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USIA - Text: 1997 National Trade Estimate Report -- Turkey, 97-03-31
From: The United States Information Agency (USIA) Gopher at <gopher://gopher.usia.gov>
TEXT: 1997 NATIONAL TRADE ESTIMATE REPORT -- TURKEY
(Annual Foreign Trade Barriers appraisal released) (1740)
Washington -- The 1997 National Trade Estimates Report on Foreign Trade
Barriers, released March 31 by the Office of the U.S. Trade Representative,
reported the following barriers to U.S. trade with Turkey:
(Begin text)
(Note: In the following text: "billion" equals 1,000 million.)
TURKEY
In 1996, the U.S. trade surplus with Turkey was $1.1 billion, an increase
of $182 million from the U.S. trade surplus of $927 million in 1995. U.S.
merchandise exports to Turkey were $2.9 billion, an increase of $159
million (5.8 percent) from the level of U.S. exports to Turkey in 1995.
Turkey was the United States' thirty-sixth largest export market in 1996.
U.S. imports from Turkey were $1.8 billion in 1996, a decrease of $23
million (1.3 percent) from the level of imports in 1995.
The stock of U.S. foreign direct investment (FDI) in Turkey in 1995 was
$1.2 billion, an increase of 8.2 percent from the level of U.S. FDI in
1994. U.S. FDI in Turkey is concentrated largely in the manufacturing,
banking, and wholesale sectors.
IMPORT POLICIES
Tariffs and Other Charges
The introduction of Turkey's customs union with the European Union (EU) in
1996 resulted in substantial revisions to Turkey's tariff regime. Turkey
now applies the EU's common external customs tariff for third country
(including U.S.) imports, and imposes no duty on
non-agricultural items from EU and European Free Trade Association (EFTA)
countries. Turkey eliminated its mass housing fund surcharge on almost all
imports except for agricultural products and used construction machinery.
The weighted rate of protection for industrial products from the U.S. and
other third countries dropped from 11 to 6 percent with the introduction of
the customs union. Higher transitional protection for imports of sensitive
goods from third countries are being phased out starting in 1997. By 2000,
the average weight is set to fall to 4 percent.
Although EU/EFTA countries have received preferential tariff treatment on
industrial products for several years, initial data indicate that the
introduction of the customs union led to a shift in Turkey's import
pattern. During the first four months of 1996 the EU's share of total
Turkish imports rose to 52 percent from 44 percent during the same period
in 1995, while the share of U.S. goods fell from 12 percent to 8 percent.
Consistent with its WTO commitments, Turkey maintains high border
protection on many agricultural goods and food products. Turkey also
maintains certain surcharges on agricultural products which are inconsistent
with its WTO commitments. In late 1996, Turkey imposed a temporary ban on
cattle and beef imports.
Import Licenses
Turkey requires import licenses for some agricultural commodities, which
are issued based on domestic supplies. The government also requires
certification that quality standards are met for importation of human and
veterinary drugs and certain foodstuffs. Import certificates are necessary
for most products requiring after-sales service, including telecommunications
and electronic equipment and vehicles. Importers are also required to
establish repair facilities in all seven regions of Turkey. Some telecommunications
equipment related to radio frequencies require type approvals.
STANDARDS, TESTING, LABELING, AND CERTIFICATION
The Turkish Government's strict application of phytosanitary standards in
late 1996 led to a temporary halt of U.S. grain exports to Turkey.
Following extensive bilateral discussions, the government agreed to
temporarily suspend its "zero tolerance" standard for certain grains,
although the issue remains under discussion.
GOVERNMENT PROCUREMENT
Turkey normally follows competitive bid procedures for domestic, international,
and multilateral development bank-assigned tenders. U.S. firms sometimes
become frustrated over lengthy and complicated bidding/negotiating
processes. Military procurements generally require an offset provision in
tender specifications when the estimated tender value exceeds one million
dollars. In the absence of a bilateral tax treaty, U.S. bidders for Turkish
Government service contracts are subject to a 20 percent withholding tax.
This can significantly add to the cost of U.S. bids vis-a-vis those from
countries which have a tax treaty reducing the rate of withholding for
professional services. In March 1996, the United States and Turkey signed a
tax treaty which will eliminate this withholding tax, although neither side
has yet ratified the treaty.
EXPORT SUBSIDIES
In 1995, Turkey significantly reduced its export subsidy programs in order
to meet commitments to the EU and WTO. The government still provides cash
subsidies to a limited number of agricultural exporters. Domestic producers
and exporters can take advantage of a number of state programs designed to
support production for domestic and export markets, including cash and
credit assistance for R&D projects, environmental projects, participation
in trade fairs, market research, and establishment of branch offices
overseas. From June 1995 to December 1996, the Government of Turkey spent
only $6 million under these programs. Exporters also benefit from export
credit schemes and guarantees provided by the Turkish Export-Import
Bank.
LACK OF INTELLECTUAL PROPERTY PROTECTION
Turkey's intellectual property regime improved considerably in 1995. After
years of complaints from Western businesses and governments about weak
intellectual property laws and lax enforcement, the Turkish Parliament
approved a number of new laws in mid-1995 as part of Turkey's harmonization
with the EU in advance of the customs union. The new patent, trademark,
copyright and other laws, as well as Turkish acceptance of a number of
multilateral intellectual property conventions, have given Turkey a
comprehensive legal framework for protecting intellectual property rights.
Enforcement of the new laws, however, was uneven in 1996. Efforts are under
way to educate businesses, consumers, judges, prosecutors and others
regarding the implications of the new laws. The Turkish judicial system,
however, remains overburdened and it will likely be some time before
the necessary elements for a smoothly functioning system are in place.
Copyrights
In June 1995, the Turkish Parliament passed a bill amending Turkey's 1951
copyright law. The bill (1) extends the term of copyrights from 20 to 70
years; (2) extends coverage to computer software; (3) increases fines for
violators; and (4) removes many previous exemptions to full copyright
protection
Turkey also acceded to a number of international copyright conventions
during 1995, including the Paris Act (1971) of the Berne Convention and the
1961 Rome Convention. The amended copyright law, however, fails to address
all of the deficiencies in Turkey's copyright regime or to bring Turkey
fully into compliance with Uruguay Round standards for intellectual
property protection. The government has acknowledged the need for further
amendments and is committed to passing new legislation early in 1997.
Patents
A new patent law came into effect in June 1995, replacing Turkey's 19th
century patent law. The new law was subsequently amended in August and
November of 1995. Turkish officials insist the law is fully compatible with
the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPs), although U.S. officials have
questioned a number of provisions, including the law's broad compulsory
licensing provisions. The new law is clearly deficient in one significant
respect: coverage for pharmaceutical products and processes will not begin
until 1999. This date is in accordance with Turkey's commitments to the EU
for the customs union. The legislation also does not contain "pipeline"
protection for pharmaceutical products. The Turkish Patent Institute is now
accepting applications for pharmaceutical patents in accordance with the
TRIPs Agreement's "mailbox" provisions. U.S. industry has also indicated
that Turkey fails to protect test data submitted to the regulatory
authorities to support applications for marketing approval of pharmaceutical
and agricultural chemical products, as required by Article 39.3 of
the TRIPs Agreement.
Trademarks
Along with the patent law, Turkey replaced its trademark law in 1995. Here,
too, it remains to be seen how effective the Turkish bureaucracy and legal
system will be in controlling the spread of counterfeiting of foreign
trademarked products.
Turkey acceded to a number of international patent and trademark conventions
in 1995, including: (1) the Stockholm Act (1979) of the Paris Convention
for Protection of Industrial Property, (2) the Patent Cooperation Treaty
(1984), (3) the Strasbourg Agreement on
International Patent Classifications, (4) the Geneva Act (1979) of the Nice
Agreement on International Classification of Goods and Services, and (5)
the Vienna Agreement Establishing an International Classification of
Figurative Elements of Marks.
SERVICES BARRIERS
Businesses in certain sectors, particularly finance and banking, must
obtain special government permission before commencing operations in
Turkey. While foreign films are not subject to quotas, Turkish law
currently permits localities to assess a higher rate of taxation on
receipts generated by foreign films than for domestic films. Despite
bilateral consultations between the United States and Turkey in 1996, the
Turkish Government has failed to fulfill its agreement to institute
measures equalizing these tax rates.
Basic Telecommunication Services
In the recently concluded WTO negotiations on basic telecommunications
services, Turkey made commitments on all such services, and will provide
market access and national treatment for them as of 2006. It adopted some
pro-competitive regulatory principles. Turkey set a 49 percent foreign
investment limit on telecom services.
INVESTMENT BARRIERS
Turkey has a liberal investment regime in which foreign investments receive
national treatment. The Treasury Undersecretariat screens foreign
investment proposals, but this appears to be a routine and non-discriminatory
process which does not impede investment or limit competition. Almost all
areas open to the Turkish private sector are also fully open to foreign
participation. Establishments in the financial and petroleum sectors
require special permissions. The equity participation ratio of foreign
shareholders is restricted to 20 percent in broadcasting and 49 percent in
aviation and maritime transportation; in other sectors, 100 percent foreign
ownership is permitted.
ANTICOMPETITIVE PRACTICES
As part of its customs union agreement with the EU, Turkey has pledged to
adopt EU standards concerning competition and consumer protection. However,
the Turkish Government has not yet appointed the "competition board"
mandated in a 1994 law, effectively preventing the law's implementation.
Government monopolies in a number of areas, particularly alcohol, tobacco,
and telecommunications services, have been somewhat scaled back in recent
years, but remain a barrier to certain U.S. products and services. In 1997,
the Turkish telecommunications sector is to be partially privatized and
licenses are to be issued for many value-added services. In the tobacco
sector, two U.S. tobacco companies have factories in Turkey, although
the dominant position of the state monopoly continues to limit their
operations.
(End text)
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