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Chile Joint Study Group Report on the Feasibility of An TURKEY - CHILE JOINT STUDY GROUP REPORT ON THE FEASIBILITY OF AN FTA (REPORT ON TURKEY) Ankara, July 2007 1 CHILE-TURKEY JOINT STUDY GROUP ON THE FEASIBILITY OF AN FTA TABLE OF CONTENTS TERMS OF REFERENCE .......................................................................................................... 5 EXECUTIVE SUMMARY ........................................................................................................... 6 I. INTRODUCTION ..................................................................................................................... 9 I.1. Main Characteristics of Turkish Economy and Institutional Framework ................... 9 I.1.A. Macroeconomic Features ........................................................................................... 9 i. Gross Domestic Product .............................................................................................. 10 ii. Inflation ........................................................................................................................ 10 iii. Export Sector .............................................................................................................. 11 iv. Foreign Investment .................................................................................................... 12 v. Investment and Savings .............................................................................................. 13 vi. Employment and Salaries .......................................................................................... 13 I.1.B. Trade Policy Regime: Formulation and Implementation ..................................... 14 i. Legal and Institutional Framework ........................................................................... 14 ii. Trade Policy Objectives and Formulation ................................................................ 16 iii. WTO – Turkey Relations .......................................................................................... 21 I.1.C. Structure and Features of the Market .................................................................... 22 I.1.D. Banking System and Credit Policies ....................................................................... 24 i. General Overview of the Turkish Banking System .................................................. 24 ii. Banking Regulation in Turkey ................................................................................... 26 iii. Turkish Insurance System ........................................................................................ 28 I.1.E. Employment Policies, Laws and Salaries ................................................................ 29 i. Constitutional Assurance ............................................................................................. 30 ii. Trade Unions Act No.2821 ......................................................................................... 30 iii. Establishment Procedures ......................................................................................... 31 iv. Conditions for Trade Union Membership ............................................................... 31 v. Assurance for Management of Labor Union and Confederation ........................... 31 vi. Association in Public Sector ...................................................................................... 32 I.1.F. Environmental Policies and Laws ............................................................................ 34 i. The Environmental Agenda ........................................................................................ 34 ii. Legal Context ............................................................................................................... 35 iii. Institutional Framework. .......................................................................................... 35 iv. International Cooperation. ........................................................................................ 35 v. Trade and the environment. ....................................................................................... 35 I.2. Trade .................................................................................................................................. 36 I.2.A. Composition of Trade in Goods ............................................................................... 36 i. Exports .......................................................................................................................... 37 ii. Imports ......................................................................................................................... 38 I.2.B. Origin and Destination of Trade in Goods ............................................................. 40 i. Exports .......................................................................................................................... 40 ii. Imports ......................................................................................................................... 42 I.3. Trade in Services ............................................................................................................... 44 General Trends/Principal Characteristics: ....................................................................... 44 I.4. Investment ......................................................................................................................... 45 Foreign Direct Investment (FDI) in Turkey: .................................................................... 45 FDI Inflows: ......................................................................................................................... 47 2 Number of Companies with Foreign Capital: .............................................................. 47 By sector: .......................................................................................................................... 47 By country: ....................................................................................................................... 48 I.5. Introduction of FTAs Negotiated by Turkey ................................................................. 49 I.5.A. Modalities of Negotiation ......................................................................................... 49 i. EFTA States and the Central and Eastern European Countries (CEEC) .............. 50 ii. Balkan countries .......................................................................................................... 50 iii. Barcelona Process ...................................................................................................... 50 iv. Ongoing Negotiations ................................................................................................. 51 I.5.B. Tariff Reduction in the FTAs, Customs Union and Preferential Trade Arrangements ...................................................................................................................... 51 I.5.C. Rules of Origin .......................................................................................................... 53 II. ECONOMIC RELATIONS BETWEEN CHILE AND TURKEY ................................... 55 II.1. Bilateral Trade in Goods ................................................................................................ 55 II.1.A. Exports ..................................................................................................................... 56 II.1.B. Imports ..................................................................................................................... 58 II.2. Bilateral Trade in Services: ............................................................................................ 62 II.3. Bilateral Investments: ..................................................................................................... 62 II.3.A. Turkish Investments in Chile: ................................................................................ 62 III. TRADE AND INVESTMENT POLICIES......................................................................... 62 III.1. Introduction ................................................................................................................... 62 III.2. Measures affecting Trade in Goods ............................................................................. 62 III.2.A. Tariffs ...................................................................................................................... 62 i. Generalized System of Preferences and Free Trade Agreements (FTAs) .............. 63 ii. Suspension Regime and Tariff Quotas for Industrial Products ............................. 64 III.2.B. Non-tariff Measures ............................................................................................... 64 III.2.C. Import Customs Procedures ................................................................................. 64 III.2.D. Measures Affecting Exports .................................................................................. 65 i. Export Subsidies ........................................................................................................... 65 III.2.E. Technical Barriers to Trade .................................................................................. 66 i. Legal Framework of Technical Barriers to Trade .................................................... 67 ii. Standards ..................................................................................................................... 69 iii.
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