Our UGM Corporate Communications Director Sami Altınkaya's article entitled "Way our in foreign trade" was published in the Dünya newspaper on 06.07.2020.

Way out in foreign trade

The main issue in foreign trade is the added value the products you sell have. In other words, instead of selling tomatoes, it is important to sell the seed of tomatoes or sell iron and steel products by making qualified flat products or air tools used in the defense industry, rather than selling them as unprocessed products.

That's when the price of the product you sell for $ 1.3 dollars per kilogram increases to 5 thousand dollars. That means your country wins more. It is not, however, sufficient to produce your products and services with added value. You have to be able to sell them at their real price, so they're worth it. This is not enough. When you sell your products, you have to convert your logistics superiority to money. You should be able to import and export at low cost and faster. If countries thousands of miles away deliver their products to Europe in less time than you do, you have to sit down and think about at which point we do things wrongly. Logistic superiority should also be cashed in. If you do not remove the subsequently invented and completely illegal chameleon costs in our ports, the foreign trade you do becomes expensive. This causes billions of dollars to escape abroad. It is impossible to understand why the money that will go to the state's pocket will go abroad. And why is it tolerated? In other words, you can't reach your target unless you make foreign trade cheap and fast.

Why would anyone think to make billions of dollars just from the warehouses and storages we own? Why does Turkey not crown its logistics superiority with logistics centers? If you can't solve these questions, you get nothing as long as the rhetoric doesn't turn into action.

All these problems are waiting for a solution, and if additional customs duties come back to your imports in a row, you will break the eye when you try to correct eyebrow. How can you forget that your export depends on raw materials coming from abroad? If you are going to do at least in the name of protecting the products produced in Turkey customs duties would not be better? Will it not harm exports to impose taxes on a raw material and product that you do not produce? So, what will you do if the countries where you put additional customs duties also bring the same application to the products that you export?

The cadres who guide Turkey's economy can find the solution of all these problems together, from exporter to importer, warehouse to customs officer, shipper. The culture of consultation must be re-implemented.

Is imposing additional customs duties solution

In the “Economic Notes” program published in Haber Global, my guest was Rıza Mehmet Korkmaz, General Manager of Unsped customs brokerage. We talked about the effects of the crisis that started with the pandemic process on foreign trade. We asked Rıza Mehmet Korkmaz, who for many years was the general director in the Ministry of trade and represented Turkey in the United States and Europe.

Korkmaz, who pointed out that we are also experiencing the negative effects of the covid-19 epidemic in our foreign trade said that: “Our export in January May period, compared to the same period last year decreased 19.68 percent, our import declined by 5, 14 percent, our export import coverage ratio were 88.1 percent in the same period last year, this year it was 74.6 percent. Our foreign trade volume in June increased by 11.52 percent to 29 billion 774 million dollars and it is gratifying that the ratio of export import coverage has also increased to 88.61 percent.”

Korkmaz pointed out the drawbacks of imposing additional customs duties and stressed that although such solutions may seem like a solution for the foreign trade deficit in the short term, the entry of these products into the country cannot be prevented with deviations of origin and customs tariffs in the medium and long term, and the tax revenue expected by these decisions will not serve that purpose too much as expected.

Korkmaz specified that “:Newly introduced additional customs duties, on the one hand, can lead to inflationary pressure by increasing costs on products subject to domestic consumption. Our export products will be more expensive with additional customs duties imposed on raw materials and semi-finished products that are input for our export products. This, in turn, will weaken our competitiveness.”

Korkmaz pointed out that the middle income trap is no longer talked about, “When we look at the world's exporters today, we see Germany and China. We can't compete with Germany's high technology or China's cheap labor in the short term without completing structural transformations. But I think there are no countries in the world where we can't compete with our logistical potential. Turkey should also rise to the top position in the Logistics Performance Index by accelerating transactions and processes, activating digitalization, reducing bureaucracy and increasing its competitiveness.

Korkmaz putting forward that Turkey should establish logistics centers that can serve at the global level in this context, said that: “In the west of Turkey there is Europe, where 40 percent of the World Trade is carried out and 11 percent of the world population lives. To the East is Asia, where 25 percent of the world's trade is carried out and 61 percent of the world's population lives. Turkey has easy access to 1.6 billion potential customers in Europe, Eurasia, the Middle East and North Africa and a $ 28 trillion market with a 4-hour flight. Our geographical location is located on the main transport corridors.” and emphasized that it is almost a natural Transfer Center. ‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎‎

Moreover, the “One Belt, One Road” project, which aims to revive the historic Silk Road initiated by China, covering 65 countries and projected investment of $ 1 trillion, also offers important opportunities for Turkey, located in the middle corridor.

Korkmaz said that: “In order to turn all these advantages into opportunities, we must avoid practices that negatively affect the competitiveness of our companies, increase costs and fuel unfair profits. From the point of exit of goods in export and import operations in other countries, the unnecessary costs encountered in the process of the logistics of arrival at the point of delivery, contracts, and payments that are not based on unjustified tariff and legal additional charges, bureaucracy, delays, should be removed with the cooperation of the public and private sector.” 

Rıza Mehmet Korkmaz emphasized that referring to the importance of establishing logistics centers that will serve at the global level in order not to fall into the middle income trap and said that: "For this, we must adapt to technological developments to increase our competitiveness, and more importantly, we must have a 10-year goal of producing high technology.”

An additional tax was imposed on one out of every three imported products

The Ministry of Commerce increased additional customs duties (IGV) stipulated in April - May in response to the decrease in exports, in the face of the absence of the same reduction in imports and the growth of the foreign trade deficit.

Additional customs duties were imposed on 187 products in a wide range from 5.8 percent to 50 percent, on 859 products from 2 percent to 30 percent, on 414 products from 1.9 percent to 30 percent including products like wristwatch, buttons, sheets of plastic, static convector, cosmetics, stationery, bags, of iron or steel, construction materials, construction machines, cranes, agricultural machinery, certain iron and steel products, contact lenses, marble, granite, television receiving devices, printing and writing papers, semi-finished leather products, certain auto parts, gold and precious stones, jewelry, refrigerators and freezers, dishwashers and washing machines, split air conditioners, oven and cooking appliances, water filters, turbo-compressors, engine parts, golf cart, fabric opening and wrapping machines, and various manual and agriculture tools, appliances, metal furniture, plaster, construction materials, wooden doors and windows, prefabricated buildings, iron-steel wires, ropes, cables, chains, copper wires, cables, flooring and tiles, adhesive tapes, rubber sheets, time control devices, musical instruments, play equipment, ski and sports equipment, locks, hinges, scissors, brushes, zippers, lighters and hygienic products.

In addition, surveillance value of many products increased and the obligation to obtain certificate of surveillance is stipulated and a serious brake was put on import.