Foreign Trade News from Turkey

Socar makes top money transfer for FDI.. Some $475 million has recently been transferred to Turkey from Azerbaijan.

 Some $475 million has recently been transferred to Turkey from Azerbaijan to finance the forthcoming expenditures in the STAR Refinery in addition to some $350 million worth of previous money transfers, said head of SOCAR Turkey Kenan Yavuz, noting that this was the largest money transfer to have been spent as foreign direct investment in Turkey.  Socar Turkey and a consortium led by Spain’s Tecnicas Reunidas signed an agreement in May to build STAR Refinery, worth $4.3 billion in the western province of İzmir.  Yavuz said the refinery project was the most important part of Refinery Petrochemistry-Energy-Logistic Integration investments worth $9 billion in Petkim Peninsula. The money transfer of $475 million raised their refinery company’s capital to $1.9 billion, he said. Yavuz stated that the total cost of the project would be $5.5 billion, of which $1.9 billion would be financed by equity capital. After using this capital, they planned to start using foreign resources provided by loans.  Star Refinery is planned to have an annual capacity of 10 million tons to refine different crude oil types. The refinery is planned to produce annually 4,900,000 tons of ultra-low sulfur diesel, 1,300,000 tons of naphtha, 457,000 tons of mixed xylene, 1,630,000 tons of jet fuel, 260,000 tons of LPG, 525,000 tons of reformat, 692,000 tons of petroleum coke and 159,000 tons of sulfur. The refinery is slated to be completed by 2017, Yavuz said.

Source:Hurriyet Daily News


Economic expectations for the CEE region improve.. In November 2013 economic expectations for Central and Eastern Europe including Turkey (CEE) have improved by 7.0 points.

 In November 2013 economic expectations for Central and Eastern Europe including Turkey (CEE) have improved by 7.0 points. Thus, the ZEW-Erste Group Bank Economic Sentiment Indicator for the CEE region now stands at a level of 41.6 points. The ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe reflects the financial market experts’ expectations for the CEE region on a six-month time horizon. The indicator has been compiled on a monthly basis together with further financial market data by the Centre for European Economic Research (ZEW) in Mannheim with the support of Erste Group Bank, Vienna, since 2007.

Economic Expectations for Poland and Slovakia have displayed the highest increases by 14.1 points and 16.7 points respectively. In contrast, economic sentiment for Croatia decreases by 14.7 points - this is the strongest decline of the indicator among all CEE-countries.

The experts’ assessment of the current economic situation for the CEE region has improved slightly in November. The respective indicator has increased by 5.1 points to a level of 16.2 points.

Source:International Trade News

Turkey’s real unemployment rate 20 pct when all jobless considered.
There are over 6 million real unemployed people in Turkey, creating a jobless rate of 20 percent, almost doubling the official figures. Higher unemployment, officially or unofficially, appears set to be the biggest nightmare for Turkey in the coming years

 The accuracy of an official unemployment rate is open to discussion in almost all countries, not just in Turkey. There is generally some discrepancy between official numbers and real numbers. The official unemployment rate is based on different assumptions and defined in varied ways. A person over 15 years old is not included in the workforce unless s/he applies for a job. For instance, over 11.4 million women are not included in the workforce as they are grouped as “housewives.” Therefore, they are not seen as unemployed. If even one-fourth of them had been included in the main group of the workforce, Turkey would be one of the countries with the highest unemployment rate, leaving Spain, Portugal and South Africa behind. While three-fourths of the male population over 15 years old are included in the workforce, only 31 percent of Turkish women over 15 years old are part of the workforce. There are other issues.  The Turkish Statistical Institute (TÜİK) reveals “official unemployment rates” in the middle of each month for the prior two months. The agency announced the rate for August 2013 as  9.8 percent, which is one point higher than the same period of the previous year.  Official unemployment The number of unemployed people increased to 2.8 million this August from 2.4 million last August. This means around 400,000 people became a part of “officially” jobless people. This rate is one point lower than the EU average and very close to the figures in Hungary, Slovenia and Poland. The unemployment rates of more than 27-28 percent in Spain and Greece are extremely high,  to be sure.  Here, the main problem is semi-workers. The ILO asks from its member countries to declare their “flexible employment” or “discouraged jobless” rate covering people who are jobless, but do not even bother seeking jobs because they don’t believe they’ll be able to find work, in a separate group from the “official employment” rate. In this vein, people who “believe there is no job post in the region where they live or believe there is no job for themselves or do not know how to seek jobs, but say they are ready to work” are not seen as “officially jobless.”  These people are called the “discouraged ones.” They are actually unemployed, but are tired of seeking jobs with so few prospects. Some 2.1 million people live like that in Turkey, around three-fourths of the official jobless rate. If they are included in the equation, the number of jobless people surpasses 4.9 million in Turkey. There is more.  In addition to official jobless people and uncounted unemployed people, there is another group: “underemployed people” who are “barely working.” The number of people who work fewer than 40 hours a week, but would work more if they could find jobs increased to 595,000 in August from around 400,000 compared to the same month of 2012.  Underemployment This means the number of people who could find jobs requiring less than 40 hours a week almost doubled in one year. There is also another group: “Temporary workers,” who work temporarily, but seek a permanent job as they cannot afford to live their lives with temporary jobs. The number of all these underemployed people surpassed 1.076 million in August, increasing by 44 percent from the same month in 2012. They should also be counted as real unemployed people.  The number of officially unemployed people, discouraged workers and temporary workers exceeds 6 million in Turkey. This means there are over 6 million real unemployed people, creating an unemployment rate of 20 percent. The official jobless rate is around 10 percent in the EU, the same as Turkey’s official rate. The real rate of unemployment is also over 18-20 percent in the EU as well.   Seasonal job opportunities in agricultural, tourism and construction sectors begin to decrease at the beginning of every August, pushing unemployment rates up in the following months. This year will not be an exception.  The official unemployment rate will be over 10 percent in the September figures, which will be announced soon. Economic conditions, however, do not promise more jobs. Although the Turkish government is trying to create more jobs just before elections at the cost of extra budget expenses, it can’t create more than 80,000-90,000 new positions in the public sector. This figure is so much lower compared to the 3 million officially unemployed people.  Growth is the recipe, but Turkey hasn’t been able to grow at more than 2-3 percent for the last two years at the expense of pushing its current account deficit much higher. Turkey might also attract less foreign capital in 2014, making it even more difficult for employed people to keep their jobs. Higher unemployment, officially or unofficially, appears set to be the biggest nightmare for both Turkey and the EU in the next years.

Turkish Daily News/Mustafa Sönmez

US-EU Trade Talks “Back on Track,” Officials Say.

Bridges Weekly Trade News Digest • Volume 17 • Number 39 • 21st November 2013 

Negotiators for the planned US-EU trade agreement concluded their second round of talks last week in Brussels, with officials from both sides reporting “good and steady progress.” With the discussions reportedly back on their original timetable after a brief delay in October, both parties are now aiming to make enough headway in the talks to hold a political review in early 2014.

“I am glad to see that we are now fully back on track with the EU-US trade talks,” said EU Trade Commissioner Karel De Gucht on Friday, with his US counterpart, Michael Froman, similarly noting that the discussions were both “successful and productive.”

This week’s discussions focused primarily on regulations and investment, as well as services, energy, and raw materials. Due to scheduling difficulties, some meetings have also been occurring over videoconference, touching on issues such as intellectual property rights, small and medium enterprises, and competition policy. Future videoconferences are expected to tackle issues such as tariffs, labour, and environment.

Upcoming rounds, officials said, are likely to feature text-based discussions - underscoring the interest on both sides to move the talks forward quickly. Since the talks were first announced, officials from both sides have said that they want to achieve an ambitious agreement while following a rapid timetable.

The first round was held in Washington in July, just a month after the negotiations were launched, and dealt primarily with how the talks should be structured, as well as isolating any potential areas of convergence. (See Bridges Weekly, 18 July 2013) This second round - held in Brussels - had originally been scheduled for 7-11 October, before the partial US government shutdown forced them to be rescheduled. A third round of talks is already planned for the week of 16 December in Washington.

De Gucht: Keep “eye on the prize”

The pact has been touted as having major potential for creating new jobs and driving growth on both sides of the Atlantic, particularly given the continued struggles each party has faced in getting back on their feet following the financial crisis.

Just this week, the Paris-based Organisation for Economic Co-operation and Development (OECD) cut its previous global growth forecasts for next year, due partly to the “lagging and uneven recovery” in the eurozone and to how close the US came to breaching its debt ceiling in October, along with the slowdown being seen in some emerging economies.

A European Commission study has suggested that the deal, once completed, could add €119 billion and €95 billion annually to the EU and US economies, respectively, with much of these gains coming from removing non-tariff barriers - particularly in the areas of regulations and standards. The US and EU already have the world’s largest trade relationship, with bilateral trade in goods and services hitting €2 billion daily, according to 2012 estimates.

“Let’s keep our eye on the prize: more jobs for people in Europe, more growth for the European economy,” De Gucht said on Friday.

Regulations, investment

Consumer protection advocates on both sides of the Atlantic have questioned what the pact’s focus on regulations and standards - the trickiest part of the negotiations, and arguably where some of the big financial gains will come from - will mean for food and product safety.

Officials tried to assuage those concerns after this week’s meetings, with US chief negotiator Dan Mullaney telling reporters on Friday that nothing in the pact will “undermine the high standards of public health and safety, environmental protection, and consumer protection that citizens on both sides of the Atlantic expect and enjoy.”

Regulatory topics that were discussed during last week’s meetings included regulatory coherence, and a so-called “TBT-plus” chapter - which would include elements on technical barriers to trade that go beyond those in the related WTO agreement. Sectors where both sides wish to reach regulatory compatibility include, among others, automobiles, pharmaceuticals, information and communication technologies, and medical devices.

The US-EU pact is also set to include investment-related provisions, with both sides now reviewing their respective approaches to the subject. “There was a good degree of agreement on getting an ambitious deal while confirming the Parties’ regulatory freedom to legislate in the public interest,” the European Commission confirmed in a press release.

Financial services?

Officials are also expected to hold discussions on financial services in the weeks ahead - a surprising development for some trade observers, given that the topic is a thorny one for Washington.

While the US has said that the topic is best addressed in other contexts, such as the G-20, the EU has strongly pushed for including the issue in the trans-Atlantic pact. De Gucht said in an October speech that cooperating on this issue is essential for ensuring the financial resilience of both trading partners. (See Bridges Weekly, 17 October 2013)

Meetings to deal specifically with financial services regulation will occur before the third negotiating round, with officials set to meet in Brussels on 27 November to discuss the subject.

“The EU side has made clear that they want to have conversations in this area, and we are engaging in those conversations,” Mullaney told reporters last week.

The US and EU together account for 70 percent of world trade in financial services.

Both sides have also begun comparing their respective approaches on cross-border services, telecommunications, and e-commerce, officials said last week, and have begun outlining their respective market access interests in certain services sectors.