In 1995, the U.S. trade surplus with Turkey was $927 million, $251 million
less than that in 1994. U.S. merchandise exports to Turkey were $2.7 billion in
1995, a $27 million decrease from 1994. Turkey was the United States'
thirty-sixth largest export market in 1995. U.S. imports from Turkey totaled
$1.8 billion in 1995, an increase of 14.3 percent over 1994 import levels.
The stock of U.S. foreign direct investment in Turkey was $1.1 billion in
1994, 8.7 percent greater than in 1993. U.S. direct investment in Turkey is
largely concentrated in manufacturing and banking.
Tariffs and Other Charges
In conjunction with its January 1, 1996 accession to a customs union with the
European Union, Turkey has adopted a new import regime. The new regime applies
the EU's common external customs tariff for third country imports and provides
zero duty rates for non-agricultural items of EU/EFTA origin. It eliminates the
Mass Housing Fund charge on almost all imports except for agricultural products
and used construction machinery. According to Turkish government estimates, the
duty rate reductions and the near elimination of the Mass Housing Fund charges
yield a tariff reduction from 10.8 percent average to 3.6 percent average for
third country imports, including the U.S.
The EU tariff system also simplifies the calculation of duties on U.S. goods,
reducing administrative costs and providing a greater degree of predictability
for exporters. However, because duties have been eliminated among Turkey, the
European Union and EFTA member states, U.S. exporters, who will still be subject
to Turkish duties, are at a disadvantage compared with their European
Consistent with its WTO commitments, Turkey maintains high border protection
on many agricultural and food products.
The Turkish Parliament authorized the Turkish Government to join the World
Trade Organization on January 26, 1995, backdating the bill to December 31,
1994. The Turkish Government still needs to implement measures to align its
policies with the Uruguay Round commitments.
Importers must obtain permission from relevant ministries for certain goods,
including telecommunications equipment, some agricultural products, chemicals,
pharmaceutical products, vehicles and coal. Importers are required to establish
repair facilities in all seven regions of Turkey in order to obtain permission
to import certain vehicles, office equipment, electrical and electronic
U.S. firms sometimes become frustrated at the lengthy, often complicated
bidding process for Turkish government tenders. While the government normally
follows competitive bidding procedures, military procurements generally require
an offset provision in tender specifications when the estimated tender value
exceeds $1 million dollars.
Turkey has used several export subsidy programs. Producer-exporters may
deduct eight percent of industrial export revenue in excess of $250,000 from
their corporate taxable income. Non– producer industrial goods exporters are
entitled to a four percent deduction. Turkish exporters can also benefit from
tariff and surcharge exemptions on imported inputs, surcharge exemptions on
export financing transactions and export credit schemes provided by the
LACK OF INTELLECTUAL PROPERTY PROTECTION
In 1995, Turkey significantly improved its intellectual property laws.
Following years of slow progress, an agreement with the European Union creating
a customs union forced Turkey to enact new patent, copyright, and other
legislation. Turkey also accepted the Uruguay Round's TRIPs Agreement, as well
as a number of important international conventions governing protection of
intellectual and industrial property rights. Although some further amendment of
legislation is needed and expected in 1996, the legal foundation for a modern IP
regime is now in place; Turkey now needs to enforce the new laws and reduce
In recent years, U.S. patent and copyright industries have petitioned USTR to
designate Turkey a "priority foreign country" for its failure to provide
adequate and effective protection for American rights holders. Thecopyright
industry has also petitioned for removal of Turkey's beneficiary status under
the Generalized System of Preferences Program (GSP). In a December 1995
out-of-cycle Special 301 review to assess Turkey's progress in implementing its
commitments to the European customs union, USTR kept Turkey on the "priority
watch list," noting 1995's legislative achievements but stressing the need for
significantly greater efforts to enforce the laws.
Unauthorized copying of U.S.-origin motion picture videos, sound recordings,
computer software, and books is widespread. Illegal retransmission of
copyrighted films and TV programs is a growing problem.
After nearly two years of debate, Parliament passed amendments to Turkey's
1951 Copyright Law in June 1995. Turkey acceded to the 1971 Paris Act of the
Berne Convention in January 1996. The amended Copyright Law contains a number of
significant improvements: expanding the term of protection to 70 years,
broadening coverage to include software, and sharply increasing penalties for
infringement. However, the new law remains deficient in several respects --
notably in the areas of protection of pre-existing works -- and further
amendments will be needed to bring the law into compliance with TRIPs, Berne,
and EU directives.
The 1986 Cinema, Video and Music Works Law does not provide sufficient
penalties to serve as an effective deterrent against piracy. A new draft Cinema
Law remained stuck in Parliamentary committees in 1995. The Turkish Government
intends to revise the draft to make it compatible with the amended Copyright
Law. The Government of Turkey has not yet agreed to remove provisions which
discriminate against U.S. exporters by imposing higher registration fees for
imported films than for domestically produced films.
In June 1995 Turkey enacted a new Patent Law, replacing a law originally
passed in 1879. New Trademark, Industrial Design, and Geographic Indicators Laws
were passed at the same time, completely revamping Turkey's foundation for
industrial property protection. Turkey also adhered to a number of international
conventions in 1995, including the Stockholm Act of the Paris Convention, the
Patent Cooperation Treaty, and the Strasbourg Agreement.
While the new Patent Law is a significant improvement over the previous law
-- including a term of protection for new and existing patents of 20 years from
date of filing -- it contains several flaws. Coverage of pharmaceutical products
and processes is delayed until 1999 (consistent with Turkey's commitment to the
European Union). There is no pharmaceutical pipeline protection. Turkish
officials insist that the new law is completely TRIPs-compatible, but note that
TRIPs, and Turkey's other international obligations, take precedence over
It is difficult to assess the amount of U.S. export losses attributable to
inadequate intellectual property protection in Turkey. U.S. copyright industries
estimate losses due to piracy in 1995 of around $200 million; U.S.
pharmaceutical firms put their annual losses at $60 million.
To counter widespread piracy, Turkey in 1996 needs to prove that it is
willing and able to enforce aggressively the new laws. The announcement in
January 1996 of a significant settlement between a major U.S. software firm and
a large software pirate was an encouraging sign. Turkey is establishing a series
of specialized IPR courts to hear cases tried under the new laws; although it
will take some time to train judges and other personnel, these courts should
significantly improve the ability of U.S. firms to protect their property rights