Presentation on theme: "Relations with Neighbours-South Caucasus Ümit Özlale"— Presentation transcript:
1Relations with Neighbours-South Caucasus Ümit Özlale tepavRelations with Neighbours-South CaucasusEconomic Policy Research Foundation of TurkeyEMERGING POWERS, NATIONAL INTERESTS, AND THE FUTURE OF MULTILATERALISM WTO Public Forum Geneva, September 26, 2012Ümit Özlale
3Turkey in the region: Rapid growth in manufacturing after mid-90’s Relations with Neighbours-South CaucasusTurkey in the region: Rapid growth in manufacturing after mid-90’sShare in exports of the region and level of industrialization (1996)Country’s share in total manufacturing exports of the regionRole of customs union and the EU in our export performanceShare of manufacturing in Country’s total exports (%)Source: UN COMTRADE, TEPAV Calculations
4Relations with Neighbours-South Caucasus Today Turkey is the largest manufacturer in the region (thanks to Customs Union and closer EU link)Share in exports of the region and level of industrialization (2010)Country’s share in total manufacturing exports of the regionRole of customs union and the EU in our export performanceShare of manufacturing in Country’s total exports (%)Source: UN COMTRADE, TEPAV Calculations
6Relations with Neighbours-South Caucasus However, Turkey has no star industries in exportsRising sectorsStar sectorsTraditional sectorsFailing sectorsMarket share in 2011Source: UN COMTRADE, TEPAV calculations
7Relations with Neighbours-South Caucasus And loss of competitiveness is a challenge: Comparison of Turkey with EU- Accession 12Source: WEF ( ), REF Calculations
8Comparison of Turkey with BRIC in terms of competitiveness measures Relations with Neighbours-South CaucasusComparison of Turkey with BRIC in terms of competitiveness measuresSource: WEF ( ), REF Calculations
9Regional economic integration is the current trend Geographical distribution of Turkey’s exports:Actually during the crisis, the problem is from the exports side. Slow recovery process in the European markets affected us very negativelyDiversifying exports to the Middle East and North African markets became our first crisis response.Diversification is good. And it helped our businessmen a lot, during the first year of the crisis.Europe’s share in our exports decrease by 10 percent. But Europe is still our major market. And the European Unions’ share is still about 46 %.
10Turkey’s west & east: Varying degrees of European integration Relations with Neighbours-South CaucasusTurkey’s west & east: Varying degrees of European integrationİstanbulUSD 51 billionKocaeliUSD 10 billionBursaUSD 11.2 billionİzmirUSD 6.6 billionKayseriUSD 1.1 billionKonyaUSD 1 billionGaziantepUSD 3.6 billionKocaeli: 10 billionAnkara: 5.2 billionAdana: 1.3 billionMersin: 1 billionEskişehir: 658 millionSource: TURKSTAT
11Regionalism vs. Multilateralism: Case for Turkey
12Regional Trade Agreements There has been an increase in the number of RTAs for Turkey.Some of them are EC, EFTA, Egypt, Albania, Macedonia, Bosnia-Herzegovina, Croatia, Georgia, Israel, , Montenegro, Morocco, Palestine, Syria, TunisiaAnd RTAs are flourishing worldwide, mostly in the form of FTAs and common markets.
13Why the rise of RTAs and the fall of Multilateralism? Problems in negotiationMore bargaining power with RTAsHigher market share and easier market accessBarriers to trade and NTB in RTAs are reduced more quickly and to a significant extentAnd as long as multilateralism fails to liberalize international trade, regionalism tends to continue.
14However; Danger of being excluded from the RTA block for non-members Conflicting multiple RTA memberships (Spaghetti Bowl)
15How does that affect Turkey? Fact 1: Europe is Turkey’s major trade partnerFact 2: Customs Union agreement between EU and Turkey was a major factor for that close trade relationFact 3: EU gave pace to signing FTAs with its trade partners, which means that Turkey may no longer to reap the customs union benefits in the future.Fact 4: Turkey can do almost NOTHING. It works like an exogenous negative trade shock.
16Does diversification of markets help? Turkey has successfully diversified its export destinations, after the global financial crisis.However, EU is still (and should be) the main actor:Export sophisticationPolitical issues
17Is MENA the solution? In terms of diversifying the exports, yes. However, it does not provide a long-term solutionQuality of exports and the value addedThe size of the MENA market as a wholeGrowth prospects for the MENA region and the increasing uncertainty.
18To Conclude;Although Turkey is one of the leading exporters in the region, structural problems such as competitiveness exist.There is a high probability that, increased regionalism and the associated EU policies will further emerge as a challenge.MENA is far from providing a sustainable solution.There should be more focus on a new industrial policy design.