Benefiting from trade opportunities with Turkey

Vivagen Amoomoogum
Analyst – Trade Division

Turkey, officially known as the Republic of Turkey has the world’s 15th largest Gross Domestic Product (USD 1.1 trillion) and is considered as one of the newly industrialized countries in the world. With a population of more than 74 million inhabitants and being among the Top 5 countries in the world with the highest number of billionaires, Turkey is regarded as an ‘emerging economy’ with a per capita income of more than USD 10,000.

Due to various economic structural reforms such as privatization, banking system strengthening, fiscal discipline, and tight monetary policy, Turkey was able to recover rapidly from the recent financial crisis and is now the fastest growing economy in Europe with a GDP growth of 8.5% in 2011, making it also one of the fastest growing economies in the world.

Regarding Turkey’s main economic sectors, it is the world’s largest producer of several agricultural products such as hazelnuts, cherry, fig and apricot, and is also the biggest producer of consumer electronics and home appliances in Europe. Turkey is also among the world’s leading nations of shipbuilders and is the 7th largest automobile producer in Europe. Moreover, the country is classified on the list of the top biggest importers of cotton, staple fibres, fertilizers, medicaments, plastic products, and iron and steel products.

FTA with Turkey

With such an enormous potential, Turkey represents one of the most interesting trading partners for Mauritius. The Free Trade Agreement (FTA) between Mauritius and Turkey was signed in September 2011 and is expected to strengthen the economic and commercial relations, and to increase the volume of trade in goods and services between the two countries.

The Mauritius-Turkey FTA is partly based on the Interim Economic Partnership Agreement (EPA) with the European Union (EU) and provides enhanced duty-free access for almost all industrial products originating from Mauritius and being exported to Turkey. As far as the textiles and clothing sector is concerned, the Turkish side has agreed to provide immediate duty-free access on all garments with the single transformation rules of origin, except for a list of 70 products on which duties will be phased down over four years.

With respect to agricultural products, Mauritius has obtained concessions on a list of 46 products including chilled fish, cut flowers, vegetables, preserved tuna, sweet biscuits and tropical fruits such as pineapples, mangoes and litchis.

As regards to the Mauritian offer, a tariff phased-down schedule similar to the interim EPA signed with the EU will be applied; and includes a list of sensitive products such as biscuits, meat, pasta, paints, soaps and detergents, iron and steel products, which will be excluded from the tariff liberalization process. On the rules of origin, the EPA rules would be applied and the provision for both countries to cumulate origin with the EU has been included.

Given the growing private sector dynamism and an increasing number of ‘upper-middle’ class entrepreneurs, Turkey represents a huge opportunity for our operators to explore this market. Currently, our total exports to Turkey amounts to Rs 134 million with semi-manufactured products such as denim fabrics and cake decorations representing the major items exported.

In fact, the structure of Turkey’s imports reflects a significant degree of imports in intermediate goods including products for which Mauritius has substantial exports, such as polished diamonds, medical instruments, fertilizers, preparations used in animal feed, plastic packing products and metal tubes and pipes.

According to the International Trade Centre’s (ITC) market analysis tools, there exists an indicative potential trade of nearly Rs 63 billion between Mauritius and Turkey. Textiles and clothing is being identified as the sector having the highest trade potential between the two countries. The import figures for Turkey for all textiles and clothing items for the year 2011 amounted to Rs 410 billion with an average annual import growth of 18 percent over the last five years. In addition, it is worth noting that Turkey has relatively more imports in fabrics than in finished garments. The main suppliers were Bangladesh, China, Pakistan, Vietnam and Indonesia, which do not benefit from same favourable market access conditions as Mauritius has been able to obtain under the Mauritius-Turkey Free Trade Agreement.

The Mauritius-Turkey FTA is expected to be ratified by the Turkish Government in September 2012 after which a date will have to be agreed for its implementation. Subsequently, the MCCI will be organising a workshop to apprise the business community on the opportunities available under the FTA. An information booklet prepared by the MCCI will be made available to operators which will include complete and comprehensive details on the FTA and on the trade opportunities available including information on trade logistics and certification requirements.

It is expected that through the Mauritius-Turkey Free Trade Agreement, the business community will make the most out of the enormous trade opportunities available with Turkey.