Dış Ticaret Müsteşarlığı29 Nisan 2011

Bahçeşehir Üniversitesi – Istanbul

Dr. M. Sait AKMAN

Çok Taraflı İlişkiler ve Avrupa

Birliği’nin Geleceği Konferansı

Towards a Turkish Trade Strategy

İhracat Stratejik Planı (Export Strategy Plan) (2004-2006)

Revised Export Strategy Plan (2007-2009)

DTM Stratejik Plan (UFT Strategic Plan) (2009-2013)

2023 Strategy

Sanayi Strateji Belgesi (Industrial Strategy Document) (2011-2014) International Trade and Investments (as a horizontal

policy area)2

İhracat Stratejik Planı (Export Strategy P.) (2004-2006)

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Major structural problems:Regional and sectoral confinement in exports (ürün ve pazar

çeşitliliği)Lack of compatibility of export structure with the international

trade trends and developments, and Instability in the rate of export growth.

General Objectives:“building up of an export structure conducive towards

sustainable export increase”

Objectives: To ensure promotion and marketing of high quality Turkish

products in foreign market To ensure information relevant for exporters (Market Access) To provide the exporters with inputs at internationally competitive

prices To improve exporters’ market access opportunities… within the

framework of bilateral and multilateral trade relations To develop better coordination among the public and private sectors

and non-governmental organizations

DTM Stratejik Plan (UFT Strategic Plan) (2009-2013)

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Main Objectives:

Transformation towards an export structure with high value-added products based on innovation and R & D

Increasing regional and sectoral diversification in line with trends in world trade, access to new markets

Providing easier access to raw materials intermediary goods

Developing trade defense instruments against injuring or threatening imports

Export-oriented production strategy

Switching to high value-added goods in low-tech sectors;

Switching to high value-added goods in medium-low tech sectors, and increasing production;

Increasing production levels in medium-high tech sectors;

New investments in high-tech sectors.

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Essential points in export strategy

A proactive trade policySwitching from low-to-medium, into mid-to-high,

and high-tech products in exports

Products based on innovation, R&D and designInput supply strategy ‘girdi tedarik s.’ (common

purchase organ.)A better coordination of public institutionsPublic-private coordinationRestructuring the UFT6

Share of sub-sectors in total manufacturing exports (%), TÜİK

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Share of groups in total manufacturing exports (%)

Group (techn. intensiveness)

1996 2009

Low 57.8 31.7

Medium Low 20.8 32.4

Medium High 19.5 33.4

High 1.9 2.5

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Switching from primary and low technology production into more technology-intensive

production and exports

‘To be Europe’s manufacturing base in mid-to-high tech products, and a base for manufacturing and design (Büyükekşi, TİM);

How to reconcile without expanding your domestic resources?

TR has challenges and disadvantages vis-a-via CEEC and other EU members because they are already in the EU decision making mechanism through which they can manipulate policies

EU investment relocate in these countries as they fulfill adoption of the acquis, while TR is slow in this process

Redistribution mechanisms (i.e. structural funds) help CEEC to adjust their industries, while EU funds for TR is very limited..

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Graph & Turkey’s export concentration by country and sector (Herfindhal-Index, 1990-2007)

Source: Türkiye Kalkınma Bankası (2010), TR’nin İhracatında Öne Çıkan Sektörleride Temel Pazar Ülkeler, Rakipler ve Rekabet Gücü

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Share of high-tech exports in total exports (%) of selected countries

Source: World Bank, World Development Report, 2007.11

İMALAT SANAYİNİN TEMEL GÖSTERGELER AÇISINDAN YAPISAL ANALİZİ, İSO (2010)

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What kind of trade strategy?

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1.Trade strategy should not be confined to manufacturing sector only,

2.Trade strategy should not be confined to exports only

3.Trade strategy is not only market access, but trade rules

4.Trade strategy is not only about trade only, but relevant policy areas

A critic of Turkey’s export strategy

1.The new trade agenda is devoted to export policy, without particular attention to imports (what should be Turkey’s new import policy?)

2. It focuses on market access to other markets without opening its own. ‘But one main driver of growth is imports’

3.Vertical integration in global trade and production patterns are neglected (reducing the rate of intermediary goods/inputs in exports is so easy?) Which part of value-added chain should Turkey position itself?

4. It is mainly confined to manufacturing, with little attention to other areas (services, investments, agriculture, development…)

5.Trade policy is not only confined to trade only, but trade-related issues (environment, technical standards, government procurement, investments, labour issues, food security…)

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Import policy:

Heavy use of anti-dumping and safeguards is not compatible with liberal trade policy!

Trade-off between export-oriented market access strategy in medium-to-high technology sectors; and high protection in imports in low-to-medium technology (i.e. textiles-clothing, footwear, base metals) sectors!The nominal protection rates (NPR) are high in sectors

like: 8.93 percent in textiles; 8.03 percent in footwear; 5.36 percent in base metals; 6.36 percent in transport equipment; and 5.41 percent in chemicals.

Lowering tariffs on essential inputs as demanded by domestic producers, is not always possible due to higher rates in CCT of the EU (Customs Union). What to do?

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Trade strategy should consider… (1)

The vertical integration in world production and trade patterns and decide where to stand in value-added chain

whether Turkey is a developing country with low-to-medium tech goods; or a developed country oriented towards value-added, high-tech products, branded products based on R & D and innovation? AVOID "middle-income trap"

Trade in services not to be neglected in trade policy, without it the latter cannot be comprehensive for a country to become 10th biggest economy !!

How to merge bilateral investment agreements with FTAs? (India, Korea, Canada, so on)

The critical role of ‘trade adjustment assistance’ mechanism necessary to overcome the resistance of uncompetitive / senile industries.16

Trade strategy should consider… (2)

EU accession process must be integrated more firmly into trade strategy

The impact of EU FTAs must be better identified (Akman, 2010)

An integrated strategy with new topics in global trade agenda (food security, climate change, social standards, investments, public procurement…)

Trade and environment issue needs more scrutiny.. A specific policy approach for ‘development’ policy

and assistance? (remember Doha DEVELOPMENT Round)

its interests in WTO multilateralism and bilateral FTAs

which one deserves priority?should focus on its WTO rights against offending partners if

they prevent market access for TR exportables.. 17

WTO vs. RTAs

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Preferential agreements shift attention away from the Doha Round and multilateral WTO rules

WTO is not only a forum of negotiations, but a venue for trade rule-making

“Turkey's FTAs makes its trade regime complex and difficult to manage. Future trade agreements could further complicate the trading environment creating a web of incoherent rules and detract from multilateral efforts, given the limited resources available” Turkey TPRM Report (WTO, 2003: 17).

Tariffs before and after NAMA

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Calculation by UFT Economic Research Section based on the formulas and coefficients suggested in the latest Draft on NAMA Modalities (4th Rev.) where the coefficients are assumed to be 8 and 25 for the developed and the developing countries respectively where the formula is (i.e. t1= [a or (x,y or z)]*t0 / [a or (x,y,or z)]+t0 )

Trade strategy should consider… (3)

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Trade strategy should go hand in hand with Industrial Strategy Document

Good coordination of public bodies, UFT, ministries so on…

Good coordination of public-private relationship (state - business, NGOs, universities)

More active involvement of private parties in FTA and WTO process

Trade policy and export diversification

Tariff removal has decreasing returns in terms of export diversification. A la Ricardian model, that precisely predicts that a reduction in trade barriers leads to an increased range of exported goods (see Dornbusch et al., 1977, and Venables, 2003).

Getting better access to a foreign market through tariff cuts helps to increase the extensive margin of exports, but up to a certain point. When tariffs are low enough, other factors become more important to push diversification further.

These factors may include, among others, physical infrastructure, which is a key determinant of transport costs; institutional infrastructure related to trade facilitation (e.g., customs); logistics; and factor endowments determining the ability of the country to be active in certain sectors (e.g., human capital in industries producing high tech or differentiated goods).21

Rekabet gücü bileşenlerine göre Türkiye’nin yeri (133 ülke arasında)

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