1. Turkey as an Open Economy: Trading Partners Serra Battaloğlu Aysun Can Özgenur Korlu Elif Sercen Nurcan

2. Content Introduction of Trade Partners and Breakdown of Turkey’s Export-Import Factors Affecting International Trade Growth Graphs Eurasia: Russia as a Trade Partner European Union as a Trade Partner Asia: China (PRC) as a Trade Partner North America: US as a Trade Partner Middle East: Iraq as a Trade Partner Bibliography

3. Volume of Trade

5. Introduction of Trade Partners and Breakdown of Turkey’s Export-Import

7. China Germany Russia USA Italy Germany United Kingdom Iraq Italy USA TOP 5 IMPORTS BY COUNTRY TOP 5 EXPORTS BY COUNTRY

8. Introduction of Trade Partners and Breakdown of Turkey’s Export-Import CountryExports to Turkey Imports from Turkey Volume of Trade with Turkey Germany 21 351 98413 418 068 34 770 052 China 24 873 452 2 414 932 27 288 384 Russia 20 399 806 3 589 464 23 989 270 Italy 10 639 077 6 887 871 17 526 948 USA 11 127 970 6 395 981 17 523 950

9. Basic Facts about Turkey’s Trade Items The top export items of Turkey are(*): - cars ($7.32 BN), -refined petroleum ($5.01 BN), -raw iron bars ($4.81 BN), -vehicle parts ($4.59 BN) and -delivery trucks ($4.27 BN). The top import items of Turkey are(*): - gold ($16 BN), - refined petroleum ($15.9 BN), - cars ($9.3 BN), - scrap iron ($7.19 BN) and - petroleum gas ($5.3 BN). (*) According to the Observatory of Economic Complexity (OEC) report in 2014; at current US dollars for 2014; using the 1992 revision of the HS (Harmonized System) classification.

10. Factors Affecting International Trade Regional Proximity (time cost reduction, historical relations) Trade agreements (reduction of tariff and nontariff barriers [i.e. subsidies] to trade) Private sector relations (differences in trade policies, construction booms, differences profit rates via intra-firm and global competition, business strategies.) Economic complexity (differences in relative factor endowment [comparative/absolute advantages]) Socio-political developments (exchange rate trends) Fragmentation (ability to keep the final price as low as possible via technical feasibility)

11. Growth of Export

12. Growth of Imports

13. Comparison

14. Proportion of Imports covered by Exports (%)

15. Balance of Foreign Trade

16. Volume of Trade

17. Volume of Trade (logarithmic scale)

18. Eurasia: Russia as an Trade Partner

19. Eurasia: Russia as a Trade Partner Long history of trade between the Ottomans and Romanovs Official bilateral trade agreement signed in 1934 between the Turkish Republic and USSR Positive political and economical relationship between the Bolshevik government and revolutionary Ankara government between 1919-1945 Joseph Stalin’s expansionist demands on Bosphorus after WWII and the subsequent Cold War tensions between 1945-1989 Open trade and reign of neoliberalist paradigm after the fall of Berlin Wall in 1989; founding of Black Sea Economic Cooperation in 1992 Recent militaristic tensions over Syrian civil war in 24 November 2015 Dominant factors affecting Turkish-Russian bilateral trade: Geographical proximity (time cost reduction [shuttle trading, tourism]) Economic complexity (factor endowments [labor intensive TR intermediary goods vs RUS primary goods])

20. What Turkey exported to Russia in 2014 (2014 total value $6.36 BN at current US dollars for 2014; 3.8% of total exports in 2014): 1.Agricultural products (22%) 2.Textiles (21%) 3.Automobile industry products (18%) 4.Electronics and machinery(15%) 5.Chemicals (8%) 6.Processed metal (4%) 7.Plastics (3%) 8.Ready-made clothing (3%) 9.Furniture (2%) 10.Processed food (2%) 11.Construction materials (1%) 12.Processed wood products (1%)

21. Turkish Exports to Russian Federation betw. 1995-2014, at current US dollars for 2014

22. What Turkey imported from Russia in 2014 (2014 total value $14.7 BN at current US dollars for 2014; 6.8% of total exports in 2014): 1.Petroleum (32%) 2.Iron-steel (30%) 3.Grains (10%) 4.Chemicals (7%) 5.Natural gas (5%) 6.Seed oils (5%) 7.Coal (3%) 8.Paper (1%)

23. Turkish Imports from Russian Federation betw. 1995-2014, at current US dollars for 2014

24. Aftermath of 24 November 2015 Russian Jet Shootdown Incident Economic sanctions: suspension of visa-free travelling, limits on Turkish residents and companies doing business in Russia, restrictions on imports of Turkish products (except lemons*), restrictions on exports of certain Russian products (exclusive Gazprom gas deal cancellation, no grain exports) Imports from Russia(**): 2015 October: 15.17 BN at current USD for 2015 2015 November: 13.74 BN at current USD for 2015 (-9.4%) 2015 December: 16.86 BN at current USD for 2015 (+22.7%) 2016 January: 13.45 BN at current USD for 2016 (-20.2%) 2016 February: 11.89 BN at current USD for 2016 (-11.6%) 2016 March: 13.95 BN at current USD for 2016 (+17.3%) *http://www.haberturk.com/ekonomi/ekonomi/haber/1161154-rusya-bir-tek-limona-yasak-koymadi **According to TUIK Foreign Trade Reports 2015 October- 2016 March; at current US dollars

25. European Union as a Trade Partner

26. Turkey’s largest trading partner worldwide is Germany. Not just Germany, but also EU members like Italy, United Kingdom, France and Spain also important trading partners of Turkey. This makes EU the number one import and export partner of the Turkey, while Turkey ranks 7 th in the EU’s top import and 5 th in export markets. The EU and Turkey are linked by a Customs Union agreement, which came in force on 31 December 1995. Turkey has been a candidate country to join the European Union since 1999, and is a member of the Euro-Mediterranean partnership. Turkey's exports to the EU are mostly machinery and transport equipment, followed by manufactured goods. When looking at machines, mechanical appliances and vehicles, Turkey’s principal competitors outside the EU are the central and eastern European countries (CEECs). Turkey faces stiff competition from Poland in the trade with vehicles. EU exports to Turkey are dominated by machinery and transport material, chemical products and manufactured goods.

27. European Union as a Trade Partner

30. Asia: China as an Trade Partner

31. The Development of Economic Relations in Historical Perspective Recognition of PRC in 1971 Kenan Evren visited China in 1982 “We could get rich if we can sell one orange to every single Chinese...” Bilateral visits to each other via high level officials in the 1990’s İncreasing economic relations in the 2000’s. Asia: China as an Trade Partner

32. Asia : China as a Trade Partner Main Export Items of Turkey: Marble and travertine, metal ores, chromium, copper, inorganic chemical compounds, textile fibers, iron and steel Main Import Items of Turkey: Wireless telephone devices, automatic data processing machines, television camera, audio-visual devices, machinery,plastics, organic chemicals

33. Imports from China, 2015

34. Asia : China as a Trade Partner

35. North America: US as a Trade Partner

36. In 1927, diplomatic relations between Turkey and the US were established. In 1947, Economic and Technical Cooperation agreement was signed which implemented the Truman Doctrine. Turkey became the recipient of special economic assistance. In 1974, US Congress imposed an embargo on arms sales to Turkey after the Cyprus invasion. In the 2011 National Export Strategy reports of the US government, Turkey is referred to as a “next-tier market” and that the trade relationship between Turkey and the USA is expected to expand. U.S. exports to Turkey include aircraft, iron and steel, agricultural goods, oil, cotton yarn and fabric, and machinery. U.S. imports from Turkey include vehicles, machinery, iron and steel and their products, agricultural goods, travertine, and marble. Reported U.S. direct investment in Turkey is led by the banking and manufacturing sectors. North America: US as a Trade Partner

37. What is the trade balance for Turkey to the United States? Red- ImportsData Source: The Observatory of Economic Complexity Blue- Exports

38. Total $6.89B Numbers denoted in %

39. TOTAL: $11.7B Numbers denoted in %

40. Middle East: Iraq as a Trade Partner

41. Long history of trade between the Ottoman core and Iraqi periphery Official bilateral trade agreement signed in 1932 between Turkish Republic and Kingdom of Iraq Continuation of relations after the fall of Iraqi monarchy in 1958 and during Iraq-Iran War in 1980 UN imposed embargo period 1990-2003 Break down of the economic production infrastructure in Iraq due to Second Gulf War and fall of Saddam Hussein Recent construction projects, petroleum supply lines and commodity exchange boom after the end of US occupation Middle East: Iraq as a Trade Partner

42. What Turkey exported to Iraq in 2014 (2014 total value $10.8 BN at current US dollars for 2014; 6.5% of total exports in 2014): 1.Primary food items (22%) 2.Raw and processed metal (18%) 3.Machinery (15%) 4.Processed food items (11%) 5.Textiles (10%) 6.Furniture (5%) 7.Jewellery (5%) 8.Plastics (4%) 9.Paper (3%) 10.Chemicals (3%) 11.Construction materials (3%)

43. Turkish Exports to Iraq betw. 1977-2014, at current US dollars for 2014

44. Turkish Exports to Iraq betw. 2003-2014, at current US dollars for 2014

45. What Turkey imported from Iraq in 2014 (2014 total value $0.263 BN at current US dollars for 2014; 0.12% of total exports in 2014): 1.Gold (44%) 2.Refined Petroleum (38%) 3.Animal hides (7%) 4.Scrap plastic (5%) 5.Paint (2%) 6.Paper (1%) 7.Raw cotton (1%) 8.Scrap machinery (1%) 9.Processed food (1%)

46. Turkish Imports from Iraq betw. 1962-2014, at current US dollars for 2014

47. Growth of exports and imports data: TurkStat, Foreign Trade Statistics, February 2016; http://www.turkstat.gov.tr/PreTablo.do?alt_id=1046 Turkish Export Destinations in 2015 Graph: http://www.turkstat.gov.tr/UstMenu.do?metod=temelist Observatory of Economic Complexity report; http://atlas.media.mit.edu/en/profile/country/turkey TR-EU Trade: Nowak-Lehmann, F, Herzer, D, Martinez-Zarzoso, I, Vollmer, S. (2007). The Impact of a Customs Union between Turkey and the EU on Turkey’s Exports to the EU, JCMS Studies, 719-743. Turkish Exports/Imports to/from Russian Federation/Iraq betw. 1995-2014, at current US dollars for 2014 graph and What Turkey exports/imports to/from Russia/Iraq pie chart:: http://atlas.media.mit.edu/en/visualize/stacked/hs92/export/tur/rus/show/1995.2014/ Turkey Russia Energy Deals graph: Okan Yardımcı (PhD) http://enerjiuzmani.blogspot.com.tr/2015/07/july-08-2015-energy- cooperation-in_8.html Economic determinants of free trade agreements:Scott L. Baier, Jeffrey H. Bergstrand http://www.sciencedirect.com/science/article/pii/S0022199603000795 No import ban on lemons: http://www.haberturk.com/ekonomi/ekonomi/haber/1161154-rusya-bir-tek-limona-yasak-koymadi Fragmentation: http://2012books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s06-01-what-is- international-trade-th.html Bibliography