Despite the challenges that have traditionally plagued the U.S.-Turkey relationship – including the more recent troubles surrounding the Turkish acquisition of the Russian S-400 missile defense system – the U.S. and Turkey are still actively pursuing the rather lofty goal of increasing their trade volume to a $100 billion target.
President Donald Trump and President Recep Tayyip Erdogan have agreed to expand trade "very significantly" between the NATO allies and G20 members, from about $20 billion to as much as $100 billion. "We think that number should be easily $100 billion, which would be great for Turkey and good for us. So we're going to be expanding," President Trump said last November.
President Erdogan also emphasized during the White House meeting last November that we should not confuse political incidents with commerce-related aspirations as our secretaries of commerce are currently heavily invested in achieving the $100 billion thresholds.
The trade between Turkey and the U.S. totaled almost $20 billion last year. As the business world knows, the U.S.-Turkish commercial relationship has not yet reached its full potential. There are a lot of opportunities to increase the volume starting this year.
Turkey is recognized as an emerging market and, as one of the world's newly industrialized countries, Turkey is a member of the G20 which consists of the 20 most important economies in the world.
Today, 1,800 U.S. companies are operating in Turkey, with many American Fortune 500-companies committed to producing their products here in Turkey. Those American companies and their affiliates, with 80,000 Turkish employees, generated revenues in Turkey last year totaling $35.4 billion.
How easy would it be to reach $100 billion in trade volume between the U.S. and Turkey? First of all, trust between the two parties is very important. Many American companies continue to choose Turkey as an investment center to use Turkey's strategic location, precious resources and a high-quality workforce. We are also seeing Turkish companies start to invest in the U.S. in different sectors. U.S. and Turkish business delegations consistently visit each other to have a clear road map of the $100 billion goal.
The most important element to achieve this goal is to have a free trade agreement between the two countries. The United States currently has 14 free trade agreements with 20 countries. Free trade agreements increase access to higher-quality, lower-priced goods, promoting more growth, efficiency, innovation, competitiveness and fairness. Turkish Caucus Member Rep. Alex Mooney introduced Free Trade Promotion legislation on Oct. 6, 2015, but it was not enacted.
Also, some obstacles stand in the way of the current trade relationship. As an example, Turkey is paying high tariffs on steel and aluminum products, and despite the U.S.'s decision to reduce tariffs from 50% to 25%, it is still not fair for Turkish companies. A better reduction in tariffs would make at least $500 million in contributions to steel exports.
Turkey has also been one of 120 countries participating in the Generalized System of Preferences (GSP), the oldest and largest U.S. trade preference program in place since 1975. The Trump administration removed Turkey from this program last year but there is still hope that this issue could be fixed this year to reach the goals.
The double taxation agreement between the United States and Turkey currently in force should be reassessed and revised. The position of Turkish start-ups and small-medium entrepreneurs, especially in the technology world, is growing tremendously, which should be linked to the sales channels of American companies.
A $100 billion target road map in the short term, medium term and long term should be planned and executed by collaboration between governments and private sectors.
Through open dialogue and a return to sincere collaboration via potentially less volatile avenues of the economy, the U.S. and Turkey may agree on common ground and objectives to stabilize relations. The commercial developments and diplomacy between the U.S. and Turkey are critical.
An economically powerful Turkey is crucial for both regional and global factors. It is imperative for Turkey to return to its old days of cooperation with the U.S. in a changing world. This would be achieved through innovation and a clear road map with new economical solutions applied.
I am very hopeful to see a better and stronger trade volume this year.