Our Trade Volume With ASEAN Is Far Below Its Potential

We talked to Cemil Çakar, Co-Chairperson of DEİK ASEAN Working Committee and Chairperson of Turkey- Thailand Business Council, on the activities and objectives of the Working Committee.

With its ever-increasing importance on the global scale, the Association of Southeast Asian Nations (ASEAN) stands out as a rapidly rising economic partnership in its region. With members such as Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia, ASEAN is now regarded as the major market to open up to the Asia Pacific region. Our country has established important ties with the ASEAN through its status as the Sectoral Dialogue Partner of the Association. We talked to Cemil Çakar, Co-Chairperson of DEİK ASEAN Working Committee and Chairperson of Turkey-Thailand Business Council, on the importance of the ASEAN in our business world in light of its increasing value on the global scale. “We can increase our efficiency in the region through new and integrated strategies that focus on ASEAN, free trade agreements (FTAs) we signed and will sign, and a collective effort from the state and the private sector together,” says Çakar.

You are the Co-Chairperson of the ASEAN Working Committee founded within DEİK. Could you tell us about the founding reasons and future goals of the Working Committee?

DEİK ASEAN Working Committee was founded to develop economic projects and cooperation with ASEAN, of which our country is the Sectoral Dialogue Partner, and to increase the efficiency of the Turkish business world in the region. Our Working Committee consists of the Business Council Chairpeople of the seven ASEAN member countries within the DEİK Asia Pacific Business Council.

Our total trade volume with the member countries, which was $1.3 billion in 2002, reached nearly 10 billion dollars today after more intense and fruitful cooperation established between ASEAN countries and Turkey. But these figures are far below their actual potential. We can increase our efficiency in the region through new and integrated strategies that focus on ASEAN, free trade agreements (FTAs) we signed and will sign, and a collective effort from the state and the private sector together.

Countries that are not located in the region cannot be full members of ASEAN. However, our country has been its Sectoral Dialogue Partner since 2017. And we conduct lobby activities to elevate our country to the status of Dialogue Partner. The ASEAN Ankara Committee, consisting of the Embassies of ASEAN member countries in Ankara, is responsible for conducting the activities of the Association in our country. The Committee started to be chaired by the Cambodian Ambassador in the first half of 2021. We recently discussed what we could do together with the Ambassador at Gedik University ASEAN Research Centre. I would like to inform everyone here that we will continue to work closely with the ASEAN Committee in Ankara, and we will be in active communication and joint activity planning within this scope.

It is very important to develop our trade-economic relations with Southeast Asia to reach our international economic goals in 2023. To sum it up, as the Business Council Chairpeople of the ASEAN member countries within DEİK, we carry out activities in the ASEAN Working Committee to increase our business and investment ventures with the region, bring balance to the chronic deficits of our foreign trade, and develop a holistic approach to our economic relations.

Turkey has proven its vision by joining ASEAN as a Sectoral Dialogue Partner, and this vision has been turned into a diplomatic action plan with the Asia Anew Initiative of our Ministry of Foreign Affairs. The diplomatic pillar of this initiative, which is further developed by the vision of our state, is working successfully. However, as you know, we needed to form the economic pillar of this initiative, and this is actually the essence of our ASEAN Working Committee.

The economic cooperation areas, which I will break it down below, of our sectoral dialogue partner agreement with ASEAN are determined by the 2019-2023 Practical Cooperation Areas Document:

• Trade and investments
• Public-private sector joint projects
• Mining
• Science-technology, innovation, and R&D cooperation
• Food and agriculture

It is our aim in these and a few more areas to prove to everyone that our business world is a huge market for exports with the rising middle class of its region, has a high tourist potential, is an attractive investment centre as a customs-free free trade area, and offers great opportunities for our contractors with large-scale infrastructure and transportation investments. We aim to pioneer new relations for our business world by organising forums/meetings in physical environments when we leave the online and pandemic conditions behind us. We also plan to hold meetings to ensure the participation of our DEİK members and Turkish business representatives in the ASEAN Business and Investment Summit (ASEAN BIS) program organised annually by ASEAN. There are also developing projects and partnerships in the fields of economic cooperation with the 35-member Asian Cooperation Dialogue (ACD), of which our country became a member in 2013 and Term Chair of the 2019-2020 period. We also plan to bring our DEİK members and representatives of the Turkish business world together with the leading representatives of the Asian business world by taking an active role in the activities of our Ministry of Foreign Affairs for the organisation of the 20th ACD Connect Business Forum, which will be held in 2021 in our country. At the same time, we aim to lead joint activities and projects in the region with our universities and provide more student exchange in order to develop human resources for both sides.

And the attention of our DEİK ASEAN Working Committee on the region has gained more importance with the Regional Comprehensive Economic Partnership (RCEP) signed on November 15. Our Working Group has expanded its area of interest to the entire RCEP region with this agreement signed between ASEAN, China, Japan, Korea, Australia, and New Zealand.

Could you talk more about the importance of the Association for Turkey within the framework of trade figures between ASEAN and our country?

When we look at the trade data of the ASEAN-RCEP region with our country and with the world, we see that we have a total trade volume of $43.26 billion, and we have a $28.94 billion deficit with the regions. When we further break down this deficit, we see an important gap in investments and intermediate good exports. We need to remember it is not possible to give up on them in the short term since these products are used in the export-oriented production of our country.

On the exports side, we can bring balance to our foreign trade with the region, which is an integrated manufacturing hub, through high value-added, advanced-technology, authentic and brand products or foods with geographic specificity, special chemicals, software, and e-commerce as well as wide-ranging approaches such as tourism and direct investments.

Do the figures of our import and export with ASEAN reflect their potential? If not, what can be done to improve that?

No, it definitely does not reflect its potential. The inadequacy of our outlook on the region can be seen in our trade figures. We need to stop complaining about the foreign trade deficit and start changing our outlook. For we need to see the great market potential of the RCEP region with its population of 2.26 billion, an average growth rate of 4.29%, and product purchase from the world worth around $5 trillion. We need to realise that our 0.42% share in the foreign trade volume of this market, which corresponds to 1/3 of the world economically, has great potential to increase. We need to look at the bright side of our relations.

We would like to hear your opinions on the Regional Comprehensive Economic Partnership (RCEP) that the 10 ASEAN member countries signed with China, Australia, South Korea, Japan, and New Zealand. How will this agreement affect global trade?

We are now fully aware that just like the star of the 19th century was Europe, and the 20th century was the United States of America, Asia will be the star of the 21st century. The centre of the global trade is now shifting from transatlantic to transpacific. We see new positionings and structures emerge in the global value chain. Trade and investments will change direction; new trade corridors and supply chain structures will emerge. Many agreements between the countries of the region will lose their validity, trade between them will become much simpler and more effective, transactions will gain speed, and competitiveness will increase.

The RCEP became a party to agreements with China, Japan, and Korea for the first time. Then, ASEAN became the second most important trade partner of China, along with the USA, forming the world’s largest FTA region. This region that we are talking about constitutes 30% of the world trade, population, and gross domestic product (GDP). And the signing of this agreement has inspired other regional agreements. For we see the Asia Pacific Economic Cooperation Forum (APEC) negotiations gaining momentum after this development. If this agreement is signed, states such as Russia, China, and the USA will be parties to the same agreement for the first time and will constitute 50% of the world trade. There may also be further progress in agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which consists of 11 pacific countries.

RCEP is the first multilateral FTA, unlike the widely applied ones. Although it will take years to fully put this agreement into force, its most important effect in the short term is the tax-free region criteria of origin, which has been reduced to 40%. This article will turn the region into a giant integrated manufacturing hub. Then, as they will be much more competitive both in the global markets and in the region, they may have challenging effects for our country besides some opportunities. Therefore, it is very important to conduct impact and prevention activities in terms of both our country and the industries of the business world. We may face devastating outcomes if we do not take immediate action. We also need to address the positive and negative impacts of China’s Belt & Road initiative and prepare ourselves for the possible outcomes.

We have FTAs with South Korea, Malaysia, and Singapore from the region in force and continue negotiations with Japan and Thailand. If we do not increase our free trade through new agreements, our exports to the region will become even more difficult. Regional projections show us that China will be the biggest economy in the world in 2030, and the Asia Pacific will host 2/3 of the global middle class. According to the impact analysis of the World Bank, RCEP will create approximately $2.5 billion of surplus value. Apart from all these, the region will become more attractive in terms of global direct investments with that agreement, which may cause non-regional countries to lose investment.

Co-Chairperson DEİK ASEAN Working Committee and Chairperson, Turkey-Thailand Business Council Cemil Çakar