The second meeting of the Center took place on the 26th June 2014 in Istanbul with the participation of TÜSİAD Senior Fellow and Director of the Center on the United States and Europe's Turkey Project at Brookings Prof. Dr. Kemal Kirişçi, Managing Director of European Services Forum (ESF) Pascal Kerneis and Director of the TEPAV Center for Multilateral Trade Center and Turkey’s former Representative to the World Trade Organization (WTO) Ambassador Bozkurt Aran. In this second meeting of the Center, the latest developments regarding the new generation of FTAs and the impact of the ongoing TTIP negotiations were discussed by these prominent experts.
 
In their opening speeches, IKV Secretary General Associate Professor Çiğdem Nas and IKV Brussels Representative Haluk Nuray gave detailed information on the FTA Information and Capacity-Building Center and its objectives. Haluk Nuray also gave an overview of the current state in Turkey-EU relations. Despite the slow progress in Turkey’s EU accession process, Turkey-EU relations will continue to deepen in three main areas namely, political dialogue, visa dialogue, and the renegotiation or upgrading of the Customs Union.  In his concluding remarks, Haluk Nuray explained that TTIP presented an important opportunity for Turkey as did the Customs Union decades ago.

TÜSİAD Senior Fellow and Director of the Center on the United States and Europe's Turkey Project at Brookings Prof. Dr. Kemal Kirişçi analyzed the developments on TTIP within the American perspective. He argued that the TTIP is not only considered as a means to achieve economic growth, but also a mechanism to reinforce strategic relations between two traditional allies. Despite this initiative taken by the EU and the USA, Prof. Dr. Kemal Kirişçi pointed out to some of the challenges encountered by the USA in this negotiation process. The Obama Administration revealed its incapacity to convince the Congress and the Republicans to adopt the “Trade Promotion Authority”.  As a result, once the European and American negotiators will reach an agreement on TTIP, the draft will be presented to the Congress which has the authority to ask for new amendments. This problem is not expected to be overcome before the next presidential elections that will take place in the end of 2015. Meanwhile, the USA is well aware about the determination shown by the European Commission to conclude an agreement. But the past election in the European Parliament has raised concerns among American negotiators on the future of the EU.

Lastly, Prof. Dr. Kemal Kirişçi mentioned Turkey’s keen interest in becoming part of TTIP. He stated that the Turkish government has brought up successfully to the attention of the US Trade Representative about its intention to take part in the TTIP process.  Prof. Kirişçi argued the best option for Turkey was to join the negotiations once it has reached a mature level.  Furthermore, Turkey should focus on forming alliances with other third countries such as Switzerland (or EEA countries) that remain outside the TTIP, but have strong economic ties with EU.

Managing Director of European Services Forum (ESF) Pascal Kerneis gave a presentation entitled “Latest Developments in World Trade and TTIP Negotiations – A perspective from European Services Industry”. Following his introduction to the structure and objectives of the ESF, he commented on EU’s trade police and the ongoing negotiations within TiSA and TTIP.

Covering a large range of services sectors and horizontal federations ESF is a European institution representing the voice of the European Services industries for the international trade negotiations in services and investments. The main objective of the ESF is to raise the awareness of importance of trade in services among EU services industry, among EU negotiators as well as among EU and international institutions. It also carries out analyses of trade policies and lobbying activities in trading countries. Within this framework, the ESF prepares a list of trade barriers per sectors and per countries and positions papers in bilateral negotiations.

When presenting an overview picture of the international trade and investments in services, Kerneis stressed the importance of including services in trade agreement especially in the TTIP. When using the trade in value-added (TiVA) indicators, the share of services reaches 45 percent of the total world trade whereas this share represented only 23 percent when measured in gross terms. Pascal Kerneis highlighted the importance of the EU in global services trade. The EU is the biggest exporter of services representing 24 percent of world export in services. Kerneis gave also informed about EU’s current trade policy by presenting the scope of the new generation of FTAs negotiated as well as the list of the countries with whom the EU has already signed a FTA and with whom the EU is undergoing FTA negotiations.

When speaking of the TiSA, Kerneis also mentioned that Turkey will be the country that will benefit the most from this agreement since it has rarely concluded many agreements with other member countries involved in the negotiation of the TiSA. Referring to the FDI Restrictiveness Index prepared by the OECD, Kerneis explained that Turkey has in fact opened up many sectors in the services such as insurance and banking sectors. According to the 2013 data, Turkey’s score on openness to FDI remains higher than the OECD average.

In regards to the TTIP, Kerneis expressed his disappointment about the American position in the negotiations. He drew the attention to the lack of ambition of the USA and further criticized the USA for ignoring the main problems, especially in regards to the licenses that European firms need to export to the USA. In this regard, he explained that American firms need only one license to export in the entire EU, while the European firms need around 50 to access to the overall American market. All this put aside, according to Kerneis, the deadline to complete TTIP negotiations foreseen by the end of 2014 is unrealistic target. Considering the election of the European Parliament and the College of Commissioners, the targeted deadline should be not prior to 2017-2018.

Kerneis made his concluding remarks by stating that from a political point of view, it would be in Turkey’s interest to negotiate on the maritime transport as well as the aviation transport should Turkey “docking” the TTIP negotiations between USA and the EU.

The Director of the TEPAV Center for Multilateral Trade Center and Turkey’s former WTO Representative, Ambassador, Bozkurt Aran, in his presentation entitled “New Era in International Trading System: Proliferation of Regional Agreements” provided the participants with substantial background information on the evolution and fragmentation of the world trading system and the rise of bilateral and regional FTAs. His Excellency Aran shed light on how the world trading system has transformed over the past decades by pointing out to the current and the rise of new actors in the world trading system.

Despite the slow progress in world trading system, his Excellency Aran ensured that the Doha Round has not become completely obsolete but this system now needs to be completed to allow members to move to other multilateral regimes. The past eight rounds of trade talks were relatively less demanding because they covered mainly the industrial goods and custom tariffs. His Excellency Aran briefly presented the current structural and political challenges encountered in the world trading system and drew the attention to the lack of confidence in the entire system.
Some of these problems include; having an inflexible and outdated agenda with each member state being a veto player, tensions between most favored nations (MFN) and reciprocity, lack of critical mass decision-making, ambiguity and lack of clarity of the definitions and the rules, and absence of a mechanism to orchestrate coherence among preferential trade agreements (PTAs).  By quoting ‘Global Trends 2030: Alternative Worlds’, a recent publication by the USA National Intelligence Council, his Excellency Aran further highlighted the increasing role attributed to the developing countries in the global economy, such as China, India, and Brazil, regional players such as Colombia, Indonesia, Nigeria, South Africa, and Turkey.
 
His Excellency Aran in the second part of his presentation questioned whether Turkey is ready to undertake initiatives to negotiate with the global economic powers and he assessed the possible paths Turkey could pursue as regards to the TTIP.  The policy options assessed included tripartite negotiations between USA, EU and Turkey, direct involvement of Turkey to the process of re-negotiating the Customs Union with the EU, engaging in separate negotiations with the USA or the possibility of Turkey “docking” (joining) when negotiations reach a certain maturity. In his analysis, his Excellency Aran pointed out that there is no positive indication that the first and the second options are likely to be achieved. He underscored that the best option for Turkey remains “docking” which was previously applied in the Trans Pacific Partnership (TPP) when Japan and Canada became parties to the TPP. According to his Excellency Aran, at this stage the Turkish government should widen the scope of the Customs Union to the service sector. He mentioned this option as a pre-stage solution before engaging in a fully fledged ‘docking’ process.

Assessing the possibility of Turkey “docking” in the TTIP, Kerneis described it as the “easiest but the most expensive” strategy for Turkey. He warned that docking will imply pre-negotiating every provision, and Turkey might be asked to make a lot of concession during the negotiation process. Mr. Nuray and his Excellency Aran stated on numerous occasions that Turkey should not miss the opportunity to take part in the TTIP. In overall, it is perceived by the speakers that Turkey will lose if not engaged in the TTIP.