Good Practice
Turkey must improve procurement process to engage further in transatlantic trade

Whilst the country has perhaps more pressing problems, with the prospect of all out war on its borders with Syria, Turkey might need to improve its government procurement processes too if it wants to be part of global trade agreements.

According to US Secretary of Commerce Penny Pritzker, Turkey must make necessary economic and process reforms before it can engage further in the Transatlantic Trade and Investment Partnership (TTIP). The trade partnership, currently being negotiated between the US and the EU, will eliminate tariffs and regulatory barriers.

Ms Pritzker specifically highlighted a lack of transparency in government procurement as one of the obstacles preventing Turkey from participating in the partnership. Speaking in Istanbul at the 10th anniversary of the American Business Forum earlier this month, Ms Pritzker underlined deficiencies in Turkey’s tender process.

An artice title “US trade delegation visits Turkey, emphasizes transparency” in Cihan onlie news portal says Ms Pritzker, along with her delegation of CEOs from the US President’s Export Council, noted discriminatory tender processes, protective public procurement policies, a long licensing period in the pharmaceutical industry and a lack of transparency. She said that US companies bidding for contracts have suffered from such problems.

Ms Pritzker was quoted in Todays Zaman as telling the forum: “One thing I know is that business wants certainty. If you are going to make an investment as a business, you want to know you have a fair shot in public tender, the process is transparent.”

She added that many US companies had encountered problems fulfilling tender requirements, including a precondition that companies investing in infrastructure and pharmaceutical projects must create employment. Ms Pritzker urged Turkey to improve its public procurement process before further trade deals could be made.

“Turkey and the US are great allies and nothing is going to change that,” she told the Forum, “But let’s be clear, talking about TTIP before Turkey makes the necessary economic reforms doesn’t make sense.”

According to a recent report by Washington, DC-based think tank Brookings Institution, Turkey’s exclusion from TTIP could have a damaging effect on the nation’s economy. The report expects Turkey to lose around €15.8 in its international trade volume annually if the country is left out of TTIP, causing 95,000 people to become unemployed and a 2.5 percent fall in the Turkish economy. Exclusion would also harm Turkey’s goal of being among the top 10 world economies by 2023.

Because of Turkey’s customs union agreement with the EU, the TTIP will mean that US goods will have no tariff when entering Turkey. However, a tariff would still exist for Turkish goods entering the US.

The Wall Street Journal says that US officials and businessmen expressed an interest in investing in Turkish infrastructure, tourism and technology sectors during meetings.

There were also discussions about a tender for a Turkish missile defence system. Last year, the US expressed concern when Turkey awarded a contract for defence missiles to a US-sanctioned Chinese firm. US bidder Raytheon came third in the tender. The deal with Chinese firm CPMIEC has since broken down, and the tendering process reopened. A US Commerce Department official quoted by the Wall Street Journal said: “We absolutely are interested in making a competitive bid to Turkey… we tried to talk about our perspective and what we could offer.”

Strengthened trade and investment ties between the US and Turkey could facilitate Turkey in joining the TTIP, but the country must also reform its own procurement process first.

If Turkey does aspire to become an EU member in time, the country would then have to abide by EU procurement regulations. Adopting a robust and fair procurement process might also help the country in some small way to position itself for membership.