U.S.-Turkey Relationship

Jose W. Fernandez
Assistant Secretary, Bureau of Economic, Energy and Business Affairs
TUSKON Business Association
Istanbul, Turkey
January 26, 2011

As prepared for delivery

Thank you so much, it is a pleasure to be here. In particular, I’d like to thank Chairman Riza Nur Meral for hosting me today. In my short tenure at the State Department, this is the third time I’ve been to Turkey, more than any other country. I am also very pleased to be traveling with my friend and colleague, Assistant Secretary Camunez of the Department of Commerce. This isn’t simply a measure of how much we enjoy visiting our friends and colleagues in Istanbul and Ankara. Nor does it simply reflect the fact that the U.S.-Turkey relationship continues to grow in strategic importance. Both of these are true. But the more important reason is that we recognize the vast potential to broaden and deepen our relationship even further.

I’d like to reiterate what our two Presidents have already acknowledged, time and time again. Turkey and the United States share a very unique and special relationship, which is truly a “model partnership.” The significance of this relationship is underscored by Secretary Clinton’s recent statement that “the U.S. and Turkish partnership is one of the most important bilateral relationships in the world.”

This is not some vague and idealistic vision of unity and harmony. It is in fact a realistic assessment based on the substantive steps we have already taken to strengthen our economic collaboration.

A central pillar of this relationship is our economic and commercial engagement. Turkey’s economic growth is good for the Turkish people and good for the region. It is also good for the United States, as we seek greater economic opportunities in this vibrant economy.

For these reasons, I agree with your Ambassador Namik Tan who, in a recent editorial in the Hurriyet Daily News, eloquently called for, “deepening and widening relations in fields other than military and strategic initiatives, notably in economic, commercial and cultural spheres.” I know that Ambassador Tan and I both believe that the depth of our relations in economic and commercial fields is not yet reflecting the nature of model partnership. We have to do better.

I’m happy to report that U.S.-Turkey bilateral trade grew about 25 percent in 2010, from the recession year of 2009. However, because Turkey’s economy has recovered from the global financial crisis so much faster than the United States’, U.S. exports to Turkey have grown much faster than Turkey’s exports to the U.S. – which I understand is an issue of concern for your government. Your government has been pressing mine to speed up the regulatory process that would open the U.S. market for important Turkey agricultural products, and we in Washington are working hard to do that.

Another side of the economic relationship is investment. U.S. investment into Turkey has been rising strongly and helps balance out the trade imbalance. Between 2007 and 2008 (the latest years for which statistics are available) U.S. investment into Turkey rose about 25 percent, to over $6 billion.

Our economic relations are healthy and growing – but they can be so much more! To my colleagues in government and my friends from the business sector, let me propose to you today that we truly reenergize our commitment and efforts to ensure that this vision of the “model partnership” is realized. I’m not speaking of symbols of economic cooperation, but a real commitment to meet specific challenges and achieve concrete goals.

I’d like to share with you some thoughts today about how to achieve a truly strategic economic relationship. I see the U.S.-Turkish partnership as founded on three pillars, which present opportunities for us to work together on fundamental issues. These are:

1. Participation in international fora, like the Group of 20 (G20) and the World Trade Organization (WTO), which constitute the backbone of our global economic system;

2. Striking the right regulatory balance, on issues like intellectual property enforcement, pharmaceuticals, and agriculture; and

3. Collaboration on spurring innovation and entrepreneurship.

International Fora
As partners in the G20, Turkey and the United States are working to hasten recovery from the economic recession and to put into place new measures to prevent future financial crises. We are also striving to increase global financial transparency to facilitate greater investment flows, with the right balance of supervision. In this area in particular, I want to salute my Turkish counterparts for their leadership in integrating foreign aid into the G20 process during the Istanbul summit this past May.

The G20 moved swiftly during the height of the economic crisis to take actions that ultimately helped keep the global recession from becoming a global depression. Although we are not out of the woods yet, our detailed work on financial regulatory reform, and broader global issues, is essential to continued recovery.

Turkey’s recent economic success, before the most recent crisis, came about after it took difficult steps to prepare for greater international economic integration, both with the customs union and with entry into the WTO. he United States applauds these steps and is confident that Turkey will reap even greater benefits as it undertakes further measures to compete more effectively in the global marketplace.

Regulatory Framework for Growth
Another key aspect of our strategic economic relationship lies in fostering a regulatory framework that encourages business growth. e know that Turkish business is booming, thanks to your efforts and the work of businesspeople like you across the country. Turkey is an exciting market where U.S. business men and women want to be. But, our economic relationship can be so much more than it is today. I’m confident that together we can take our economic cooperation to the next level by addressing key issues that affect business and investment.

A regulatory framework to facilitate Turkey’s business growth, which would expand trade and investment and create new jobs here in Turkey, would include measures that:

  • make it easier to start up and wind-down businesses and spur investment;
  • provide for a strong intellectual property regime, and;
  • are consistent and transparent on key issues like pharmaceuticals and agricultural biotechnology.

On the first point, we are collaborating with several Turkish ministries to streamline legislation to make it clearer what companies must do to comply with Turkish law, and to make it easier for Americans to do business in this country. For example, we are working with the Chamber of Commerce on issues like insurance to address specific licensing concerns.

We are also interested in helping Turkey expand the scope for overseas investment and pension funds to operate, as well as to expand the insurance sector. This could bring over a billion dollars a year to Turkey, and turn Istanbul into a truly world-class financial center.

Turkey unquestionably is poised to become a top world economy. An important facet in achieving this goal will be implementing a world-class system to protect intellectual property. This will ensure that Turkey takes its place among the most modern, creative and developed of global economies.

A strong intellectual property protection regime will protect Turkey’s creative talents and inventors as well as protecting foreign intellectual property rights (IPR). And, believe it or not, protecting foreign intellectual property actually helps Turkey’s domestic creative companies – how can local computer programs, music or movies compete against foreign ones, if illegal copies of the foreign ones are available for a couple of lira in the market?

Turkey is not living up to its aspirations in this area. It has remained on my government’s IPR watch list in 2010, and piracy and counterfeiting continue to flourish. As a leading economy, Turkey deserves a world-class system to protect intellectual property. We are working together constructively to address these IPR issues. We are working with the Turkish Government to improve the rules and regulations governing patents, trademarks and copyrights to help Turkish and international developers prosper. We have also offered judicial training in the sometimes technical IPR sectors to Turkish courts and government officials. We stand ready to expand that training to the processing of these cases in Turkey.

Finally, as Turkey takes its rightful place among the top global economies, it becomes increasingly important that Turkey’s regulations are transparent and in general harmony with other major economies. In particular, current regulations on agricultural biotechnology and pharmaceuticals are stifling a possible area for business growth in this country.

In a 2008 survey of the global impact of biotech crops, the global net economic benefits to biotech crop farmers was estimated at $9.2 billion dollars, through increased yield and reduced pesticide and fertilizer use, among other benefits. These benefits were divided roughly evenly between farmers in the developed and developing world.

Agricultural biotechnology is not a silver bullet, and certainly not the only answer to greater agricultural production. But, with appropriate regulation, it can help spur Turkish economic growth, both for domestic farmers and people who use imported raw materials.

The same goes for pharmaceuticals. While the issue is complex, in essence, a predictable and transparent regulatory system will attract greater investment. Potential investors – some of whom are deciding right now where to invest billions of dollars – will hesitate to enter a market if they feel uncertain about inconsistent or un-transparent regulation.

Mind you, our pharmaceuticals, agriculture, and technology companies want to be here. Turkey can be a great market and a gateway to other markets. But our companies, even though they are mostly doing well here, see a much greater potential. And so I come back to my theme: for this to be a truly “model partnership,” both the U.S. and Turkey have to do better.

Because of the great potential for U.S. and Turkish companies to work together on these issues, on this trip I will be convening meetings here to bring together leading U.S. companies in the pharmaceutical and agriculture sectors, to meet directly with Turkish government officials. We are discussing ways to facilitate our investment and trade cooperation in these areas.

My goal is to resolve these long-standing, more routine issues, along with the issues my Turkish government colleagues care about, to “take them off the table” and let us focus on our strategic goals. Where do we want to be in 10 years? The progress that we make together can help Turkey achieve your worthy goal of becoming a top ten economy by 2023, and enhance our already robust economic relationship.

Innovation and Entrepreneurship
We are looking to the future of our economic partnership by focusing on innovation in science and technology and entrepreneurship as other ways to take our U.S.-Turkish partnership to the next level. We concluded a landmark science and technology agreement last October, and we are currently working with Turkey’s Science and Technological Research Council (TUBITAK) to expand cooperation in key areas. Such an expansion will increase research partnerships between U.S. and Turkish entities in areas of shared priorities, including several that support high-tech industries.

We are also collaborating on fostering entrepreneurship. Entrepreneurs, and the new businesses they create, are the engines of economic growth and job creation, which in turn, are the underpinnings of political stability and the growth of civil society. To give you an idea of what I mean, from 1980-2005, firms less than 5 years old accounted for all net job growth in the United States.

In Turkey, we are working together to start up a new program called Partnership for a New Beginning, which will reach out to the full array of U.S. private sector partners--companies, universities, foundations, and NGOs--to contribute resources and capabilities here in Turkey. We will also work in the coming months to set up the third local chapter of the Global Entrepreneurship Program, a program dedicated to fostering entrepreneurship and job growth.

I see our cooperation on fostering entrepreneurship as a true partnership, and a way to build security and opportunity worldwide.

The record of Turkey’s economic development and growth over the last 20 years has been simply stunning. I applaud Turkey for setting an even more challenging goal for its future, one that has the potential to transform the country into a major global economic player and financial center.

Now that I’ve been to Turkey several times, I’d like to return the favor and invite a delegation of you to come meet me in Washington to discuss specific steps we can take to enhance our economic and commercial relationship, even beyond the current dialogues we are engaged in.

The next time we meet, I hope to discuss key issues where we can do even more. For example, we want to collaborate with you on renewable energy, joint infrastructure development projects, and on taking concrete steps to help turn Istanbul into a truly world-class financial center. I want to make sure that the U.S. ExIm Bank and our Overseas Private Investment Corporation (OPIC) are helping to fund greater economic relations between the United States and Turkey. These are challenges I hope we can tackle on our next visit.

Now, I’ve said this to business people in the United States, and I want to say it to you as well: Governments can facilitate relationships and improve regulations, but our shared economic success lies with you, the business men and women of Turkey and the United States.

The business people of our two great nations can truly be our “economic ambassadors,” to help us build bridges of cultural understanding and economic growth between our countries. We can create new jobs and prosperity in both of our countries and together celebrate the full potential of our strategic relationship and Turkey’s rise as a leading economic power.

Thank you so much; Tesekkur ederim.