Trade Minister Ruhsar Pekcan and Rifat Hisarcıklıoğlu, head of the Turkish Union of Chambers and Commodity Exchanges (TOBB), have addressed the challenges emerging from both the upcoming Brexit process and trade wars. During the Trade Wars, Brexit and the Future of the Multilateral Trading System meeting organized yesterday by the International Chamber of Commerce (ICC) Turkey National Committee in Istanbul, Pekcan stressed the importance of strong economic ties between Turkey and Britain. "We still don't know what will happen on Oct. 31 but there is one thing we know; Britain is one of the countries we trade the most with, the second country we export the most to," she said.
Pekcan added that if a "hard Brexit" occurs Turkey will be the second most affected country after the EU, adding that the Turkish government is proactively working on minimizing the negative impacts of the process.
She also raised some concerns over the trade wars between the U.S. and China, saying that the trade wars have turned from mere discourse into an action that hurts.
For his part, Hisarcıklıoğlu said the trade wars, which began as a commercial duel between the U.S. and China, have gradually turned into a vortex that has drawn the EU, Japan and Korea into it.
"We still do not know how the Brexit is going to be resolved or what will happen after the divorce," he said, adding the process has turned into a mess.
He also added it is unclear whether U.K. Prime Minister Boris Johnson will be able to put an end to the issue, or whether Britain will seek a new election or referendum.
"As the business world, we are getting dragged into even greater risks as uncertainty increases," he said.
The U.K. is among the 17 countries in Turkey's Export Master Plan, meaning a target for growing foreign trade and exports.
According to the Turkish Statistical Institute (TurkStat), the bilateral trade volume reached $18.8 billion as of 2018, with $11.2 billion in exports and $7.4 billion in imports.
The U.K. is the second-largest destination for Turkish exports, with a 15.7% rise in exports to the country from 2017. Imports were also up 13.7%.
Trade Minister Pekcan had recently warned that if Britain crashes out of the EU without a deal – a "no-deal" Brexit – trade between Turkey and the U.K. could drop by as much as $3 billion, adding that many Turkish companies lacked information on the consequences of such a scenario.
Pekcan had emphasized that they expect that the most affected sectors would be automotive by a trade loss worth up to $1.2 billion, textile with $1.3 billion and electronic and white goods by $500 million.
Nearly 3,000 British-owned companies are estimated to have been operating in Turkey and the U.K. is among the leading investors in Turkey.
According to the Central Bank of the Republic of Turkey (CBRT), the amount of investments carried out by British firms in Turkey in 2018 amounted to $409 million. The amount of investment made by Turkish companies, which have distribution and sales-oriented representative offices and branches in the U.K., stood at $323 million during this period.
The U.K. is currently scheduled to leave the EU on Oct. 31, but turmoil in the British government has raised the prospect of another postponement of the divorce date.
UK SEEKING STRONGER POST-BREXIT TRADE WITH TURKEY
Separately, British Chamber of Commerce in Turkey (BCCT) Chairman Chris Gaunt said that the U.K. wants to protect and increase its trade volume with Turkey.
The British and Turkish authorities are seeking to find a solution to issues that may arise in bilateral trade post-Brexit, Gaunt told Anadolu Agency (AA) yesterday. He said that the U.K. does not want to lose the current bilateral trade volume between the two countries of around 18 billion pounds ($23 billion) but wants to strengthen its commercial relations with Turkey despite uncertainties over Brexit. Both sides are willing to undertake new investments and projects, but British companies are going through a difficult process with uncertainties due to Brexit, Gaunt explained.
"It was never going to be an easy transition. We have seen this over the last three years. Now, we have got to a point, where the government and the prime minister made a very clear commitment that we will leave on the Oct. 31, with or without a deal. Whether that will happen is not clear either," he said. He called for a form of free trade agreement that he said would be needed between the two countries as Turkey, which is a part of the EU's customs union agreement, cannot independently under current EU rules negotiate a deal with the U.K. if it leaves without a deal.
"Our diplomats and the Turkish ministries are working to find a solution to this," he said.
TURKEY – HIGH PROFILE FOR OFFSHORE WIND AND STORAGE
The BCCT is focusing heavily on Turkey, particularly for energy and technology trade. "We keep Turkey as very high profile," Gaunt said.
To this end, the chamber has organized two conferences in the U.K. to be held by the end of the year to allow startups, Turkish companies and U.K. companies to meet. U.K. Offshore wind farm technology has been targeted from the many potential investment opportunities that they follow, Gaunt said.
The U.K. government has been promoting this technology and wants to bring it to Turkey, a sector that Turkey to date has not invested in.
"It is going to happen, whether it happens now or later. We have already committed to providing this sort of help and support to Turkey," he asserted.
Solar storage technology is another target sector in which Turkey has huge potential.
He said that British companies with experience in developing storage for solar power are interested in looking for opportunities in countries like Turkey with strong solar potential.
TURKISH, BRITISH FIRMS COULD CO-INVEST IN THIRD COUNTRIES
In recognition of Turkey's advantageous, geographical location as a potential hub for U.K. companies, he said, "up until now we have been providing services to U.K. companies, but now we are also providing services to Turkish companies, particularly Turkish companies that want to invest in the U.K."
"When you view Turkey, you do not just look at it in terms of its domestic market, but also look at its trading relationships within the region because many Turkish companies have operations in Central Asia, the Middle East and North Africa," he added.
"If you want to expand your products and brands into these markets the first stop is Turkey and you should try to find a good Turkish partner that will enable you to move into these markets. We promote that very strongly," Gaunt said. He said that the chamber works very closely with the U.K. Export Finance (UKEF), which is very active in Turkey. UKEF allocated a $3 billion budget for Turkey, which can also be used for Turkish and British companies' investment projects in third countries, Gaunt explained. "UKEF can provide funding of up to 85% of the total, but the criteria are based on using 20% of U.K. content in the supply chain," he added.