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Remarks of Franklin L. Lavin
Under Secretary of Commerce
for International Trade
American - Turkish Council Annual Conference
March 28, 2006

Opening Remarks
Thank you Minister Tuzmen (Tooz-men) for that kind introduction.

Ambassador Holmes, Mrs. Holmes, Minister Tuzmen, Ambassador Sensoy (Shen-soy), Mrs. Sensoy, distinguished colleagues…..

Let me thank the American-Turkish Council, the American Friends of Turkey, and the Turkish-US Business Council for inviting me to be with you tonight.


I am pleased to have this opportunity to share my thoughts on how we can strengthen our bilateral commercial and economic relations. Tonight, let me offer some general thoughts on the relationship, highlight the good news in our growing trade and investment ties, and also identify issues for continuing progress.

First, I would like to convey the strong regard and feelings of friendship that America holds for Turkey. We are long-time allies and partners in the defense of freedom and the promotion of modern democratic values. Americans and Turks have fought together and died together in that cause and we will continue to stand together side-by-side in the future.

That is not to say we have always agreed, as in the case of Iraq in 2003. But there are fundamental strengths in the relationship that will allow us to see through these differences. At base, both Turkey and the United States, as strong NATO allies, share a commitment to fighting the war on terror and and rebuilding Afghanistan and Iraq. We are grateful for the efforts of Turkey to build international support for Iraq and we look forward to Turkey's continued engagement in Iraq's success as a stable, peaceful democracy in the neighborhood.

Now, let me turn to the good news in the economic relationship. Turkey's economic reform program has brought impressive results in recent years. Turkish GDP growth has averaged almost 8% since 2002, one of the highest growth rates in the world. The challenge for Turkey in the coming years will be to keep reform on track, to keep liberalizing the economy, deregulating, privatizing, and allowing for more competition, more business growth and start-ups. In the last year alone, Turkey sold a 55% stake in the landline monopoly Turk Telecom, 51% of oil refiner TUPRAS, and 46% of the leading iron and steel company Erdimir. Possible privatizations for 2006 include Turkish Airlines, cigarette factories, the National Lottery, and power distribution companies.

This is all good news but, as Minister Tuzmen knows, it is almost a permanent struggle between those who favor economic growth and greater prosperity and those who are satisfied with a business-as-usual approach to government's role in the economy.

The good news in Turkey's economy is reflected in the good news in the commercial relationship with the United States. Trade between our countries has doubled in the last decade and is up by over 40% since 2003. In 2005, the United States - Turkish trade increased by about 14% from 2004 with total trade equaling almost $10 billion.


I don't want to dampen the positive mood this evening but with all the good news, we should take note that we still have some challenges as well. Our trade and investment figures do not yet reflect the potential that our bilateral commercial relations hold. There is still room for growth. Turkey's stable, democratic and modern society should be highly attractive to U.S. business. Turkish demographics present a growing young and affluent population desirous of the best products and services. And for their part, Turkish firms are increasingly successful and capable in the international market place, dominating several sectors across the mid-east and Europe.

In 2005, Turkey took in a record $9.6 billion of foreign direct investment, nearly 20% of which came from the U.S. U.S. FDI in Turkey nearly doubled last year from about $2 billion to $4 billion. That's quite impressive but it could be even greater. Think about Poland and Hungary. In Poland, U.S. companies have invested more than $8 billion and in Hungary, U.S. investment totals close to $9 billion.

In relation to trade, although trade between our two countries grew strongly to $9.5 billion, consider that U.S. trade with Malaysia is $44 billion. Our trade with Thailand is $27 billion in 2005. With the Philippines, it is $16 billion. Clearly, there is a lot of room for growth.


Turkey is well positioned to take advantage of some of the more important economic trends unfolding in the region. Turkey's location is an attractive "lillypad" for hopping off to the emerging markets in Central Asia and the Caspian Basin and to an economically resurgent Iraq. Its historic role as a bridge to Europe has been locked in through its membership in the EU Customs Union. With all of these factors, Turkey offers American businesses a natural base for increased trade and commercial operations.

Indeed, Turkey has recognized the potential that increased trade with the United States offers. Minister Tuzmen, I applaud Turkey's "Year of the Americas" strategy in promoting greater linkages with the United States and other countries in the Western Hemisphere. Turkey has identified six U.S. states - New York, California, Texas, Illinois, Florida, and Georgia - that offer significant opportunities for increased trade and investment.

Improving business promotion is just what we need, but it cannot be fully successful unless we are also improving the business climate. Let me touch on a few issues. Copyright piracy and trademark counterfeiting are highly problematic in the publishing, optical media, apparel and cosmetics businesses. Also, complicated legal and administrative procedures, accompanied by frequent, sometimes unclear changes in the legal and regulatory environment inhibit business growth.

I am pleased that the Turkish government passed legislation last year expanding protection for pharmaceutical test data. However, it appears that the legislation does not provide adequate protection as is required under the WTO TRIPs Agreement.

By resolving problems in these areas, building a vibrant IPR regime, and removing market access barriers that impede competition, Turkey will improve its investment climate and serve notice that it is a secure location to invest. This is critical to the promotion of a creative, technologically advanced economy that allows the best products and services to be available to its people.

Countries compete hard to attract foreign investment. Those countries that successfully meet this challenge are those that create a hospitable environment. Successful markets are open, transparent, protect the interests and property of foreign companies, and do not change the rules of the game after investments have been made and facilities built. They create a degree of certainty that investors find comforting.

Let me offer a further thought about trade and commerce. We should always remember that prosperity is a means as well as an end. Our nations all seek a better material life, and we also know that a stronger economy and vital commercial trade flows will give us the means to tackle the other problems we face. In essence, trade is about creating opportunities, building better societies, and eliminating poverty.

I close with the words of Ataturk, "National sovereignty should be supported by financial independence. The only power that will propel us to this goal is the economy. No matter how mighty they are, political and military victories cannot endure unless they are crowned by economic triumphs."

I know that through collaboration and cooperation and a shared vision for a more vibrant economic relationship between our countries, we can dedicate ourselves to the economic steps necessary for achieving long term shared economic triumphs.

The United States and Turkey have a great relationship and good economic news to celebrate. We have some commercial issues to address but the stars are aligned for good progress. I look forward to working with Minister Tuzmen to build upon our success.

Thank you.