On the Rise

Many date Turkey’s modern relations with Japan back to the tragic sinking of the Ottoman frigate Ertuğrul off the coast of Honshu in 1890, though things have certainly taken a turn for the better since then. The visit by Japanese Prime Minister Shinzo Abe in May 2013 marked a new page in relations between his country and Turkey. Coming as it did soon after Turkey celebrated the “Year of Japan” in 2012, which saw cultural and historic ties emphasized, the 2013 mission by the Japanese prime minister brought a new level of cooperation between the two countries. Shinzo Abe’s visit to Turkey was the first time for a Japanese premier since Junichiro Koizumi came in 2006.

The nuclear agreement will see Japanese engineering giant Mitsubishi Heavy Industries team up with the ITOCHU Corporation, Areva and GDF SUEZ of France, and the Turkish Electricity Generation Company (EÜAÅž) to construct Turkey’s second nuclear facility in Sinop. The 4.8 GW ATMEA1 facility should see the first of four reactors come online in 2023, with the project to be finalized by 2028. Japanese companies are no strangers to large infrastructure projects in Turkey, with Marubeni joining up with Doğuş İnşaat of Turkey and French giant Alstom to construct the near $3 billion Marmaray cross-Bosphorus tunnel project, which is set to open in October 2013. As well, the Izmit Bay Bridge project, which will massively reduce travel times between Izmir and Istanbul, is also being spearheaded by Japanese constructor ITOCHU Corporation, a subsidiary of IHI.

Trade relations between Japan and Turkey were also a focus of the Japanese prime minister’s visit, with a long-mooted free trade agreement (FTA) between the two receiving further support. Two-way trade between Turkey and Japan has been on the wane of late, with Japan slipping from being Turkey’s top Asian trading partner in 2000, to being just fourth in 2012 at $3.9 billion, behind China ($24.1 billion), India ($6.6 billion), and South Korea ($6.2 billion). Imports from Japan still make up the bulk of two-way trade ($3.6 billion), with Turkish exports accounting for a mere $332 million for 2012. Turkish exports are dominated by textiles and food products, with much of Turkey’s growing presence in more advanced manufacturing still not being reflected in the figures.

Talks to conclude the so-called Japan-Turkey Economic Partnership Agreement (EPA) are set to continue, with Turkey hoping the agreement will help it penetrate the Japanese export market in a more focused manner. As well, efforts to improve Japanese involvement in the Turkish economy seem to bearing fruit, with the country leading the FDI table in 1Q2013, accounting for 23%, or $303 million, of the total $1.34 billion recorded over the quarter according to the Central Bank of Turkey.

Improving the cultural ties between Japan and Turkey is seen as key to getting two-way trade back on the agenda. As part of the Strategic Partnership Agreement, a Turkey-Japan University of Science and Technology will be established, Turkey’s second international university following the opening of the Turkish-German University in 2009. The creation of education links between the two countries will allow for the training of a new generation who will be able to better promote trade and investment between the two sides, and hopefully see Japan once again competing at the top of the Turkish trade league tables again.