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U.S. Pledges to Liberalize Trade with Turkey but Mum on FTA

Monday, May 20, 2013
Sandler, Travis & Rosenberg Trade Report

The U.S. and Turkey agreed May 16 to establish a high-level committee that will examine ways to deepen bilateral economic relations and liberalize trade. This committee will be associated with the Cabinet-level Framework for Strategic Economic and Commercial Cooperation launched in 2009, which a White House fact sheet said is “the focal point for efforts to improve the trade and investment climate in both countries by working through obstacles to increased market access and identifying new areas of collaboration.”

The Transatlantic Trade and Investment Partnership to be negotiated between the U.S. and the European Union is expected to feature prominently in the new committee’s discussions. Because Turkey is part of a customs union with the EU it would be required to extend duty-free treatment to imports from the U.S. once the TTIP is implemented, but the U.S. would not be required to reciprocate. Prime Minister Recep Erdogan and other Turkish officials have therefore expressed support for a free trade agreement between the U.S. and Turkey to avoid such an unbalanced outcome. Senior U.S. officials have said little in response but have appeared to leave the door open.

In the meantime, the White House notes that economic ties between the two countries are growing rapidly. Two-way trade has grown 75% over the past four years to nearly $20 billion annually, U.S. exports to Turkey jumped 106% between 2009 and 2011, and U.S. foreign direct investment in Turkey nearly tripled from 2010 to 2011. Over 1,200 U.S. companies now operate in Turkey, an increase of nearly 50% since 2007. Many new joint ventures are designed to manufacture products in Turkey for both domestic consumption and export to third-country markets.

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