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ICI Assembly Discusses the Future of Turkish Economy and Industry in the Period of Trade Wars

15.08.2018
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Istanbul Chamber of Industry (ICI) August ordinary Assembly meeting was held on 15 August 2018 in Odakule with the main agenda of "The Future of Turkish Economy and Industry in the Period of Trade Wars". The guest of the Assembly meeting chaired by ICI Board Member Erman Atasoy was Prof. Dr. Veysel Ulusoy from Yeditepe University.

ICI Chairman Erdal Bahçıvan talked about the latest economical developments in the world and Türkiye besides trade wars. Bahçıvan, especially, shared his views about the latest fluctuations in exchange rates with Assembly members. "Since the beginning of the week, we closely follow the precautions taken by the Turkish government working hard to relieve the fluctuations in the exchange rates." said Bahçıvan. Bahçıvan expressed his belief that Türkiye will come out of this period with less damage as such precautions continue, and said:

"If there are unconscious opportunists who want to benefit from the latest tough days of Türkiye and take speculative and manipulative actions, then we, the true industrialists who love their country and work hard to generate food and employment for their nation, should clearly express their condemnation. We trust in the bright future of our country. As dialog, consultation and mind stand at the forefront, as we take lessons from mistakes, as we adhere to the facts of economy, as we continue saying right to the right and wrong to the wrong, I don't believe there is a single challenge that we cannot overcome."

ICI August ordinary Assembly meeting was opened by ICI Assembly Member Erman Atasoy. While Atasoy was talking about the current economical developments, he underlined that the fluctuations in the exchange rates will be overcame by Turkish economy. "Türkiye is passing through challenging days economically, but the month August is the month of victory in Turkish history. I believe that we will overcome this period once again with victory." said Atasoy.

Then, Atasoy invited ICI Chairman Erdal Bahçıvan to the stage to make his speech about the main agenda item. Bahçıvan said that the banks should also act with sense of responsibility and sensitivity while everyone declared mobilization with a national consciousness in this period that Türkiye is wanted to be pulled into an economical chaos. Bahçıvan underlined that some of the banks want to turn this period into profit by pushing healthy firms unfairly in these challenging days. Bahçıvan, who said that they had heard many complaints regarding this subject, stated that they, as ICI, will not sit back and watch silently these banks that display such attitudes.

Stating that they, as industrialists, maintain their desire to continue production, make new investments and create employment despite of these challenging conditions and increasing costs, Bahçıvan underlined that they are proud to shoulder responsibility in challenging days of Türkiye as in its good days. Stating that they are trying to do this by using local and national resources as much as possible, Bahçıvan added that the government is making great effort. Bahçıvan said that they are closely following the precautions taken by the government since the beginning of the week to relive the fluctuation in the exchange rates, and appreciating these actions with the belief that Türkiye will get out of this period with less damage as such actions continue.

Bahçıvan continued:

Stating that every country involved in this process will be affected negatively from this period as every logical being would agree, Bahçıvan said that both hot money flow and long term direct foreign investment tend to return back to developed countries. Bahçıvan attracted attention to the need of developing countries to come up with new and effective strategies in the light of this fact. Bahçıvan underlined the importance of making careful analyses to identify the required strategies and to forecast the future of economy and industry in these tough global conditions.

Underlining the fact that the separation between protectionism- and globalization advocates in economy are getting sharper while talking about trade wars, Bahçıvan said that the rise in protectionism actions attract attention in many parts of the world, and USA even moved from idea and discussion phase to action phase. Mentioning that countries defending free global trade against this respective protective trend initiated a fight to maintain the current system, Bahçıvan said that the "Belt and Road" project of China known also as "Iron Silk Road" creates a huge potential for global infrastructure investments in the next term. Bahçıvan stated that the worry to lose its global hegemon power due to this project of China lies behind some of the decisions of USA regarding trade wars.

"As protectionism wind blows in the world, the importance of having a strong economy and production-oriented economy mentality is increasing rapidly." said Bahçıvan. "The way to reduce our external dependency and current deficit passes through supporting high quality production in the country and keeping our industry dynamic and strong. None of us should forget that the foundations of many leading large industrial organizations of Türkiye and the world were laid in such challenging days. We fully believe that our economy and industry will come out of this trade war by gaining strength thanks to our joint, effective strategies and rapid actions."

Yeditepe Üniversitesi Öğretim Üyesi Prof. Dr. Veysel Ulusoy

After ICI Chairman Bahçıvan, Prof. Dr. Veysel Ulusoy from Yeditepe University shared his ideas about the agenda as the guest speaker. Stating that the trade wars initiated by USA are not covered by the rules of World Trade Organization and shaped within the framework of the ideas of President Trump, Ulusoy said that these will leave permanent marks despite of that. Ulusoy said that even though the war is declared unilaterally, the involuntary countries not involved in war will also be affected, and added that the global markets in the world are now closer and everyone is an income earner.

Declaring the attitude of former USA President George Bush pushing USA to sell more cars to Japan in his visit to Japan as the starting point of trade wars, Ulusoy said that trade wars should be discussed only in the dimension concerning trade. Mentioning the decrease in private sector investments of USA after the global crisis in 2008, Ulusoy reminded that the election campaign of USA President Donald Trump was promising to draw the overseas USA investments back to USA. Naming this as the reason for Trump to take the votes of low income groups and decrease the unemployment rate to a level below 5 percent, Ulusoy added that the minimum wage also increased in reality.

Ulusoy said that USA sanctions are applied with the authority assigned to the President, and reminded that the product groups that tariffs are defined to for China are products with high patent intensity. Underlining that the trade wars began with the claim that Chinese firms in the supply chain share the confidential information again with Chinese firms, Ulusoy said that Trump took precautions against China by claiming commercial espionage. Ulusoy said that the main industries are chemicals, machinery, computer, electronic devices, and only 13 percent of the production in these industries that precautions are taken belong to Chinese companies and the rest is the investments of international capitals in China.

Saying that Türkiye is not an actor of trade wars and had to follow the price pressure set by developed countries, Ulusoy underlined that USA increased the taxes in steel and aluminum import from Türkiye since the tariffs set in March lost their impact as the value of Turkish Lira decreased. "The decision of USA to increase the customs tax applied to steel and aluminum products imported from Türkiye is an irrational and unreasonable decision not based on any economical fact but rather on political turbulence." said Ulusoy.

Telling that Türkiye benefits from the cheap currency in the world since 2008 and only tries to plan the future in the periods of crisis, Ulusoy said that Türkiye has many opportunities. Underlining the importance of the reaction of EU to the sanctions of USA, Ulusoy mentioned the need for Türkiye to reconsider the Customs Union.

Following the speeches, ICI Assembly Members came to the stage one by one and shared their opinions about the main agenda. And the questions of the ICI Assembly Members were answered by Prof. Dr. Veysel Ulusoy.