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U.S. Department of State

Diplomacy in Action

The 9th Meeting of the U.S.-Turkey Economic Partnership Commission

Jose W. Fernandez
Assistant Secretary, Bureau of Economic and Business Affairs

Mehmet T. Gucuk, Deputy Under Secretary for Economic Affairs, Ministry of Foreign Affairs
Washington, DC
November 29, 2012

11:00 A.M. EST


MODERATOR: Good morning. My name is Belinda Jackson Farrier, and I am a media relations officer with the Foreign Press Center in Washington, D.C. I would like to thank all of our participants here in Washington, D.C. and in our New York Foreign Press Center for attending today’s briefing.

Today’s briefing will discuss the ninth meeting of the U.S.-Turkey Economic Partnership Commission. This morning, we will hear remarks from the heads of each delegation, the U.S. Department of State Assistant Secretary for Economic and Business Affairs Jose Fernandez, and Turkish Deputy Under Secretary for Economic Affairs and the Ministry of Foreign Affairs, Ambassador Mehmet Gucuk.

We will begin with opening remarks from Assistant Secretary Fernandez, followed by comments from Deputy Under Secretary Gucuk. Following their remarks, we will take questions from our participants in Washington, D.C. and New York.

Thank you, and we’ll begin with Assistant Secretary Fernandez.

ASSISTANT SECRETARY FERNANDEZ: Good morning. Thank you for coming. I’m delighted to have the chance to speak to you about the United States-Turkey Economic Partnership Commission meeting, which we just held yesterday. This was the ninth meeting that we have had of the Economic Partnership Commission, and we believe that that’s a testament to really the enduring commitment of both of our countries to continuing our economic cooperation and commercial cooperation.

We have found that having these meetings every few months allows us to move our cooperation forward, and that really have seen really good results in the last few years. This commission, the Economic Partnership Commission, is a key component of the U.S.-Turkey Framework for Strategic, Economic, and Commercial Cooperation, which we – what we call FSECC, and FSECC held its last meeting in June of this year.

There are tremendous – we believe – tremendous trade and investment opportunities for U.S. companies in Turkey, just as the U.S. with its huge market, represents a great opportunity for Turkish companies that are looking to expand internationally. Our main focus during the meeting – and it was a day-long meeting and we had a number of our agencies with us from both the Turkish side and the U.S. side. The main focus of the meeting was to take advantage of the opportunities that both of our countries have: how to promote and strengthen business-to-business ties, promoting innovation, and enhancing our economic cooperation.

And we also dealt with some important issues, issues that continue to – that we have to continue to work on, issues of agriculture, pharmaceutical, and others. The more strategic component of our discussion included opportunities for investment and cooperation in electricity generation and energy efficiency, where we have a number of projects, including one that we’re very proud of that we call the Near Zero Zone Project. Other infrastructure projects – third-country cooperation, the Turkish Government’s project to turn Istanbul into a financial center. And also we had our Small Business Administration and KOSGEB talk to us about what we could do to try to better engage not just the large companies that may already be doing business in Turkey, but a lot of our small and medium enterprises. We believe that, taken together, all of these opportunities could open up billions of dollars of new trade and investment opportunities for U.S. and Turkish firms.

I can see that this most recent meeting of the EPC continues to be an important mechanism for making good progress in expanding the economics and strategic relationship that our presidents called for back in 2009, and it’s really been a pleasure on a personal level, from my end, to be able to participate and to contribute in a small way to that continued progress. This has now been my – I think my sixth EPC commission meeting. I can see the progress, and it’s really a delight for us to be able to see how – not just what the opportunities are, but how much progress we’ve been able to make on trade.

I’d like to thank the members of the Turkish delegation who traveled to Washington to participate in these discussions, and also to thank the colleagues from all of our agencies. And again, we had a number of our U.S. agencies participate. They wanted to participate. To thank our agencies whose expertise is invaluable and whose involvement is important as we try and promote our commercial and investment relations with Turkey.

And now let me hand it over to Ambassador Mehmet Gucuk, Deputy Under Secretary for Economic Affairs at the Turkish Ministry of Foreign Affairs. I had not met the Ambassador until this meeting, and – because he’s new to the EPC, but I can see that he will be a wonderful partner as we continue to try and promote our economic relations.

Mr. Ambassador.

AMBASSADOR GUCUK: Thank you very much, Assistant Secretary Fernandez. Good morning, distinguished members of the press, ladies and gentlemen. It was, indeed, a pleasure for me to co-chair the ninth Turkey-U.S. Economic Partnership Commission here yesterday, together with Assistant Secretary Fernandez. We convened our meeting with a broad agenda and under a new and promising climate in Turkish-American relations. And we are going through one of the best period in our relationship, and this year has been an exceptional one, particularly in terms of high-level visits as well as frequent contacts.

We are glad to hold regular discussions with the United States on a broad spectrum of issues as an embodiment of our model partnership in action. The fact that Turkey is the 16th largest economy in the world and 6th largest in Europe and a member of G-20 injects a clear, new dimension to the Turkish-American relations, which is to work together as well in finding solutions to the global economic problems. By branding our relationship as model partnership, we expressed our strong will to elevate Turkish-American economic relations, and we have been quite active since. And we spared no effort not only to strengthen the current mechanisms, but also to seek means to create new areas of cooperation.

While talking about enhancing of economic and commercial relations, we actually have three main overarching goals. And these are, first and foremost, increasing investment, both financial investments and foreign direct investments, and also enhancing our bilateral trade, but at the same time balancing it. Because presently, the balance is not in favor of Turkey, and the ratio in that respect is 3 to 1. And the third main area is the cooperation in third countries.

We have dynamic mechanisms to this effect, and we witnessed the Framework for Strategic, Economic, and Commercial Cooperation to hold its second meeting in Ankara this year. Trade and Investment Framework Agreement Council is going to meet in the period ahead, within a couple of months. And the Economic Partnership convened a second time this year, for its ninth session.

As of 2012, the Near Zero Zone, as Secretary Fernandez has pointed out, and Istanbul financial center, standing out as the major accomplishments of our bilateral economic cooperation within this framework. And infrastructure, third-country cooperation, ICT, and energy appeared to be promising areas for further cooperation.

Turkey’s potential on renewable energy and U.S. companies’ desire to cooperate with their Turkish counterparts present a timely opportunity in the sector, and tangible cooperation is encouraged by both sides. And energy efficiency and urban (inaudible) formation were proposed by the Turkish side as new possible areas of cooperation to which our U.S. counterparts responded positively.

An exciting area offering major prospects for new horizons is the third-country cooperation. The Middle East and North Africa region is going through a transition, and the people of these countries need us to be there to help them to establish a better future. Entrepreneurship is also a significant item in our agenda.

Let me touch upon also the – very briefly on the recent figures regarding the Turkish economy. As you know, the Turkish economy recorded 8.9 percent growth in 2010 and 8.5 percent growth in 2011. And according to the OECD reports, Turkey’s expected to be the fastest-growing economy of the OECD members between the periods 2011 and 2017. And our target is to make Istanbul an international financial center. Istanbul’s stock exchange market, the value has reached $200 billion. And I would like to place Turkish-U.S. cooperation to this end. And we’re working closely with our U.S. counterparts on the Istanbul International Financial Center project.

And on the energy front, over the last decade, Turkey has been second only to China in terms of its ever-increasing energy demand, and in that respect natural gas and electricity demand increased. So also in the field of energy, major pipeline projects will enhance Turkey’s role as an important and reliable transit country on the east-west as well as north-south energy axis. And we have a very fruitful, ongoing energy dialogue in that respect as well. Turkey also aims at further increasing its use of hydro, wind, and solar energy resources. And by ’23, we envisage to meet 30 percent of our electricity needs from renewables. So we see also a very strong potential for cooperation in that field as well.

And we are glad to see the increasing interest of the U.S. investors in the Turkish market. It’s worth to mention that a good number of successful Turkish-U.S. collaborations are already proceeding at full speed. Turkish-U.S. joint venture Ford Otosan is building its third manufacturing plant in Turkey as part of a 1 billion U.S. dollar investment decision in three years. Sisorsky and (inaudible) Aviation, in partnership with other Turkish firms, are planning to produce more than 600 Black Hawk helicopters in Turkey and export them to third countries. And this motivates Turkish investors as well. Godiva was purchased by Ulker Group is a good example. Actually, it’s the first example of an acquisition of an international brand by a Turkish company. And as you might be well aware, Mitas Energy and its U.S. partner Falcon Steel recently broke ground for a new steel plant in Kaufman, Texas.

And these are success stories, and our aim is to help them multiply. And of course, we have a long way, and we have to do much more to uncover our true economic potential. But our leaderships have the necessary vision, as well as the resolve, to take our economic and trade relations forward. And I have no doubt that our discussions here yesterday with Assistant Secretary Fernandez, with a view to strengthening our bilateral economic relations, was indeed a useful and functional step forward for the desired direction.

So in concluding, I would like to thank you, once again, to our American hosts for arranging an excellent ninth session for the EPC. And in the remaining period, we shall be more than glad to respond to your questions. Thank you.

MODERATOR: Thank you very much. And, oh, please feel free to remain at the podium. And Assistant Secretary Fernandez, would you like to join us? Thank you.

At this time, we can take questions from New York and D.C. Please be sure to wait for the microphone once you’re called on, and please state your name and your media outlet.

All right. Any questions?


MODERATOR: Yes, please, here in the front.

QUESTION: My question – Savas Suzal from Turkish Daily News. The question is: Mr. Secretary, your department is in charge of economic sanctions and combating terrorist financing also, right? And my question is: You are imposing economic sanction against the Iran. Turkey has a deal as gas and energy in exchange for the gold. Did you talk about the gold transfer from Turkey to Iran?

ASSISTANT SECRETARY FERNANDEZ: No, sir, we did not. It was not part of the commission.

QUESTION: Okay. Do you have any concern about this business?

ASSISTANT SECRETARY FERNANDEZ: As I said, we didn’t speak about it at the commission meeting. This is something that we continue to consult with Turkey. As you know, we’ve had a number of preliminary consultations successful with Turkey with regard to sanctions under our law. These are exemptions that we – that are granted under the law every six months, and we have to do it again. So we have consultations with Turkey and other countries with respect to the scope of U.S. sanctions on Iran, but again, this is not something that we discussed yesterday.

MODERATOR: Any additional EPC-related questions? Yeah.

QUESTION: Thank you for this. Tolga Tanis from Hurriyet. A quick question regarding the trade agreement, bilateral trade agreement, possibility between two countries, because it’s a long story which has been discussing by the U.S. and Turkish side to sign an agreement, a bilateral trade agreement. I mean, if it is a violation of European Union agreement signed by Turkish side or any violation to the international agreements that U.S. or Turkey has signed. So it has been issue for a long time. Did you discuss that issue in – for – during your meetings?

AMBASSADOR GUCUK: This issue, as you have mentioned, has a long past, but it was not one of the major topics of our discussion, because a free trade agreement between Turkey and the United States is something which has also relevance to Turkey’s customs union relations with the EU. So – but of course, it is our strong intention to hold parallel talks with the United States when the process regarding the U.S.-EU trade agreement is underway.

ASSISTANT SECRETARY FERNANDEZ: Let me just point out something. Despite the fact that there is no free trade agreement – and as the Ambassador mentioned, we didn’t discuss it yesterday – our trade numbers are reaching record levels. We stand at almost $20 billion worth of bilateral trade with Turkey. Both Turkish exports to the U.S. and U.S. exports to Turkey have grown tremendously in the last few years, and also American investment in Turkey. American investment in Turkey today is $1.4 billion. And that’s a very good number. That’s a number that we talked about how we go about increasing it in the areas that Turkey wants to pursue as it’s pursuing its “10 by 23” strategy, energy and other sectors.

So this – there is no trade agreement, but the numbers are good numbers, and it’s our hope that we can continue to try to work on that trade, try increasing that trade, and finding ways for Turkish companies to be able to sell more here in the U.S. as well.

QUESTION: As a quick follow-up: It’s my knowledge that this is something the Turkish side wants for a long time, I mean, to sign a free trade agreement with U.S. What is your stand on this issue? I mean, are you eager to push for a free trade agreement and to negotiate with European Union in terms of the custom –

ASSISTANT SECRETARY FERNANDEZ: We – I think you’d have to – the Turkish obligations with the EU, I think, would have to be dealt with. It’s not something we talked about. And what we did talk about, though, was finding ways to – leaving aside agreements to just increase the trade and increase the numbers.

MODERATOR: Okay. Great. We’ll take this question here.

QUESTION: Melek Coglar, for the Voice of America. I just want to go back to Iran and gold issue. It was reported that Robert Menendez and Mark Kirk are working on a bill that will basically put that trade in the sanctions. What is the U.S. Administration’s policy on that? Is that – is the U.S. Administration will be supporting that legislation?

ASSISTANT SECRETARY FERNANDEZ: Look. Again, we are consulting with Turkey. It’s not something we talked about in the EPC.

AMBASSADOR GUCUK: As a background to those questions, maybe some factual information from the Turkey side might shed some light to the matter. I mean, if it is about gas for gold or gold for gas matter, my answer would be a categoric no. Because this is how the systems works regarding Turkey’s oil and gas purchases from Iran is concerned. The payments for gas and oil purchases are made to accounts in Turkish banks opened on – in the name of Iranian gas and oil companies. And there is no such thing as a kind of any transfer made for any gold purchase from those accounts.

So, I mean, when talking about the unilateral U.S. sanctions on which Turkey’s policy is well known and insofar as the importing institutions, companies in Turkey for gas and oil are concerned, for oil, Tupras is the sole importer of Turkey. It’s a private company, as you know. They just perform their commercial transactions in affiliation to one of main Turkish conglomerates. And Botash is the company which is in charge of gas purchases from Iran. Thank you.

MODERATOR: Great. Thank you. One second. Do we have any additional questions? Okay. From Tolga.

QUESTION: As a quick follow-up, my question for you is for you Mr. Ambassador. So, okay, as I understand, you didn’t discuss this issue during your meetings, but did you raise this issue with the State Department officials? Because Mr. Fernandez is not in charge with the sanction regime. There’s another Secretary of – the Assistant Secretary’s office who is in charge with this.

And the Spokesperson of the State Department said two days ago, you – the State Department will do a revaluation for the waiver or exception that Turkey got from the sanction regime. And six months after – after six months that Turkey got this exception from U.S. – this is December – I mean, the schedule is working on, and the next month and will be major month for Turkey in terms of the sanctions. Did you raise this issue with your counterparts during your meetings in Washington, maybe with not with Mr. Fernandez, but with another people?

AMBASSADOR GUCUK: As Mr. Fernandez has pointed out, there are consultations between the two sides on this issue. But let me underline once again Turkey’s principal stance and positions regarding unilateral sanctions. And when you say sanctions against Turkey, I think that is a misinterpretation over there. It’s not about sanctions for Turkey, it’s about the companies or the banks involved. And we’re not saying neither to Tupras nor to Botash do this or don’t do this or act in line with this in keeping with this. But – or the Turkish banks involved in this transaction and purchasing process, but these institutions make their assessments, make their own assessments, and take their own decisions.

MODERATOR: Please, here in the front.

QUESTION: (Inaudible.) Secretary Fernandez, did you discuss about the Turkish desire for the nuclear energy?

ASSISTANT SECRETARY FERNANDEZ: We talked about energy in general. We talked about Turkey’s plans to double its energy production in, as part of its “10 by 23” strategy, and we talked about opportunities for U.S. companies to do that. One of them, as I mentioned, was – is the Near Zero Zone in Izmir, and what we talked about was how did we – how could we use that beginning of cooperations to try and expand our cooperation. So we did talk about nuclear as one of the several options that our companies are able to work on. But so it is one of the areas, yes.

QUESTION: And also, did you talk about the oil exploration in the Black Sea and the other sites?

ASSISTANT SECRETARY FERNANDEZ: Not specifically, sir. Only – again, only as part of a broader energy plan that Turkey has. And our interest is to find ways for U.S. companies to participate in that effort.

MODERATOR: Are there any additional questions? Oh, please, right there.

QUESTION: Melek Caglar for the Voice of America. This question is for Mr. Gucuk. You said that there is a trade imbalance between Turkey and the U.S., and this time you talk about getting over this barrier. Is there any specific steps that you will be taking to make this imbalance for the Turkish side more fair?

AMBASSADOR GUCUK: Yes, this is one of the priority items in our agenda, at least for the Turkish side. But as Assistant Secretary Fernandez has pointed out, present day we have an overall bilateral trade volume of $20 billion. And when we take into account the consideration that oil and gas is not involved in our bilateral trade, this might be considered as a significant figure. But given the fact that we’re talking about the first economy in the world on the one hand and the 16th largest economy on the other hand, I think this bilateral trade volume is much below its actual potential.

So, of course, the more we liberalize the trade, the more the chances to balance. But, of course, this is something also which is closely related to the development of business-to-business ties and also investments, because we also agreed yesterday on the fact that increasing Turkish investment in the United States, who might also be a significant factor for increasing Turkish export to the United States as well.

MODERATOR: Great. Thank you.

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