Trade: Is the U.S. Shifting from China to Turkey?
By Benjamin Lutz
The Trump administration has made it very clear that China is a priority in its foreign policy. From the trade war and the Indo-Pacific to COVID-19 and the Uighurs, the relationship between the United States and China has changed drastically. Of these changes, trade, COVID-19, and the Uighurs are the most important facets to the U.S.-Turkey relationship. As portions of manufacturing and trade potentially move away from China, Turkey has a significant opportunity to fill in that gap. Erdogan has been cozying up to the United States to further solidify his relationship with Trump and can service as a buffer — and also a liaison — to Russia.
Some are projecting Turkey as a viable trading alternative to China. The Turkey American Business Council (TAIK), an affiliate of the Foreign Economic Relations Board of Turkey, hosted a webinar on June 24 entitled “A Time for Allies to be Allies: Turkish American Global Supply Chain” with Senator Lindsey Graham (R-SC) as a main speaker. Former Senator David Vitter (R-LA) moderated the webinar. The guests discussed topics such as how to increase commercial and economic cooperation between Turkey and the U.S., how Turkey can become a more robust supply chain partner for the U.S., and how the nations can work together to recover in a post-coronavirus world.
This webinar is the latest in bilateral cooperation between the U.S. and Turkey and showcases the connection between the Turkish and American governments. Some take the projection of Turkey replacing parts of China’s manufacturing sector even farther, saying that the “Made in China” labels will start to be replaced with “Made in Turkey”. Regardless of the magnitude of the switch, it seems quite likely that new trade and investment agreements between the U.S. and Turkey will become solidified in the near future.
In big news on this front, the Automobile Joint Venture Group (TOGG), a consortium of five major Turkish companies working to manufacture Turkey’s first national automobile, announced on June 24th that the Chinese patent agency had accepted its design registration application. It was registered by the European Union’s Intellectual Property Office (EUIPO) in April, is pending approval, and is expected to be finalized in 2020 in the U.S., India, Japan, and South Korea. Turkey will soon be able to globally trade and sell its first national automobile.
Alongside cars and other goods, Turkey is seen as a strong option to diversify the long-standing China-centric global supply chain. Though COVID-19’s impact on supply networks could change the game, recently released trade data show the trade war’s early impact on the world’s two largest economies and the future of global commerce. Paradoxically, the results are largely the opposite of what the U.S. has been counting on. Tariffs have produced no real improvement in the United States’ underlying trade balance, while China’s trade surplus has increased and its export markets have become more diversified.
These results are promising for China; however, the lasting criticism of China’s COVID-19 response may outweigh these results, and many in Turkey are vying for that option as it would help Turkey, as Turkish Vice-President Fuat Oktay said in May: “The pre-pandemic global economy was built on a single supply chain, with China at its core, For countries like Turkey, with our robust manufacturing sector and our young population, this will be an economic opportunity.”
The third nail in the potential Chinese trade coffin is related to the Uighur situation. In the U.S. Congress, there is currently a piece of legislation that focuses directly on the Uighur issue: The Uyghur Human Rights Policy Act of 2019. The act freezes the assets of Chinese officers in the U.S. and restrains their visas due to their oppression of Uighurs Turks living in the Xinjiang Uyghur Autonomous Region. The Trump administration made use of the Uighur issue as a means of putting pressure on China. Turkey is one of the few Muslim-majority countries to speak out against China’s internment of the Uighur population, a move which aligns Turkey to the United States to an even greater degree.
China has controlled and will probably continue to control the global supply chain with its dominating force in manufacturing and trade. However, it seems that cracks in its fortress are growing wider as the global community joins the U.S. on criticizing China on its COVID-19 response and joins Turkey on criticizing China on its treatment of its Uighur population. These two reactions to China, alongside Turkey’s growing manufacturing sector — as evidenced by its TOGG automobile line — may increase the chance you see “Made in Turkey” on the next product you buy.