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Çağlayan blames former Turkish ministers for trade ’mistake’

Hurriyet Daily News, Turkey

Çağlayan blames former Turkish ministers for trade ’mistake’

ACCRA, Ghana - Anatolia News Agency

15 December 2010

Turkey is offering economic partnership agreements to potential trade partners instead of traditional free trade agreements in an attempt to bypass regulations in its customs union deal with the European Union, a Turkish minister has said.

Turkey’s current free trade agreement, or FTA, arrangements were beset by “a mistake” made by an earlier Turkish Foreign Ministry, State Minister Zafer Çağlayan told journalists at a Ghana-Turkey business forum in the African country’s capital of Accra on Monday.

According to the customs union between Turkey and the European Union that came into effect Dec. 31, 1995, goods can travel between Turkey and the EU without being restricted to customs regulations.

“As the customs union deal was being signed, there was an item that said the free trade agreements signed by the European Union were entirely shared by the Turkish Republic. Our colleagues at the Foreign Ministry at the time set this item aside because of concerns Turkey might have been forced into trading with southern Cyprus,” Çağlayan said. “Now the union is benefiting from this act.”

Because of the deal, Turkey is not able to sign FTAs with any other parties before entering the EU, Çağlayan said, adding that this had cost Turkey a great deal of time.

“The European Union signed free trade deals with Mexico in 2002 and Algeria in 2005,” he said. “But we have still not been able to finalize agreements with those countries. Do you think we could call that a rip-off by the EU? It was a mistake of the Foreign Ministry to sign that deal.”

Concerns over trade with Greek Cyprus

Relations between the Turkish Republic and the Greek Cyprus government on the southern part of the Mediterranean island have been tense for decades.

The Turkey-EU agreement was the outcome of efforts made by Hikmet Çetin, Mümtaz Soysal, Murat Karayalçın, and Erdal İnönü of the Social Democratic People’s Party, or SHP, who served as foreign ministers prior to the agreement. However, regardless of their concerns about being forced into trading with Greek Cyprus, Çağlayan said Turkish commerce would no longer be affected by trading with the Mediterranean state, adding that southern Cyprus’ total trade volume is only $5 billion. “This compares with the volume of a single company of ours.”

The Turkish prime minister at the time the Turkey-EU deal was inked, Tansu Çiller of the True Path Party, or DYP, was a strong supporter of the customs union, calling it a step forward in the country’s EU membership accession bid, but Turkey is now in negotiations to have the previously ignored article rewritten into the agreement, the minister said.

“But they are happy with the mistake that we made and will not withdraw,” he said.

Turkish firms paying exorbitant tariffs

When entering some countries, Turkey’s European competitors trade with absolutely no customs tariffs, but Turkish firms are required to pay up to almost 100 percent in taxes, he said.

At the same time, due to customs union regulations, Turkey can only apply a 4.5-percent tariff on imports from these countries, Çağlayan said. “To overcome these problems we began offering these new and comprehensive economic partnership agreements to other countries.”

The economic partnership agreements have been devised as a means of creating free trade areas between the European Commission of the EU and countries in Africa, the Caribbean and the Pacific group of states.

Turkey has already signed such an agreement with Georgia, is currently in talks with Iran and has already made offers to Algeria, Mexico and a number of African countries, said Çağlayan.