ANKARA: Turkey and its Arab neighbors are due to enter into a free-trade area (FTA) agreement early next year, a pact both sides see as politically beneficial. But closer trade ties have already begun causing economic disruptions in Syria and could threaten the other Arab partners as Turkey's industrial juggernaut gains freer access to their markets.
Since the two sides have eased trade barriers, including a bilateral FTA signed in 2005, Syria has been hit by an onslaught of exports from neighboring Turkey. Turkish exports to Syria have quadrupled in the five years and in 2009, Syria ran a $756 million trade deficit with Turkey.
"Turkey has a competitive edge in light industries, such as textiles and food processing that will make it especially hard for Syria to compete," Marcus Marktanner, an assistant professor of economics at the American University of Beirut said in e-mailed remarks to The Media Line. "Opposition to the union from the business sector is strongest there."
The FTA drive comes as Prime Minister Recep Tayyip Erdogan and his Islamist Justice and Development Party lead a strategic rebalancing away from Europe and the West toward closer ties with the Mideast.
Omer Taspınar, director of the Turkey project at the Brookings Institution, told a conference last month that Islamic solidarity was less a factor than economics in Turkey's new strategy, calling it a "mercantilist driver." Once ignored by Turks in favor of Europe, exports to the Middle East have grown to about 20 percent of Turkey's total. In return, Turkey relies on energy from Iraq and Iran to power its factories.
For now, however, the FTA will encompass the smaller and less critical economies of Syria, Jordan and Lebanon. Turkey's gross domestic product was $615 billion last year, almost six times the combined economies of its three partners. Dubbed by The Economist as the "China of Europe," its manufacturers turn out everything from automobiles to t-shirts for the global market.
The World Economic Forum's Global Competitiveness Index for 2010-11 ranks Turkey at 61. That is relatively low, but above that of its FTA partners. Jordan comes in at 65, Lebanon at 92 and Syria at 97, according to the WEF. Jordan ran a $325 million trade deficit with Turkey last year and Lebanon had a gap of $413 million, according to Turkish trade figures.
For Turkey the four-country FTA won't have much of an economic significance unless it expands to include the region's big energy exporters, Saudi Arabia and Iraq, said Harun Ozturkler, an expert on Middle East economies at the Ankara-based Center for Middle Eastern Strategic Studies (Orsam). He said Turkey's main goal was to show the European Union it had alternatives to membership while giving Turkish voters a reason not to worry about the long time it is taking to join the EU.
That, however, will offer little consolation for a country like Syria, whose economy is not only small but also weighed down by heavy state intervention.
Along the Syrian-Turkish border, relaxed controls have created a flood of travel and trade, but the International Crisis Group in an April report cited unnamed Syrian officials as worrying about how much commerce worked in Turkey's favor and fretting whether northern Syria may slip into a Turkish sphere of influence. Fouad Al-Jouni, Syria's industry minister, said last month that Turkish imports by last year began to curtail what he called an economic boom.
Turkey is aware of the threat economic integration poses to the economies of the Arab world. But Ozturkler said the FTA would correct the imbalances in the long run.
Years ago, many Turks opposed closer trade ties with Europe, he noted, but in the end freer trade helped Turkey to develop and modernize. The same opportunity to use integration as a springboard for growth and reforms can be exploited by Turkey's Arab trade partners, Ozturkler said. Turkey aims to lead the region into undertaking the economic liberalization it has long resisted, he said.
"They are going to suffer from the Turkish exports, but in other ways — politically — they'll benefit," Ozturkler told The Media Line.
Source : http://arabnews.com/economy/article211373.ece - Dec 9, 2010
Since the two sides have eased trade barriers, including a bilateral FTA signed in 2005, Syria has been hit by an onslaught of exports from neighboring Turkey. Turkish exports to Syria have quadrupled in the five years and in 2009, Syria ran a $756 million trade deficit with Turkey.
"Turkey has a competitive edge in light industries, such as textiles and food processing that will make it especially hard for Syria to compete," Marcus Marktanner, an assistant professor of economics at the American University of Beirut said in e-mailed remarks to The Media Line. "Opposition to the union from the business sector is strongest there."
The FTA drive comes as Prime Minister Recep Tayyip Erdogan and his Islamist Justice and Development Party lead a strategic rebalancing away from Europe and the West toward closer ties with the Mideast.
Omer Taspınar, director of the Turkey project at the Brookings Institution, told a conference last month that Islamic solidarity was less a factor than economics in Turkey's new strategy, calling it a "mercantilist driver." Once ignored by Turks in favor of Europe, exports to the Middle East have grown to about 20 percent of Turkey's total. In return, Turkey relies on energy from Iraq and Iran to power its factories.
For now, however, the FTA will encompass the smaller and less critical economies of Syria, Jordan and Lebanon. Turkey's gross domestic product was $615 billion last year, almost six times the combined economies of its three partners. Dubbed by The Economist as the "China of Europe," its manufacturers turn out everything from automobiles to t-shirts for the global market.
The World Economic Forum's Global Competitiveness Index for 2010-11 ranks Turkey at 61. That is relatively low, but above that of its FTA partners. Jordan comes in at 65, Lebanon at 92 and Syria at 97, according to the WEF. Jordan ran a $325 million trade deficit with Turkey last year and Lebanon had a gap of $413 million, according to Turkish trade figures.
For Turkey the four-country FTA won't have much of an economic significance unless it expands to include the region's big energy exporters, Saudi Arabia and Iraq, said Harun Ozturkler, an expert on Middle East economies at the Ankara-based Center for Middle Eastern Strategic Studies (Orsam). He said Turkey's main goal was to show the European Union it had alternatives to membership while giving Turkish voters a reason not to worry about the long time it is taking to join the EU.
That, however, will offer little consolation for a country like Syria, whose economy is not only small but also weighed down by heavy state intervention.
Along the Syrian-Turkish border, relaxed controls have created a flood of travel and trade, but the International Crisis Group in an April report cited unnamed Syrian officials as worrying about how much commerce worked in Turkey's favor and fretting whether northern Syria may slip into a Turkish sphere of influence. Fouad Al-Jouni, Syria's industry minister, said last month that Turkish imports by last year began to curtail what he called an economic boom.
Turkey is aware of the threat economic integration poses to the economies of the Arab world. But Ozturkler said the FTA would correct the imbalances in the long run.
Years ago, many Turks opposed closer trade ties with Europe, he noted, but in the end freer trade helped Turkey to develop and modernize. The same opportunity to use integration as a springboard for growth and reforms can be exploited by Turkey's Arab trade partners, Ozturkler said. Turkey aims to lead the region into undertaking the economic liberalization it has long resisted, he said.
"They are going to suffer from the Turkish exports, but in other ways — politically — they'll benefit," Ozturkler told The Media Line.
Source : http://arabnews.com/economy/article211373.ece - Dec 9, 2010
