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Study on Economic and Political Developments in the Republic of Turkey

THIRTEENTH REPORT OF FOREIGN AFFAIRS AND INTERNATIONAL TRADE COMMITTEE
DEBATE ADJOURNED

The Senate proceeded to consideration of the thirteenth report of the Standing Senate Committee on Foreign Affairs and International Trade, entitled: Building Bridges: Canada-Turkey Relations and Beyond, tabled in the Senate on June 20, 2013. Hon. A. Raynell Andreychuk moved the adoption of the report.

She said: Honourable senators, I rise this evening to speak to what I think is an important report from a committee of the Senate. I will speak about the potential for renewing Canada’s bilateral relations with Turkey, the necessity of improving mutual awareness and understanding between our two countries, and the benefits, in doing so, to Canadian, international and commercial priorities.

These are the conclusions of the report of the Standing Senate Committee on Foreign Affairs and International Trade, entitled Building Bridges: Canada-Turkey Relations and Beyond.

This report emphasizes commercial diplomacy as essential for renewing our relations, but it is insufficient in and of itself. Canada’s engagement needs to be sustained and consistent to offer real value for every dimension of the bilateral relationship. This message has figured throughout the committee’s study of emerging countries in a world of rapidly changing dynamics, whether with respect to Brazil, China, India, Russia or Turkey. A truly coordinated foreign policy requires creative thinking. It requires multi-level approaches involving expertise from Canada’s private, public and civil-society sectors.

During our studies of the BRIC countries, interlocutors frequently referred to the dramatic economic and political developments in the Republic of Turkey. The committee decided to investigate these developments more closely. We found a country that has changed significantly from a generation, and even a decade, ago. The new Turkey is endowed with a large, young, enterprising and increasingly educated population, rising incomes, high consumption rates and a growing middle class. Turkey’s economy now ranks seventeenth in the world. It is also one of the fastest growing economies.

Turkey registered above annual growth of 5.1 per cent over the past 10 years. Between 2002 and 2012, its GDP per capita soared from $3,500 to over $10,000. Turkey aims to become one of the world’s top 10 economies by 2023, the one hundredth anniversary of the founding of modern Turkey.

Equally impressive is how Turkey has leveraged its commercial advantages toward this end. These include its geographic proximity to Europe, Asia, the Middle East and Africa and its well-developed economic links with the European Union, its most important trade and investment partner.

Turkish interests are multiplying in some of the world’s fastest growing and also some of its riskiest economies. Turkish construction companies, for example, are involved in some 95 per cent of the Iraqi construction market. Turkey’s interest in Africa recently expanded with the opening of 23 new embassies and consulates across the continent.

Turkey’s presence in Asia and Latin America is also growing. Turkish Airlines is helping Istanbul become the global transit hub. If completed, it will be the world’s largest airport. Turkish official development assistance is being mobilized to foster international goodwill.

Our study found that it is not too late for Canada to capitalize on the opportunities that this new Turkey presents. Further, Canada’s strategic priorities and commercial strengths complement Turkey’s foreign policy and trade objectives, as well as its commodity and import needs.

The foundations for a stronger bilateral relationship are currently being laid by government officials, businesses and educational institutions, and through bilateral agreements on air transport, double taxation, social security, agriculture and peaceful uses of nuclear energy. Moreover, since 2009, an increasing number of bilateral visits have brought high-level Canadian political and business delegations to Turkey.

However, there is substantial room for improvement. The value of Canada-Turkey merchandise trade was $2.3 billion in 2012. This is up 48 per cent from 2010, but it is a slight decrease from the $2.4 billion of total trade in 2011.

In 2012, Turkey was Canada’s twenty-fifth largest merchandise export market, thirty-second largest source of merchandise imports and its thirty-fourth largest overall trading partner. Canadian exports to Turkey were valued at $850 million in 2012. Canadian imports from Turkey were valued at $1.5 billion.

Canadian foreign direct investment in Turkey was $909 million in 2012. This makes it Canada’s thirty-fourth largest foreign investment destination, representing 0.1 percent of Canadian foreign direct investment abroad.

Some people pointed to Canada’s longstanding collaboration with Turkey in NATO and other organizations, or our more recent cooperation in fora such as the G20, to argue that our relations are already about what matters to us. This perspective misses the point of the committee’s report that the bilateral dimension of our relationship is lacking and that multilateralism has not translated into stronger bilateralism.

The committee identified a need for greater mutual understanding and knowledge between Canada and Turkey. Our two countries today are poised to move past differences of opinion and to renew our relationship for our mutual benefit.

Having heard from over fifty witnesses and interlocutors both here in Ottawa and during our fact-finding mission to Istanbul and Ankara in March, we offer six recommendations and a number of suggestions to the Government of Canada.

The committee believes that Canada and Turkey should pursue deeper commercial partnerships. Trade and investment growth should be predicated on sectors where Canadian companies’ expertise complements Turkey’s economic priorities.

Sectors offering the greatest opportunities for Canadian businesses in Turkey include agriculture, mining, energy, infrastructure, transportation, and education. Our report underlines that a deeper political engagement must underpin Canada’s commercial diplomacy.

We recommend that the Government of Canada maintain consistent engagement with the Government of the Republic of Turkey at the highest political levels. A positive and constructive high-level dialogue can be critical in building the Canada-Turkey relationship, increasing Canada’s visibility and helping Canadian businesses to position themselves for success in Turkey.

Turkey, like Canada, is a trading nation. The committee believes that the two governments should work together to determine if they can find common ground on a bilateral free trade agreement. The initial process and preliminary discussions had not previously met with the necessary level of ambition on the Turkish part to make such an initiative worthwhile. However, we were pleased to hear from the Turkish Minister of Trade and customs during our meeting in Ankara that today there is both a willingness and an urgency to restart these discussions. Accordingly, the committee recommends that the Government of Canada identify Turkey as a strategic commercial priority and accelerate negotiations with the Government of the Republic of Turkey for a free trade agreement.

Another area the committee identified for building bridges with Turkey involves increased partnerships both in Turkey and in third countries. Partnerships are critical for realizing commercial opportunities, accessing valuable market intelligence and navigating the Turkish business culture.

The committee strongly encourages the Government of Canada to enhance the capacity of Export Development Canada in Turkey and to promote partnerships between Canadian businesses and Turkish business associations.

The committee also believes there is potential for Canadian businesses to partner with Turkish counterparts in third countries — in Africa, the Middle East and Asia — in order to maximize compatible commercial strengths. For example, the less risk-adverse nature of Turkish enterprises would complement Canada’s know-how and leadership in many sectors. Such joint initiatives would be especially beneficial in situations where financing is the issue for each country. Partnering would allow them to pool their resources for maximum advantage.

The committee recommends that the Government of Canada facilitate such partnerships and innovative financing collaborations between Turkish and Canadian businesses in third countries.

Opportunities also exist for Canada to work with Turkey on its education and training priorities. An arrangement allowing Turkish youth to work and study in Canada for up to one year would expose Turkish as well as Canadian youth to invaluable educational and employment experiences, and strengthen their capacity to contribute to their country’s economy. Accordingly, the committee recommends that the Government of Canada undertake to enter into a youth mobility agreement with the Turkish government. This could include young professional and international co-op experiences.

Recognizing that Canada’s youth are themselves facing significant employment challenges, the committee recommends that the agreement set quotas for each category according to our domestic labour market conditions. Education can be a key driver in deepening engagement between Canada and Turkey, from which trade and investment opportunities will flow. In fact, it was the committee’s feeling that we know too little about each other and youth need to know more if this venture is to succeed. However, we understand that the market for international students is very competitive. The committee believes that Canada needs to be proactive in marketing itself as the destination of choice and in developing relationships with educational stakeholders in Turkey.

The committee strongly believes that building and promoting a ‘‘Canada brand’’ would raise Canada’s profile in Turkey. Defining the best that Canada has to offer and differentiating Canada from its competitors in all sectors is necessary. A ‘‘Canada brand’’ would help promote the Canadian advantage in such sectors as innovation and technology.

Turkey has sought to enhance its research and development capacity and its information and communication technology, but its needs are not being met as quickly as necessary to facilitate the country’s economic agenda. Accordingly, opportunities exist for Canada-Turkey partnerships to transfer knowledge and strengthen Turkey’s technological capacity in sectors where Canada is a world leader.

In order to facilitate such transfers, the committee recommends that the Government of Canada consider memoranda of understanding with the Government of the Republic of Turkey in the areas of science and technology.

Finally, Canada and Turkey share many overlapping interests in the region: resolving the conflict in Syria; encouraging the normalization of relations with Israel; persuading Iran’s cooperation with the International Atomic Energy Agency; promoting Egypt’s economic development through youth employment and job training projects. Moreover, common engagement concerning Iraq may soon be facilitated with the opening of Canada’s mission in Baghdad. We encourage the Government of Canada to find opportunities such as these, whereby Canada and Turkey can intensify their joint pursuit of common interests amid changing regional dynamics.

The committee completed its study and report in early June. Questions have naturally been raised about the relevance of our report and its findings given recent events in Turkey. These events concern the large-scale demonstrations in Istanbul and other cities throughout Turkey, and the government’s response to these manifestations. Consistent with the protests, our report notes the internal challenges and issues Turkey must address as it continues its democratic and economic modernization. For example, our report notes the troubling signs that the freedom of expression and the media are being repressed and that the government has become increasing intolerant of criticism and dissent.

Our report also addresses concerns about Prime Minister Erdogan’s dominance of Turkey’s political and business spheres. Time will tell what the long-term impact of these recent events will be on Turkey’s relative domestic stability and its often-cited role as a model of secular democracy for the region.

As one witness commented, ‘‘Which way Turkey will go remains very undecided.’’

Our committee believes that the contents of our report remain an accurate assessment of the evolving Canada-Turkey relationship. They reflect a genuine willingness on the part of our interlocutors from the Turkish government and business leaders to deepen bilateral engagement.

Just as Turkey is evolving, the current events must be taken against the backdrop of Turkey’s significant domestic and foreign policy achievements over the last two decades. These include the subordination of the Turkish military to civilian rule and oversight, reflecting NATO and EU standards. Another is the progress made in ending the 30-year conflict with the Kurdistan Worker’s Party.

It is no coincidence that many of our report’s messages echo those found in our reports on China, India, Russia and Brazil. These include the focus on key sectors, such as agriculture, mining, energy, infrastructure and transportation, as well as education. We have also repeated the necessity of developing a ‘‘Canada Brand’’ in order to raise Canada’s profile.

Our reports are collectively and simply drawing attention to what are emerging as consistent needs if Canada is to seek new opportunities in a changing world.

The Standing Senate Committee on Foreign Affairs and International Trade has developed, over the years, a reputation, I am proud to say today, that precedes its every output. Our decision to study Turkey brought fresh attention to that country within the Government of Canada before this report was even tabled. I hope the insights and recommendations therein contribute to efforts by the Canadian government, business, educational institutions and civil society to develop the Canada-Turkey partnership to its full potential.

Honourable senators, I believe that the work of the committee is driven by changing attitudes in Canada by raising awareness of the potential that is yet to be leveraged in the Canadian society for a maximum advantage in a very changing world.

(On motion of Senator Fortin-Duplessis, debate adjourned.)

 

 

, tabled in the Senate on June 20, 2013.