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EU, South Korea deal worries Turkey

Friday, September 12, 2008

EU, South Korea deal worries Turkey


A soon-to-be-finalized free trade agreement between the European Union and South Korea is causing concern for Turkey, as its market will be indirectly opened to South Korean products due to its customs union agreement with the EU.

According to the 1996 customs union agreement, any country that signs a free trade agreement with the EU enjoys tariff-free access to the Turkish market, a one-way trade that works to the disadvantage of Turkish producers.

The EU was trying to convince South Korea to sign another free trade agreement with Turkey as well, officials from Turkey’s Undersecretariat of Foreign Trade, or DTM, told daily Referans on condition of anonymity. In a similar move, the Turkish Foreign Ministry is asking the EU to encourage South Korea to pursue an agreement with Turkey that would balance the bilateral trade.

Though Seoul has not yet officially responded to Turkey’s proposal, South Korea’s ministry of foreign affairs and trade said the country had started assessing the impact of a free trade agreement with Turkey, the Korea Herald reported Thursday. According to the ministry, the South Korean government has already hired experts to investigate the possible effects of free trade with Turkey on the country’s economy. The ministry said South Korea’s free trade agreement with the EU, currently being discussed by the two parties, was motivating Turkey to seek a trade pact with Asia’s fourth-largest economy.

Precautions to be taken

Officials noted that some protections would be in place for sectors that might be affected by duty-free Korean goods and emphasized that the agreement with the South Koreans might contribute to cooperation in the future.

These sectors included automotive, linen and fabric, textiles, and especially flat iron and color televisions, officials said. All these industries constitute an important portion of Turkey’s exports.

It would take two years to wrap up talks and sign a free trade agreement with South Korea if the two countries agreed to start today, they added.

Private sector also worried

Representatives of the private sector said they were also worried by the EU-South Korean agreement. Veysel Yayan, general secretary of the Turkish Iron and Steel Producers Association, said such an agreement with South Korea might cause problems in the flat goods and stainless steel sectors. South Korea is the sixth-biggest steel producer in the world.

"We do not have the same chances with South Korea. Otherwise, we would not object to this. However, the iron-steel industry in South Korea is subsidized by the state, and energy and other costs are subsidized by the state," he said.

Yayan said Turkey had already become victim of the EU’s free trade agreements with third countries. "The problem is that those agreements create obligations."

The EU recently signed similar agreements with Chile and Mexico, but Chile rejected Turkey’s suggestion to sign a bilateral deal.

These countries consider it unnecessary to sign a free trade agreement with Turkey because they can automatically enter the Turkish market via the EU, a Foreign Ministry official said. "Therefore we are pressing the EU to obligate their trade partners to sign similar agreements with Turkey."

 source: Turkish Daily News