TBY talks to Ret. Ambassador James H. Holmes, President & CEO of the American-Turkish Council, on bilateral relations between the two countries and the opportunities for more.

James H. Holmes
Ret. Ambassador James H. Holmes is the President & CEO of the American-Turkish Council, a non-profit organization dedicated to the strengthening of US-Turkish business and political relations. The ATC has approximately 200 corporate and individual Members in Turkey and the US. He is a 37-year veteran of the US Foreign Service, including services as the Deputy Chief of Mission at the US Embassy in Ankara. He was educated at Colgate University, Johns Hopkins University School of Advanced International Studies, and the National Defense University.

Within the past four years, bilateral trade between the US and Turkey has surpassed $20 billion. How would you assess the current state of US-Turkish commercial relations?

What you described in terms of volume is fairly accurate, except that it hasn't increased in the past year. US exports to Turkey were flat, while Turkish exports to the US grew. These numbers are acceptable, but if you look at the total trade volume in the US and that of Turkey, these are tiny fractions of what they ought to be between the world's number one and 16th largest economies. My message to US and Turkish traders is to look more carefully and more seriously at the opportunities that are not being prioritized in both countries with respect to the products and trade in which people are interested. Americans and Turks have not found each other in terms of available trade in the same way that Europe has with Turkey. There is still a substantial educational effort required, which is why such things as the NASDAQ deal with Borsa İstanbul are important, as this creates opportunities for Turkish business.

Which sectors have the greatest potential for growth between the US and Turkey?

I believe that Turkey remains extremely competitive in a high quality, high-end textile industry, where it has the skills, the production capability, and the design instincts to compete better globally. The entire IT industry and various IT partnerships have enormous potential here. Unfortunately, Turkey continues to be looked upon as an inferior country for technology, which is simply not the case. You have probably seen that Turkey has invested heavily into the FATİH Project, an educational scheme to provide school children with tablets for enhanced education, and American industry has been interested in this.

On the Transatlantic Trade and Investment Partnership (TTIP), would it benefit the US and Turkey should the former be included?

On the contrary, there is a risk that this would penalize trade between the Turkey and the US because of the way the Customs Agreement with the EU is structured. The US would reap all of the benefits and privileges to result from the agreement between the US and the EU. We need to be alert about the potentially negative consequences for bilateral trade and do our best to see that this does not occur. Turkey pressed hard when the Prime Minister was in Washington, DC in May 2013 for parallel negotiations to be undertaken, but in the end they did not agree on this.

There has been extensive cooperation between the US and Turkish defense sectors. How would you now assess the level of cooperation?

Cooperation is good; there is a broader understanding of the benefits and partnership between the two industries. A significant change here has occurred on both sides, and part of this is the substantially increasing capabilities of the Turkish defense industry. By mid-2014, we will finally see the completion of a deal with Sikorsky. This helicopter would be built for Turkish consumption, but also for third-country sales. There is a substantial component not just for this helicopter, but also for all of Sikorsky's helicopters, made by Alp Aviation in Eskişehir. Meanwhile, there is a solid record of jet engine production and maintenance capabilities through General Electric's partnership with TEI in Eskişehir. In 2013, I was disappointed by the government's decision to opt for a Chinese air defense system, for which it is currently engaged in negotiations. From my perspective, there is no doubt about the net consequences for Turkish industry changing from US partners to Chinese partners, but they made that choice themselves.

For 2014, what do you hope to achieve on the Council?

We are a membership business organization and promote broader relations between Turkey and the US. We pay much attention to political and economic developments and the national security dimension. We need, right now, to protect the relationship so that somewhere down the road we can get back successfully into the business of promoting it. The government continues to function and provide stability. The investor community has looked at the issues of the currency depreciation and current account deficit and understands that these have important economic dimensions. But they haven't panicked, and they haven't packed up their portfolios and gone home. This shows that, for most part, American investors are committed to Turkey for the long term. The goal for 2014, therefore, is to reinstill in our members confidence that the opportunities and benefits of partnership relations are genuine and the objectives of increased sales and increased returns on investment realistic.