However, according to Mr. Tuzmen, these two countries have very distinctive characteristics along with many advantages.

Is it possible to apply the high technology models of India and Malaysia in Turkey?
There are many reasons why India has a strong influence in software development. Fist of all, the software language is English, which is spoken by the Indian middle class as the native tongue. Second, the education system in the country produced a widely well-educated population in various branches of engineering.

The government’s role is another factor, too. The state provided tax exemptions for companies in the software industry along with many incentives. In other words, the government provides full support for the software industry.

Another advantage that India enjoys is the structure of the industry: India’s most important market is the U.S.. Therefore, software use and development are in tandem with the target market. The products meet U.S. software standards. This is not the case in many other countries that are trying to boost their software industries. Companies use different software, the target market is not well-defined, and a market focus cannot be set. As a result, the product to be exported does not meet the necessary standards.

WE ARE A HEAVYWEIGHT WRESTLER
According to Mr. Tuzmen, the Turkish economy is playing in the premier league of exporters. Total exports in 2003 increased by 30 percent over the year before and reached $47 billion. As imports also grew, the total foreign trade volume reached $116 billion. Mr. Tuzmen states that according to the World Trade Organization statistics, Turkey ranked as the 24th largest exporter in the world trade (excluding inter-member trade in the EU) and has the second largest growth rate (29%) after China. “Turkey is now a heavyweight wrestler. The extraordinary performance in 2003 continues in 2004: According to the Exporters’ Union statistics, exports in April 2004 reached $5.3 billion, representing a 42.1% increase compared to the same month in 2003.  If one remembers that in 1983 our total exports were $5.7 billion, the progress we have made becomes more apparent,” says Mr. Tuzmen.

(June 2004, 13th Issue)