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Turkey: Foreign Trade
Country Study > Chapter 3 > The Economy > Foreign Economic Relations > Foreign Trade

FOREIGN TRADE


Trade played a minor role in the economy until 1980 but grew rapidly thereafter, the sum of exports and imports reaching about 49 percent of GNP by 1985. By 1994 this total had fallen somewhat, to 42 percent of GNP. The trend toward increased trade had begun in the 1970s as imports increased -- primarily as a result of the rise in oil prices -- and limited incentives for exports were implemented. The turning point came after 1980, when a realistic exchange rate, strict monetary policy, and efforts to strengthen bilateral cooperation with the country's trading partners led to sharply increased exports. Improvements in the balance of trade, in turn, allowed gradual liberalization of the import regime.

Turkey's trade policy traditionally has been subordinate to the country's etatist development strategy. The demand for imports historically has exceeded the country's supply of foreign currency, forcing the government to set up extensive controls to mobilize foreign exchange for products deemed essential for investment or production. As Turkish industry developed, the proportion of finished goods declined as a share of imports. Despite liberalization of import regulations after 1980, in the mid-1990s petroleum, machinery, and industrial raw materials continued to account for the bulk of Turkish imports.

Turkey's export performance since 1980 has been particularly striking. Traditionally, Turkey has exported agricultural products and minerals. As of 1980, total merchandise exports amounted to about US$2.9 billion, or 5 percent of GNP, of which 58 percent was agricultural products, 22 percent processed agricultural products and textiles, and 6.5 percent mineral products. By 1992, when exports reached 17 percent of GNP, the share of processed and manufactured products had risen to 82 percent, whereas the share of agricultural exports had declined to 15.0 percent and that of minerals to 1.7 percent. The shift in the structure of exports resulted largely from the trend toward domestic processing of agricultural products before exportation, which caused them to be reclassified as industrial exports. Textile exports also increased during the 1980s, becoming twice as important as agricultural exports by 1992. Observers had expected that limitations on textile imports implemented by industrialized countries would hamper growth in textile exports during the late 1980s, but special concessions by the United States in 1990 -- related to compensation for Turkey's effort in the Persian Gulf crisis -- helped open export markets even further. Industrial diversification has enabled Turkey to export a wide range of products, including rubber, plastics, petroleum products, glass, ceramics, and cement.

Turkey's trade is largely with Organisation for Economic Co-operation and Development (OECD) members, particularly the European countries, notwithstanding a sharp upswing in trade with Middle Eastern oil-producing countries in the early 1980s. Exports to the EC increased from 35 percent of total exports in 1950 to almost 45 percent in 1992, while imports from the EC grew from 33 percent to about 40 percent during the same period. Turkey's most important trading partner, Germany, accounted for 15 percent of imports and 24 percent of exports in 1993. Trade with Middle Eastern countries increased considerably after 1970, partly as a result of Turkey's increased expenditures for petroleum imports, and peaked in 1982 at 45 percent of total trade, declining to about 15 percent by the early 1990s. Turkey's commerce with Iran and Iraq was important because they bought food and other products and provided petroleum to Turkey in exchange. Turkey remained neutral in the Iran-Iraq War, hoping for further improvement in trade when the two countries made peace. The embargo on Iraq after its invasion of Kuwait dramatically reduced Turkish-Iraqi trade. In 1988 Turkey sent 8.8 percent of its exports to Iraq and bought 10 percent of its imports from that country. Trade between the two countries was almost nonexistent in 1994.

Trade with the United States was much greater in the 1950s and 1960s than in the 1970s and 1980s. In 1992 imports from the United States constituted a little over 11 percent of Turkey's total imports, but exports to the United States represented only 6 percent of Turkey's exports. Although trade with the Soviet Union began in the 1930s and the Soviet Union supplied much aid, in 1992 imports from the former Soviet Union constituted less than 1 percent of Turkey's imports, while exports were about 5 percent of the total. Historically, trade with the Soviet Union and Eastern Europe had increased to more than 10 percent of total trade during periods, such as the late 1970s, when Turkey experienced balance of payments difficulties.

After 1980 Turkey shifted its emphasis in trade policy from strictly limiting imports to actively encouraging exports. In March 1985, Turkey signed the General Agreement on Tariffs and Trade (GATT), which committed the country to abolishing most export subsidies over a three-year period. In January 1993, in accordance with its commitments under the GATT agreement, Turkey consolidated and reduced most import charges.

Turkey and the EC entered into an association agreement on December 1, 1964, with the aim of full membership for Turkey after the implementation of a customs union, which the Turkish government hoped would occur in 1995. Turkey's record in meeting the European body's tariff-reduction schedule has undergone several permutations. It was adhered to until 1976, when it was abandoned, only to be reinstituted in December 1987. Several Turkish industries -- in particular the automobile industry -- fear total integration, whereas the EU in the mid-1990s fears the competitive strength of the Turkish textile industry.




Last Updated: January 1995


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Turkey was first published in 1995. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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