The imminent free trade agreement (FTA) to be signed between the European Union and South Korea is creating a certain amount of distress for Turkey's private sector, as the Turkish markets will be indirectly opened up to South Korean products under the terms of the customs union agreement Turkey signed with the EU in 1996.
The agreement in question stipulates that any country that signs a FTA with the EU enjoys tariff-free access to the Turkish market, which in turn may work to the detriment of the Turkish market.
While the EU is making efforts to convince the South Korean government to sign another FTA with Turkey, the Turkish Foreign Ministry is asking the EU to encourage South Korea to ink another trade agreement that would not disturb the current trade equilibriums.
On the other hand, despite the lack of an official response from Seoul, the South Korean Ministry of Foreign Affairs and Trade has announced the commencement of assessment of the impact of a FTA agreement with Turkey and has added that the country is also seriously considering starting formal talks for a FTA with Peru.
In line with these developments, the South Korean government has reportedly hired experts to investigate the possible effects of free trade with Turkey on the country's economy. In the event of a successful agreement, Turkey could grab a chance to expand its business opportunities in the European market, as well as to peak its benefit from the FTA with South Korea, Asia's fourth-largest economy.
Possible sectors that might be affected in Turkey by duty-free South Korean goods include automotive, linen and fabric, textiles, iron and steel, and TV, which all constitute a large share in Turkey's exports.
For example, Turkey's iron and steel exports in August 2008 increased 150.6 percent year on year to $2.550 billion.
Market specialists think that Turkey has already become the victim of the EU's free trade agreements with third countries and that the problem lies in its obligations under these agreements.