TBY talks to Lord Green of Hurstpierpoint, Minister of UK Trade & Investment, on Turkish-British trade relations.
THE BUSINESS YEAR How would you characterize the development of Turkish-British economic relations over the past two decades?
LORD GREEN As the economies of Turkey and the UK have grown over the last two decades, so has the value of our trade relationship. Bilateral trade between Turkey and the UK was worth £1.5 billion in 1992; in 2011, it was valued at £12.2 billion. UK investment in Turkey has increased significantly with over 2,400 UK companies operating there. This includes many international brands such as HSBC, Rolls-Royce, Vodafone, BP, Shell, Tesco, M&S, and Harvey Nichols. There has also been an increase in Turkish investment in the UK. For example, Beko is now a UK household name as a domestic appliance supplier and an FA Cup sponsor. Turkish Airlines now flies to five destinations in the UK and is a sponsor of Manchester United, and Ramsay, a supplier of men’s clothing, is a sponsor for Liverpool FC. Turkey’s Customs Union has EU accession status, and this has brought about increased openness in the economy and considerable opportunities for UK-Turkish trade and investment. We have introduced initiatives to strengthen UK-Turkey economic ties. The UK-Turkey Joint Economic and Trade Committee (JETCO), which meets annually at a ministerial level, was set up in 2009 and a Turkish delegation will visit the UK this spring. In 2010, our Prime Ministers signed a Strategic Partnership, under which they committed to double bilateral trade by 2015. In April 2011, the UK/Turkey CEO Forum was established by the Prime Ministers of the UK and Turkey, and has met several times, including during President Gül’s state visit to the UK in November 2011.
What are the UK’s main economic priorities in its relationship with Turkey?
Turkey has an ambitious economic vision for 2023, including lessening reliance upon imports to become a net exporter. As it looks to strengthen and diversify its economy, the UK has expertise to share. This includes information in the areas of renewable energy technology, financial and professional services, defense and security, ICT, infrastructure development, and life sciences. We see many high-value opportunities for UK-Turkey collaboration in major Turkish projects, such as Istanbul’s third airport, the third bridge across the Bosphorus, the expansion of roads and railways, universal healthcare campuses, rising education standards, and access to technology.
What is the importance of the Turkish-British relationship for businesses in both the UK and Turkey?
Turkey is a fast-growing, nearly trillion-dollar economy; a fertile ground for British business. It straddles both East and West and is the gateway to Europe. It is fast becoming a regional hub for many business operations in the MENA region, Central Asia, and the South Caucasus countries. Its trading links are growing in Africa, Latin America, and Asia. It has a large and increasingly wealthy middle class with an internal market of 75 million people. The UK exports far more to Turkey, as a proportion of Turkey’s GDP, than to any other BRIC or emerging market.
You recently announced that the UK aims to double the trade volume between the two countries by 2015. Why is this a priority for the UK?
David Cameron and Prime Minister Erdoğan set this goal in 2010 as a challenge to British and Turkish companies. A notable change in our trade relationship over the last two decades has been that the UK has moved from being a net exporter to Turkey to being a net importer, with the UK having recorded a trade deficit with Turkey every year since 2001. UK exports to Turkey rose 38% from 2009 to 2011, and 20% alone in 2011, though they fell in 2012. Our EU partners, with the exception of Italy, have also seen their exports to Turkey fall. This has been in part due to a slowdown in the growth of the Turkish economy. However the longer-term prospects are better and UK exporters can do more business in Turkey, which is why we need to maintain a high level of ambition.
Why is it important that Turkey continues to make progress on the path to EU accession?
At a time when the EU faces economic challenges and there is continuing instability in the Middle East, our relationship with Turkey matters more than ever for our shared prosperity, security, and values. Increasing trade with Turkey offers opportunities for EU businesses. The country is now the EU’s fifth largest export market. Turkish entrepreneurs in Europe run businesses worth €40 billion, employing 500,000 people. In sectors such as aviation, automobiles, and electronics, our economies are increasingly integrated. Turkey is well placed to become an energy hub, with both sides benefiting from projects to build the necessary infrastructure, including the development of the Southern Gas Corridor. The Turkey of today has been radically transformed from the country that applied to join the EU a quarter of a century ago. Just as the EU helped consolidate democracy across Central Europe and continues to promote democracy in Eastern Europe, the accession process has played a powerful role in supporting Turkey’s reforms in areas such as the civilian control of the military and the independence of the judiciary. Significant results have been achieved but, as Turkey itself recognizes, reform remains a work in progress. Improvements are needed in the areas of freedom of expression, women’s rights, and the protection of minorities.
How would you characterize the medium-term outlook for the Turkish economy, and what does this mean for the UK’s priorities in Turkey in the coming years?
Turkey’s economy is expected to grow steadily over the medium term, with the IMF forecasting that annual GDP growth in each of the next five years will be in the range of 3.5%-4.5%. The country has a young and digitally aware population—over half of its 75 million people are under 30 years of age. It has achieved investment grade status from one of the world’s leading credit agencies. When Turkey eventually accedes to the EU, its accessible trade volume has the potential to grow a further 20%. For these reasons, Turkey has been designated an advanced emerging market, and is one of the 20 high-growth priority markets that UK Trade & Investment has identified. Turkey has an ambitious vision for 2023, the 100th anniversary of the founding of the republic. By 2023 it aims to be the 10th largest economy in the world.
This interview will be published in 'The Business Year: Turkey 2013'. To pre-subscribe please e-mail us at email@example.com
© The Business Year - March 2013