Ekinci: FTA with S. Korea may boost Turkey’s competitiveness in exports

Regarding the free trade agreement (FTA) signed between Turkey and South Korea on August 1 this year, Namik Ekinci, chairman of Turkey's Steel Exporters' Association (CIB), has told SteelOrbis that the agreement in question could create opportunities in steel exports, but could also cause some difficulties for the Turkish manufacturing sector.
 
According to Mr. Ekinci, in 2011 Turkey exported 30,000 mt of steel products to South Korea with a value of $28 million and imported 266,000 mt of steel products from South Korea worth $428 million. Meanwhile, in the first half of 2012 Turkey exported 7,000 mt of steel products to South Korea, while it imported 123,000 mt of steel products from this country in the same period. Ekinci said that South Korea's steel exports mostly consist of flat steel products, with 90 percent of Turkey's imports from South Korea consisting of flat steel products. In addition, South Korea's total flat steel exports rose by more than 50 percent in the last five years. In this context, Ekinci said he believes that South Korean flat steel products will account for an increased share of Turkey's flat steel imports in the event of the removal of the customs duties applied by Turkey.
 
On the other hand, an increased share of flat steel imports from South Korea would not mean that the potential increase in the imports from South Korea would cause a larger deficit in steel trade with Turkey, Ekinci said. With the agreement, South Korean products could replace the share of products from other countries, such as some EU countries, and this could create more competitive prices in the market. Also the agreement in question could bring about falling costs in flat steel-using exporting sectors in Turkey like automotive, steel pipe and domestic appliances, and could thus increase the exports of these segments.
 
Ekinci noted that if imports harmed industries with low prices of products which are manufactured domestically, both countries could take necessary measures provided for by global trade rules.
 
According to the free trade agreement, Turkey will remove customs duty for South Korea in iron and steel, automotive, electronic appliances and textile products within seven years. In return, South Korea will remove customs duty for Turkey in iron and steel, textiles and ready-to-wear clothing immediately once the agreement is in effect, while the customs duty in automotive will be removed within five years. Ekinci said that the seven-year period will give Turkey time to adapt to the new situation and to develop a more competitive structure.
 
Pointing to production costs in Turkey, Ekinci said that burdens like high energy prices and taxes restrict Turkey's competitiveness in export markets, adding that the new trade agreement carries the risk of hindering Turkey's developing flat steel industry.
 
However, Ekinci said that, approaching the trade agreement in the context of Turkey's steel exports, Turkey has the potential to increase its long steel exports to South Korea. 13 percent of South Korea's total steel imports consist of long steel products like wire rod, sections and bars, he noted, while Turkey currently has just a one percent share of these long steel imports.