INDUSTRIAL AND TRADE RELATIONS WITH TURKEY
The Government welcomes the Committee's Report. It
shares the Committee's view that the inherent instability of the
Turkish monetary and political system remains a major block to
steady economic improvement. For the economic reform programme
to succeed in the longer term, the Turkish government must evenly
implement these reforms. The Government finds it gratifying that
the new economic strategy put in place since the February crisis
by the Turkish government has secured new financial support from
the IMF and World Bank. The Government hopes that these new measures
will reduce further risk of crisis and restore the credibility
of the Turkish financial institutions particularly in the banking
The Government agrees with the Committee's conclusion
that Turkey will continue to grow in significance as a trading
partner for the UK. The Government identified Turkey as one of
its top twelve priority target markets. And it is pleased to note
that UK exports to Turkey for last year were up by 49% compared
to 1999 and total bilateral trade for 2000 reached approximately
£3.38bn. Turkey's increasing wealth has led to a demand in
many sectors and there are good opportunities for British exporters
and investors, which include the areas of engineering, general
industrial equipment, IT and electronics, telecommunications,
healthcare and power generation.
The Government has the following comments on the
Committees' conclusions and recommendations:
TRADE AND ECONOMY
(1)We recommend that the European Commission raise
with the Turkish authorities the possible benefits of amending
the privatisation legislation with a view to increasing the attraction
of Initial Public Offerings abroad (paragraph 19).
The Government agrees with the Committee's recommendation
that the Commission should raise with the Turkish authorities
the possibility of making privatisation more attractive for foreign
investors and will notify the Commission of this proposal accordingly.
The Government welcomes the progress made so far by the Turkish
Government in this area but recognises that there is still some
way to go. There is now growing political acceptance of structural
change. Further privatisation is important for the efficiency
and globalisation of the Turkish economy. It is hoped that these
changes will create a more attractive investment climate for foreign
investors. British investment covers a wide range of sectors,
with over 330 British companies investing. Major British companies
such as BP, Shell, Unilever (UK) and Lucas Industries are well
The Government will continue to promote Turkey as
an attractive location for UK investment particularly for low-tech
manufacturing. The Government strongly supports British investors
through the Trade Partners UK network.
(2) We recommend the Government ensures that the
UK banking sector can be made aware of the potential opportunities
in any future public offerings involving Turkish banks (paragraph
The Government will take steps to ensure, through
the Trade Partners UK network, that any potential opportunities
of this nature, bearing in mind the risks, are drawn to the attention
of the British banking community. The Government will continue
to support major UK financial companies and small financial sector
groups, who will need to be reminded of the uncertainties before
venturing into the Turkish market.
(3) DTI and BTI should make companies in the UK
financial services sector aware of Turkish private pensions legislation.
Companies should be encouraged to explore the potential for offering
their expertise to take advantage of the new situation (paragraph
Private pension legislation has now been passed by
the Turkish Parliament and came into force on 7 April 2001. The
Government is already working with the financial services sector,
through International Financial Services London (formerly British
Invisibles) to organise a private pension seminar in Turkey later
in the year.
UK TRADE AND INVESTMENT
(4) We encourage BTI to publicise all upcoming energy
construction work to UK companies (paragraph 24).
The Government will continue to track opportunities
in the energy sector in Turkey and publicise them to British companies
through Trade Partners UK. More particularly, considerable effort
is being focussed by Trade Partners UK, with British Embassy personnel
in Ankara who are working actively to promote opportunities expected
to arise from the Baku-Tbilisi-Ceyhan oil pipeline project. The
Government will continue to maximise opportunities for UK companies
on specific elements of this project.
(5) We encourage the Government to make a representation
to the Commission on the issue of spirit exports to Turkey on
behalf of UK spirit producers (paragraph 28).
The Government has made a number of representations to the Commission
this year about the difficulties the UK spirits industry is facing
as a result of Turkey's failure to meet its Customs Union obligations,
most recently in June. It is working closely with the Commission
and the Scotch Whisky Association on the action to be taken to
ensure that the Turkish authorities address these concerns.
Furthermore, Government officials at the DTI are liasing with
the Publishers' Association over the book piracy issues highlighted
in the report.
(6) We hope that the Government can help establish
mutually beneficial industry links by monitoring the development
of Clean Coal Technologies in Turkey (paragraph 32).
The environment has been designated as a priority
sector for future work in Turkey by the Government through the
Trade Partners UK network. The British Embassy in Ankara held
a seminar in December 2000 on the environmental aspects of energy
production, which included clean coal technology. The Government
is supporting a cleaner coal technology transfer and export promotion
programme alongside its cleaner coal technology R&D programme.
The Government will explore the potential to develop closer links
with Turkey via the technology transfer and export promotion programme.
This could also include organising inward and outward cleaner
coal trade missions to Turkey in collaboration with UK industry.
The Government will also ensure that the relevant trade, science
and technology authorities in Turkey are made aware of the capabilities
of UK industry and academia in cleaner coal technologies by inviting
them to relevant workshops and events that we host as part of
the programme activities. The Government will also look for other
opportunities to develop this area of work.
(7) Turkey is a destination for UK tourists. We
hope that BTI can build on the existing situation and be seen
to identify opportunities, which might arise from the tourist
service industry (paragraph 34).
The Government is already in contact with the Turkish
Ministry of Tourism through the Trade Partners UK network in identifying
that any opportunities are drawn to British companies active in
this sector. Beverley Hughes the then Minister for Construction,
DETR visited Turkey in January 2001 as head of a high-level business
delegation which included tourism consultants. The Minister had
a very positive meeting with the Turkish Minister of Tourism and
reinforced that Turkey is an important destination for British
tourists. The accompanying tourism consultants were able to offer
advice to Ministry officials and Turkish private companies during
their visit in carefully developing this sector so as to have
a minimal impact upon the environment.
(8) Should the Integrated Environmental Plan go
ahead, offshore goods and services would be needed to the tune
of $80 million. This is something of which the UK should ensure
it is in a position to take advantage (paragraph 40).
The Government, through ECGD has indicated that it is prepared
to support an application for UK exports in respect of the Water
Treatment element of the Integrated Environmental Plan, subject
to the usual risk underwriting criteria being satisfied.
(9) We urge the UK government to make all efforts
possible to secure more funding for the Yalova project to give
it a chance of approval by the Turkish government. It would be
unfortunate if this project, benefiting the UK and Turkey, were
to be lost (paragraph 41).
The Government response to this comment is contained
in its answer under point ten.
(10) We are glad to see the UK involved in a scheme
for a new modern waste water system in Yalova, positioning itself
to take advantage of contracts arising from both immediate and
long-term projects. We hope to hear in the near future that the
Turkish Government has approved this plan (paragraph 42).
The Government welcomes the Committee's support for
the earthquake reconstruction projects in Yalova. The UK government
continues to put its full support behind the earthquake reconstruction
project in Yalova. The former DETR has helped to fund the British
Earthquake Consortium for Turkey (BECT) public private partnership.
The projects identified by the Consortium have been agreed as
priority projects by the UK and Turkish government and incorporated
into a Memorandum of Understanding. DETR and other Ministers continue
to press the Turkish government to take forward these projects
during trade missions and other visits to Turkey. The current
economic situation in Turkey is, however, fragile and there has
been a significant turnover in the key decision-makers in Turkey
- particularly in the Treasury. Nonetheless, the Government believes
that the projects, the waste water project in particular, are
essential for the regeneration of Yalova and continues to press
for a positive decision at every opportunity.
(11) We were impressed by the energy for change
that we found in Turkey, and by the determination shown to implement
the financial reform programme. This bodes well for Turkey's eventual
EU membership. We do not know how long the accession process will
take; it is already having a modernising effect on Turkey's social
and economic policies. We are concerned at the apparent ease,
with which the Turkish economy can be disturbed by relatively
minor occurrences, thus causing problems with a steady economic
reform (paragraph 43).
The Government welcomes the Committee's assessment that Turkey
will one day be a valuable member of the European Union, and agrees
with the observation that the EU accession process is a catalyst
for economic and social reform in Turkey. The EU's Accession Partnership
has set out the measures Turkey must take to meet the Copenhagen
criteria, including the economic, political and administrative
The Government welcomes publication of Turkey's National Programme
for the Adoption of the Acquis in response to the Accession Partnership,
and looks forward to Turkey carrying out the reforms set out there.
The Turkish Government has committed itself to carrying out a
wide range of structural reforms, notably on taxation, social
security, agricultural support and privatisation to facilitate
adoption of the Acquis. These structural changes constitute a
significant part of an ambitious but necessary economic reform
programme. The Government urges the authorities to implement the
programme in full, to restore Turkish economic health, to help
Turkey to realise its full economic potential, and to help it
join the European mainstream.
The Government will continue its support for a strong Turkish
economic programme, including support through the International
Financial Institutions. Last month the IMF Executive Board approved
an additional loan to back enhanced economic reform in Turkey.
We expect Turkey to implement all the necessary measures rigorously.
(12) In the medium to long term, there is every
prospect of Turkey's continuing to grow in significance as a trading
partner for the UK, in due course as a fellow member state of
the European Union (paragraph 44).
The Government agrees with the Committee's assessment. Continuing
economic and other reforms in the context of the EU's Accession
Partnership should help to give a significant boost to trade and
investment between the UK and Turkey.