UK-Turkey Free Trade Agreement: Beyond the Economics

Tridivesh Singh Maini Current Events, Politics , , , , , ,

Introduction

On December 29, 2020, the UK and Turkey signed a Free Trade Agreement (FTA) which will become effective January 1, 2021, after the UK leaves the EU. Turkey’s Trade Minister, Rushkar Pekcan, and the British Ambassador to Turkey, Dominick Chilcott, signed the agreement. 

The timing of the agreement was interesting, since the FTA was signed days after the UK and EU had managed to clinch a Brexit trade deal, with great difficulty, and after the US imposition of sanctions on Turkey for the purchase of S400 missiles from Russia (the decision to impose sanctions is likely to have its impact not just on Turkey-US ties, but also between Turkey and other NATO member states).

Commenting on the importance of the deal, Pekcan said:

The free trade agreement is a new and special milestone in the relationship between Turkey and United Kingdom.

President Recep Erdogan, while referring to the significance of the FTA a day before it was signed, had said that it would create a win-win situation for both Turkey and the UK. He also said that the deal is crucial, and dubbed it as Turkey’s most important economic agreement after the 1995 Customs Union.

Economic importance of the FTA 

If one were to look at the economic significance of the deal, it is dubbed to be the fifth largest trade deal for Britain. The UK-Turkey FTA is also likely to give a significant boost to the bilateral trade between both countries. The UK is Turkey’s second largest export market (for commodities including vehicles, textiles, and electrical equipment). The agreement is also important from Turkey’s point of view because without a deal well over 75% of Turkey’s exports to the UK would have been subject to tariffs. The FTA will also ensure existing preferential tariffs for 7,600 British businesses that exported goods to Turkey in 2019.

According to estimates, the potential for bilateral trade between Turkey and Britain is up to $20 billion. Britain is Turkey’s fifth largest investor (investment is estimated at $11.6 billion) and a total of 2,500 British companies are based in Turkey. 

UK Trade Secretary Elizabeth Truss, while commenting on the deal, said ‘[…it] provide[s] certainty for thousands of jobs across the UK in the manufacturing, automotive, and steel industries.’

While the key features of the deal are known (it seeks to prevent supply chains in automotive and manufacturing sectors, and also covers all agricultural and industrial goods), the FTA could also give a fillip to deeper defense cooperation between the UK and Turkey (in November 2020, Turkey and the UK held defence exercises for the first time).

Geopolitical context

The FTA also has geopolitical significance, because the UK is one of the few Western countries with which Turkey has a cordial relationship. While all eyes have been on the imposition of US sanctions, and its impact on the Washington-Istanbul relationship, Turkey’s ties with the EU have also witnessed a steady deterioration due to a multitude of factors in recent years. Turkey has also not been on the same page as the Western world on a number of geopolitical issues. This includes the Syria issue, as well as the dispute between Azerbaijan and Armenia over Nagorno-Karabakh.

Turkey’s military operation in Syria and reactions

Turkey’s military offensive against Kurdish forces in Northern Syria in 2019 received strong responses from EU member states and the US. While the EU was critical of the action, US policy makers had urged Donald Trump to freeze assets belonging to Turkish leaders and block the sale of arms to Istanbul. Trump had written to Erdogan to refrain from such an action, but the Turkish President paid no heed to the same. It would be pertinent to point out that after Turkey’s October 2019 invasion of Syria, Britain had stopped sales of arms, but said it would not be providing new export licences for weapons which may be used in military operations in Syria.

If one were to look at the Azerbaijan-Armenia issue, France has been vocal in supporting international supervision of the ceasefire and has also expressed apprehension that Turkey and Russia may exclude Western countries. 

The EU has also been uncomfortable with Turkey’s policy in the Mediteranean. Only recently, the EU imposed sanctions against Turkish companies and individuals for oil drilling. Greece had wanted sectoral sanctions but this was resisted by German Chancellor Angela Merkel and Bulgarian Prime Minister Boyko Borissov, who shares a close rapport with Erdogan.

Russia-Turkey relationship

While it is believed that the main reason for the rift between Turkey and the West is the former’s growing proximity to Russia, Istanbul and Moscow too have divergences over geopolitical issues (be it Syria, Libya, or Azerbaijan). Only recently, the presence of the Turkish President at Azerbaijan’s military parade on December 10, 2020, to mark Azerbaijan’s victory over Russian ally Armenia with Turkish assistance, would not have gone down well with Moscow. Yet in public, Russia has refrained from criticizing Turkey. In an interaction with the media in December 2018, Russian President Vladimir Putin stated that sometimes Russian and Turkish interests do not ‘coincide,’ yet he also praised Turkey for pursuing an ‘independent foreign policy’ in spite of being a member of NATO and honoring its commitments. 

He has also stated that Moscow needs to be ‘patient’ and adopt a more compromising stance vis-à-vis Turkey. 

Erdogan does realize that he cannot afford a sudden deterioration of ties with the US, and his reconciliatory statements vis-à-vis Israel, and the Turkish decision to appoint an envoy after more than two and a half years, is being viewed as a step towards mending ties with the incoming Biden Administration.

Conclusion 

The Britain-Turkey FTA is important not just for economics but also for geopolitical reasons. While Britain will deal with the realities of a post-Brexit world, and such FTA’s will be important in navigating the same, for Turkey the deal is important in the context of the geopolitics of the Middle East and beyond.

Nightcap

Brandon Christensen Links , , ,
  1. “The calamities of this dreadful time” Sarah Skwire, Law & Liberty
  2. Collapse patchworks: a theory Chris Shaw, Libertarian Ideal
  3. Apocalypse never Jeremy Carl, Claremont Review of Books
  4. The Big Questions in economics (podcast) EconTalk

The short-sightedness of big C Conservatism

Mary Lucia Darst Liberty

As we celebrate the approval of the Oxford-AstraZeneca Covid-19 vaccine, it is hard to imagine that anyone might take offense at the existence of an inexpensive, transportable solution to the pandemic. Yet this is exactly what I have encountered. A friend who is an arch-Conservative (note the capital C) responded with hostility during a discussion on differences between the Oxford and Pfizer vaccines. The issue was that my friend couldn’t accept the scientific evidence that the Oxford vaccine is superior to the Pfizer one. He fixated on the fifteen-billion-dollar subsidy Pfizer received from the US government to create their vaccine. For the Conservative, it was as if to admit the difference between the vaccines was unpatriotic since one was bought by the US taxpayer. His objections were not based on scientific evidence or ideology but upon identity and background.

During the discussion, my Conservative friend brought up the Oxford team’s continuous publication of their data as if that action somehow lessened their research’s impact or validity. The final paragraph on the Oxford research team’s webpage says:

This is just one of hundreds of vaccine development projects around the world; several successful vaccines offer the best possible results for humanity. Lessons learned from our work on this project are being shared with teams around the world to ensure the best chances of success.

The implication was “well, they’re just wacko do-gooders! They’re not going to make a profit acting like that!” The idea being that legitimate scientific research bodies behave like Scrooge McDuck with their knowledge. On a side note, this type of “Conservative” mentality has greatly damaged public perception of capitalism, a topic I’ll return to at a later point.

Members of the Oxford vaccine team are assumed to be in the running for the Nobel Prize, and for this, odds of winning are proportionate to the speed with which the broader scientific community can check findings. The Conservative could not overcome a mental block over the fifteen billion dollars. The difference is one of vision. To put it bluntly, Oxford is aware as an institution that it has existed for almost nine hundred years before the creation of Pfizer and that it will probably exist nine hundred years after Pfizer is no longer. Oxford wants the Nobel Prize; the long-term benefits – investment, grants, funding awards, etc. – far outweigh any one-time payout. As to the long-term outlook required for Nobel Prize pursuit, the willingness to pass up one benefit in favor of a multitude of others, it is alien to those whose focus is short-sighted, who are enticed by single-time subsidies or quick profits.

The conversation represented a problem which caused F.A. Hayek to write in “Why I am not a Conservative,”

In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules. Since he is essentially opportunist and lacks principles, his main hope must be that the wise and the good will rule—not merely by example, as we all must wish, but by authority given to them and enforced by them. Like the socialist, he is less concerned with the problem of how the powers of government should be limited than with that of who wields them; and, like the socialist, he regards himself as entitled to force the value he holds on other people.

In the case of the vaccine, the Conservative I spoke with had the idea that since the government sponsored Pfizer’s version, Americans ought to accept placidly the Pfizer vaccine as their lot in life. Consequently, coercive policies, for instance refusing the AstraZeneca vaccine FDA approval (something which hasn’t occurred – yet), are acceptable. Behind this facile, even lazy, view lies an incomprehension when confronted with behaviors and mindsets calibrated for large scale enterprises. Actions taken to achieve long-term building – in this instance the possibility of winning a Nobel Prize – are branded as suspicious, underhanded. At an even deeper level lies a resentment of AstraZeneca’s partner: Oxford with all of its associations.

Rather than being a malaise of big C “Conservatism,” the response, detailed in this anecdote, to a comparison between the vaccines conforms to Conservative ideas. Narrowness of mind and small scope of vision are prized. As Hayek pointed out in 1960, these traits lead to a socio-cultural and intellectual poverty which is as poisonous as the material and moral poverty of outright socialism. My own recent conclusion is that the poverty of big C “Conservatism” might be even worse than that of socialism because mental and socio-cultural poverty can create circumstances leading to a longer, more subtle slide into material poverty while accompanied by a growing resentment as conformity still leads to failure. When class and ideological dynamics invade matters such that scientific evidence is interpreted through political identities, we face a grave threat to liberty.  

Nightcap

Brandon Christensen Links , ,
  1. 10 best history books of the decade RealClearHistory
  2. Learning from the past Helen Dale, Critic
  3. Against space exploration Kenneth Roy, Centauri Dreams
  4. …Happy new year!

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Brandon Christensen Links , , ,
  1. The weirdest people in the world James Crabtree, Financial Times
  2. Finding Mrs Dalloway Jenny Ofill, New Yorker
  3. Trapped by Thucydides? John Sullivan, War on the Rocks
  4. The emergence of globalism Or Rosenboim, In The Long Run

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Brandon Christensen Links , , ,
  1. American workers do not need unions Richard Epstein, Law & Liberty
  2. Subverting individualism David Henderson, EconLog
  3. A classic on caste in South Asia BR Ambedkar, Pragati
  4. Coronavirus and the seizing of property Ethan Blevins, NOL

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Brandon Christensen Links , , ,
  1. Hayek and Cassel on the Great Depression David Glasner, Uneasy Money
  2. Giving Trump the OJ treatment Thomas Knapp, WLGC
  3. Liberalism in Brazil Lucas Berlanza, Econ Journal Watch
  4. Brazil will not become Venezuela Bruno Rosi, NOL

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Brandon Christensen Links , , ,
  1. Albert Camus and imperial nostalgia Oliver Gloag (interview), Jacobin
  2. The true meaning of Christmas is a cozy American worldview Paul Musgrave, Foreign Policy
  3. The Christmas truce of 1914 Joseph Eanett, War on the Rocks
  4. Is cord-cutting still worth it? Stephen Silver, 19FortyFive

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Brandon Christensen Liberty
  1. Merry Christmas!

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Brandon Christensen Links , , ,
  1. Informative piece on EU-UK trade deal
  2. Who will save the world? Ryan Davis, 200-Proof Liberals
  3. Is this how fascism will come to America? Scott Sumner, Money Illusion
  4. A middle aged Christmas Ross Douthat, NY Times

Nightcap

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  1. The antichrist: a biography Nicola Barker, Spectator
  2. A lunar pandemic Dagomar Degroot, Aeon

A touch of optimism

Rick Weber Comments, Culture, History

I remember when Obamacare was first being debated. The political right had so many strong arguments to make and they abjectly refused. Instead, Obama was declared a secret Muslim whose secret plan is to turn the frogs gay.

Here we are with that political tribe having ascended to the White House and now the political Left has so many strong arguments to make. And they’re refusing. Instead, the federal government needs to be made more powerful for the next time a Trump gets elected.

2020 has not been kind to my view of humanity. So I’m listening to The Rational Optimist (finally). And I’ve got to say, it’s just what the doctor ordered. Life is pretty good on balance, even with the bad stuff.

Nightcap

Brandon Christensen Links , , ,
  1. On that radio signal from Proxima Centauri Paul Gilster, Centauri Dreams
  2. Wow! signal Wikipedia
  3. How far aggressive aliens? (Part 2) Robin Hanson, Overcoming Bias
  4. Legal immigration into the United States Jacques Delacroix, NOL

Nightcap

Brandon Christensen Links , , ,
  1. It would take at least 6,300 years to reach the closest star to our sun MIT Review
  2. How far aggressive aliens? Robin Hanson, Overcoming Bias
  3. America’s long (and beautiful) anti-socialist history Matthew Wills, JStor Daily
  4. Big business got bigger in America during the pandemic George Dance, Political Animal

Nightcap

Brandon Christensen Links , , ,
  1. Pfizer-Biontech: Firstcomers and latecomers Irfan Khawaja, Policy of Truth
  2. Alienation and double-think Chris Dillow, Stumbling & Mumbling
  3. It’s not just housing… Scott Sumner, EconLog
  4. Winters in medieval Europe Lucie Laumonier, Medievalists