a.m. eastern when the house of commons is in session. and again on sunday nights at 9 p.m. eastern and pacific on c- span. watch any time at c-span.org where you can find video of past prime minister's questions and other british public affairs programs. >> on the next "washington journal" our guests are washington examiner chief congressional correspondent susan for riccio and politico senior reporter money roger -- ju. later the obama administration offered $2 billion for job programs at community colleges. we are joined by scott traffic ik. >> next, asch

discussion on a free-trade agreement between the united states and the european union and its effect on turkey. hosted by the brookings institution, this is an hour and a half. ladies and gentlemen, if everyone will find a seat. there are a couple of seats in the front for those of you who were standing in the back unless you would refer to stand next to the cookies and coffee which i can relate to. i am the director of the center of the united states and europe. we are delighted to see so many people turning out. it shows we are all ready for action and work and in good washington d.c. mode. we have a very interesting event

today on turkey and the transatlantic trade investment partnership which is a bit of a mouthful. i had to practice several times in the elevator. not to trip myself up over q- tip. it is perhaps not the most promising acronym for a major trade negotiation. nonetheless it is one that has gained a lot of scrutiny and attention around town, which is testament to why there are so many of you who turned out today. we are going to take a look at the transatlantic trade avestment partnership from more unusual angle from the role of turkey. senior fellow here at brookings and a director of the center on u.s. and europe's turkey project. it looks like most of you have wanted to get a copy of the interest andkey's potential role in the transatlantic trade negotiations. for those of you, just in case you didn't get a copy, you will

be able to download this from the brookings website. as i know from coming in the office today we have boxes of it sitting around. if you did not get a copy get in touch with us. he is launching the report today and we will be talking to him about his conclusions from having spent several months now looking at turkey's interest in the negotiations and how this is likely to unfold and the challenges that this will pose them and not just for europe and the united states but for turkey itself. very interested to see how the trade deal between europe and the united states may unfold. delighted touch have our new neighbor and colleague from the carnegie endowment, who is one of the u.s.'s leading experts on economic and trade topics. he is the rector of international economics program next door at carnegie. the format is going to be that

he will give a review of his report and then some, tree based on his experience in his own expense on this issue. 10 they will open it up to the audience for more discussion and questions. finally, i would like to thank our colleagues from the turkish industry and business association. we have the u.s. are presented sitting here in the front row. we thank them for their support for this project, overall the turkey project, but also the work that kemal has been doing on this topic. we hope that this will also be of use to people in istanbul, i'm kara and others as well. much look forward to having interaction with all of you have come today. thank you very much.

thank you, fiona. i wasn't very sure whether we were going to do this from standing on the stage, sitting on the stage or standing at the stage. i would like to thank you for joining us this afternoon. is a topic i became exposed to and encountered as i arrived at brookings earlier in the year. i can't say that i had heard of it before. topic that involved to be one close to my heart. i feel very committed to the topic and am delighted that you're he is able to join us because i can tell he is going to try to bring me down to earth on solid grounding. july was a very interesting month because the transatlantic trade and investment ownership first round of negotiations took

thee and in the same month 18th round of the transatlantic, transpacific partnership negotiation took place. when you put the two together on the basis of the 2012 statistics, they constitute just about, just under two thirds of the world's gdp, the gross to mastic product. at the same time, a little bit under 50% of the world's trade. i think when you put these two figures together, one can begin to understand why turkey is very much interested in joining, in finding a way of participating in t tip. what i got to observe soon after i became interested in the topic, is that government

bureaucracy and the business world appear to be on the same .avelength on this topic the prime minister himself has written a personal letter to obama, the minister of foreign was happy to receive his counterpart john kerry in march. meantime, major turkey's from theassociations union of chambers of commerce, whose representatives are here too, have expressed interest in turkey's participation in ttip. i believe out there in government bureaucracy and business circles, there is an, if i dare say, an intuitive feel

why this is important in terms of turkey's future economy -- future economic performance. all this is happening against the following background. turkey has been part of the western economic order since the very beginning, since the. when imf, world bank, all started. also taking it is place against the background of turkey becoming a trading state. i need this. you may have heard that once churchill at the house of commons when he pulled up his watch, people yelled at him saying that he needed a calendar not a watch. but i doubt i will perform at his level here. last 20 or 30 years, the

turkish economy has been transformed dramatically and trade has come to lay a very important role. i will return to this issue, but we have also entered since january, since i took an interested essence it took an interested in this topic -- an interest in this topic. i need not go into the details of it, but many would agree that turkey's democracy has taken an and there are't the early signs of economic difficulties on the horizon building up. part of the background is also that turkey is in a very -- atant to your graffiti very important to geography were two forms of governments, what we could call the transatlantic form of government that relies

on democracy, liberal democracy, free markets and human rights and on the other hand there is the government's model that is -- that puts more emphasis at best on sovereign democracy and states involvement in capitalism , one way or the other. what i would like to say in the remaining time is that what is at stake here, why is turkey so keen, go into the details of it. what has been so far the u.s. and eu responses, and let me say they have not been very exciting so far. what should be done and what are the challenges and opportunities there. about the quick words transpacific partnership and itself. very simplistically again, i see

these two exercises as exercises that are trying to pick up from failed, to deepen liberalization of trade with what they call a wto plus agenda. not just the removal of tariffs, but also directing the issue of non-tariff barriers, much more importantly begin to harmonize rules to do with investments, public procurements, label rules and much more importantly, particularly for the u.s., harmonizing rules that govern intellectual property. author, one of one expert in the area, this is an attempt to create a new trade rulebook for the coming decades, if not the century. jobims both to achieve creation and growth. much more interestingly, what

the european commissioner responsible for trade called the tipping point strategy. anyway, get a number of like- minded countries together that constitute an important part of the world trade and development is rules in a way to compel others to come on board if they want to benefit from the more open and liberalized markets. stateder secretary of also made reference alluding to nato.as an economic u.n. is strong, the u.s. is going to be stronger in international relations. i can't help but think that that reminds me of the. immediately after the second world war. few words about where turkey stands these days.

i believe turkey in the last two or three decades has gone through a massive economic transformation. we actually had an event in the spring here that looks at this phenomenon here at brookings. i was still a junior student at university in you stumble, turkey's foreign trade was just a mere $6 billion. in 2012 last year this had gone billion which is a huge change. the best way of capturing and other was fake statistic is that back in 1975, foreign trade correspondent to just about nine percent of turkey's gdp. today it corresponds to 50% of turkey's gdp and i think this should give you a rough idea of

the significance of foreign 's recentar as turkey economic performance. in terms of ttip, what is significant here is that turkey has incorporated 55% of the european union's key rules that govern the internal market. you could say that for all intents and purposes, turkey is part of the internal market there. even though the european unions lace in turkey's overall foreign 47-49% infallen from the late 1990s to the early today, thebout 38% eu is still the largest partner of turkey as far as foreign

trade goes. through the interviews that i made i came to realize how businesses in turkey are trying to give priority to what they call the one and a half percent profit they're going to make with business in the european 80%, 90%, 100% profit in other places in the world. investment that comes to turkey is from the european union. 65% of turkish investment over -- investment abroad goes to the european union as well. this is also a. during which turkey's engagement with the neighborhood in economic terms increased significantly very it this has important implications forttip.

i won't go into the details for benefit of time. thirdly, for all the criticism -- we major act these days to the turkish government, the prime minister as well as minister, there was a very clear vision about what he wanted to achieve in the middle east in terms of economic and regional integration. these are liberalized nation's. he envisaged a middle east that would be a bit like europe. free movement of goods and people from the most eastern city to the atlantic ocean. however, as you are all aware, that has turned sour. lastly, with obama coming to power and then his famous visit in the very early stage of his first term, a model partnership was launched. one of its important likes being

improving economic relations. in that context the framework for economic and commercial cooperation was set up. background, what is it that is at stake. the studies of the impact of what ttip will be in countries participating in it and third countries will come up. thee countries are still at preliminary stage. there are some more substantial ones that are in the pipeline and whose results are expect it about the end of this year. will impact differently whether you are part of it or outside it, but when you look at these studies, and i must admit that some of these studies are

being challenged and questioned, but that is what is available at the moment, turkey is going to be one of the losers. it is almost cut and dried. correspond going to , and that $20 billion is about the trade that occurs between turkey by laterally, or occurred in 2012 between turkey and the united states. this is not surprising. it has a lot to do with the customs union and the way in has been customs union formulated. i believe uri will be reflecting on that. each time the european union signs a free trade agreement with a third country, it automatically binds turkey, which means that turkey

has to lower its tariffs, customs tariffs and open up its markets to this third country, whoever it may be. in the case ofttip it would be the united states. whereas the third country is not obligated to open up its market, instead turkey has to engage this third country in an effort to negotiate its parallel treaty. i realize to some of you this might be a funny deal, but we can always go back into the details of it. this arrangement had been ok until a couple of years ago because most of the free trade agreements that turkey had signed, that the eu had signed, were ones with relatively smaller economies. as the eu began to engage bigger and bigger

economies and as turkey began to have difficulties in persuading these countries to come to ranging fromable, algeria, mexico, south africa hasmore recently the eu started negotiations with india, japan and a number of other important countries, alarm bells began to ring in turkey with respect to this particular arrangement of the customs union. ttipdoes that mean if comes into effect in terms of u.s./turkish relations? --st of all turkish runs and first of all turkey runs in eight and a half billion dollar trade deficit with united states. it means that trade deficit is going to increase because american companies are going to to thefreer access turkish market.

the turkish companies will continue to face similar restrictions. is goinge , ttip to lead to trade negotiations. koreans as a result of the south koreans/u.s. free trade agreement and then members of tt countries will have easier access to the u.s. market and then turkish companies will be squeezed out. the outcome is a greater trade deficit for turkey. albright and stephen hadley last year with the council of foreign relations published a very interesting and rich report on turkish/american relations. they point out that this is the sort of problem that would fuel

already high levels of anti- americanism in turkey. one impact study that i made reference to has actually calculated that turkey would be losing 95,000 places of employment as a result of ttip. you are of course welcome to challenge the statistics, but it does suggest that it could lead to unemployment while generating and thent within the eu united states. similar outcomes would be observed in the case of turkey 's trade relations with the european union. turkey runs a large deficit. that deficit would continue to expand. american companies would compete, would have a better deal in competing against turkish companies. the companies with

which the eu has been signing these free trade agreements. it is no wonder that we have ministers him i would choose not to name these ministers, who have been using, unfortunately, somewhat integrating language towards the european union. i think this is very much a function of this frustration and grievance that has been felt towards the way the customs union is operating and the way the eu is responding to these grievances. to such an extent that i am sure you have heard our prime minister's revealing at a tv program that he would like to take turkey out of the european in two another shanghai corporation. having a shanghai

blues mood of life. would turkey actually leave the european union? it is probably very doubtful, but the grievances are there and the moreances are growing intense. and is the cost to the eu -- it u.s. of the seattle is going to be very difficult for turkey to maintain its growth rate that has attracted so much attention and praise internationally? it will mean loss of jobs, but it will also mean loss of jobs for the neighborhood for the very reason that i cited earlier on that the neighborhood has a growing art in turkey's economy. migration pressures will increase. turkeyd to 20 years ago,

has moved from an emigration to an immigration country. people coming to turkey, they would most likely be going elsewhere. it would lead to turkey being less stable. the inclusion of turkey is the other side of the dollar. i need not stress the mechanisms would work in the other direction. can be done in this respect? of scenariosumber that could be followed. the one that the government, turkish bureaucracy, and the aprilss world throughout it was pushed very hard,

the inclusion of turkey into the negotiations it sells. the reasons that they could maybe go back to the q&a, that session, and the best that this was thele to promise to be informed about ttip negotiations. as you might imagine, the word of the eu in turkey does not carry as much credibility. ttip, there are those countries

that have very few custom unions with the european union or who are negotiating with full membership. the could be admitted, or door would be kept open. also not aat one is very highly likely avenue that will materialize, and a third idea that has been talked about which isntext of ttip, called docking, the idea that you reach an agreement that leaves the door open to third countries who might want to join and apply forhips membership. we will yet see if this will be the case for ttip 2. in mind in to bear this case that if it was made , turkey'swith ttip

membership would still have to go three congressional and eu and imaginecesses, or if theat failed, negotiation has turned into grievances and the negative items it would generate. lastly, there is the possibility of the turkey u.s. negotiation of the agreement. referencing the a port -- the report i brought up, they called it an interesting turkish -- american partnership, tap, however, that idea could not be pursued because of the way in which it works the other way around, that turkey cannot negotiate free-trade agreements with the third country unless

that third country has a free trade agreement with the european union, so, the u.s. did not have such an agreement, this idea of albright and how it could be put into practice even if there was political will behind it. u.s.-turkey, it was brought up by the prime minister when he came to visit washington, d.c., in may, and it has also been brought up by his deputy prime minister. not seem todoes have gained much traction in the u.s., for a stream of reasons, stretching from the very tradece that the u.s. representatives already have the agenda in front of them, and then i also heard the excuses of

turkey's democracy problems being brought up as well as congressional politics. what turkey has at best manager is what a disappointed diplomat called yet another committee, and this committee that has been set up has been set up at least at the cabinet level, ministers of the economy. is in the u.s. as well as the turkish counterpart will be engaged. i am somewhat optimistic because thee the turkish officials, bureaucrats, at least, on the ministry of the economy side being optimistic about it erie they consider this an avenue that could eventually lead to something like the high level working group that has been set up when the eu and the u.s. first him bark on the path of

ttip. what is critical in this last scenario is there should be a ,ottom-up pressure building especially from the american side and american businesses. concluding remarks before i return the floor to you, turkey in the last couple of decades has, indeed, massively transformed. economy of its corresponds to the sixth largest economy in the european union, makes you add russia, it it the seventh largest in europe and 17th in the world, but what from my point of view is much more important when one talks about turkey engagement in ttip , when you exclude russia and it iran, it is that the

turkish gdp corresponds to the total of all of those other countries excluding russia and iran. now, that is significant when turkey engages in countries economically, as well, so one needs to bear this in mind as well. turkey's economic performance has received a lot of praise, but this has been changing real fast in the last year or so, and turkey's commitment to the transatlantic alliance or community is increasingly being questioned as well. , would be one way in how this could be regenerated

and decide the economic benefits to the eu in terms of jobs and growth, to the united states, in terms of jobs and growth, to turkey in terms of jobs and growth, but also to the neighborhood, to every single neighborhood in the area stretching from armenia all of the way around the neighborhood itself, and there i would like remarks of with the a man who reflected on ttip earlier in the year, arguing , if successful, would be a mechanism that is going to help the transatlantic form of governance around the world compared to the alternative one. now, turkey is sitting on the fence, straddling both countries. bech way it goes is going to very critical in terms of which

form of government prevails in the neighborhood and beyond, and for turkey, it will be very critical if our prime minister really believes that he wants to see turkey as the 10th largest economy in 2023. thank you for bearing with me, uri is going to pick me up part now. >> there you go. [applause] >> thank you. well, i am certainly not going mal apart. i disagree with him, but i want to congratulate him on preparing a good balance, also a good read on the subject, so i just want to recommend that you carefully examine what he has written.

i am going to make one main point. before that, let me say as a premise that trade agreements should be looked at as two , and what ishess less important is trade, and more important on the bottom layer is politics. arrangements are very much motivated by politics. about anyone, geostrategic considerations that you want to consider, but i want to keep some separation between the political session and the economic discussion. i am i am an economist, going to focus on the economic implications of the current set up for turkey. and i will listen all blodget

will he to those who will correct me from the political dimension, which is very important. i basically take the view that the current arrangement, the ison with the european union a very costly arrangement for turkey and one that has become increasingly more costly, and i would advocate on economic grounds that the arrangement be reconfigured into a free trade , in a bombing turkey to renegotiate with third parties, including the united states, and i believe that one can be very much favorable to turkey eventually joining the european union but be against the current set up of the customs union.

that is the main point i want to make. let me give you three arguments to support that point. is that the world has changed. the global environment has become a lot less propitious for the customs union that turkey has with the european union. course, the prospects for these into the indefinite future, being made a lot more problematic by the enormous problems, challenges internally,faces in and the difficulties, the political developments within turkey are well-known. prospectsave those receded into the indefinite

perhaps as important a development is that we have a completely changing picture of world trade. , "juggernaut," you can take all of that with a pinch of salt, but a lot is already happening. from now, six of the seven largest economies of the world will be developing countries. none of the european countries will be there, but only the united states will be among them. today, they represent about one third of world trade, it will represent

something like 70% of world trade. within a generation. factas important is the that these are the countries were actually the biggest trade barriers exist today. in highest trade barriers the world are not in the united states or germany. the highest trade barriers in the world are in india, brazil. they are in china, and they are in a number of growing and developing countries. ofthose are the objects trade policy of today and the trade policy for the future. that is where the big growing markets are and where they have to come down and have been coming down. in ahas been reflected

major redirection of trade, the redirection of these economies, including in the case of turkey, the share ofhere exports going to the european union has fallen very markedly in the course of the last 15, 20 years, and the share going to the united states is also declining over the last 15 to 20 years. are inkets for turkey the developing world. these economies, of course, that i am talking about, with the exception, these economies are excluded from ttip. even if turkey was a part of would not affect its capacity in a significant way to ,mprove its export performance

for these very rapidly growing markets. the second -- that is one argument. the second argument, as kemal has already pointed out, to the , and eventual success, which may or may not happen, as a result of these negotiations can significantly affect the cost of the customs fact,arrangement, and, in the incentives are on the eu and the united states to correct this problem. so somebody has follow these empathize with was saying.

the idea that you go to the u.s. congress, and you basically say to them, we need to lower the export, for turkey to turkey is a big economy, has a lot of unskilled labor, competitive, etc., etc., and then they ask, what are we getting in return, we say you are getting nothing in return because we got everything in the negotiation with the european union, but this does not work. it does not work. so the incentives for the united states are not there to do this free-trade arrangement with succeeds, and similarly, the incentives for the eu to change this arrangement are completely absent.

fact, the eu negotiators, some of whom i know personally, i can go and very happily go and give away inadvertent comments access to a fast growing large turkish market without actually demanding anything in return from the americans for turkey, just demanding things in return ar themselves, so this is little bit like a trade negotiators dream, to be able to it is actually a win-win for the united states and the european union to maintain the status quo on the andoms union with turkey the negotiating processes. meanwhile, with these negotiations, turkey suffers and trade diversion in the united states. apply withuld

in thement, access united states and potentially in the european union, as well. the negotiations are less problematic for turkey because shifting regulations, by definition, well, it would be a choice that turkey faces. they might actually benefit from doing so. another important element here and the other are going to cause, very likely, a big push globally towards competitive liberalization. there is a very large number of them. they are going to feel a lot of pressure. it is not just turkey that is feeling the pressure.

they are going to feel the pressure to enter into trade agreements with the european union, with the united states, but turkeych other, will, in effect, not be able to do that. so long as they get agreement from the european union, but the european union is not going to , and once theoval negotiations are part of this, there is very little. have discussed with the united states, the same would apply for india. ,he same will apply for brazil etc., etc.. so turkey is part of this changing world, in terms of a very important part of the

policy, which is trade policy. the last point i went to make in with thef the idea customs union arrangement, that it is functional and can be by moving towards . free-trade arrangement it is mexico. example ofthe mexico, mexico is an interesting example. similar in per capita income, and back in 1994, two years before turkey signed its customs union with the european they, back in 1994, negotiated nafta, the free trade agreement with the united states and canada, which, as a free- made itreement does, completely free to negotiate

with third parties. well, mexico did not do from a point of trade, if you look at , mexico's trade has grown relative to its gdp much faster than that of turkey or other comparable countries, like result. for example. so mexico shows that you can get a very large boost to your trade by having free-trade areas. you do not have to have a customs union. mexico was also able to a large number of regional trade arrangements. turkey also negotiated some, but

the quality of mexico's free- trade agreements is much better than that of turkey, because mexico has been able to negotiate an agreement with the european union, whereas turkey has not negotiated an agreement with the united states. mexico also negotiated with the pacific ,lliance, and now with the tpp they are negotiating a free- trade agreement with japan, and they negotiated a number of other very large trade agreements. one of the effects of this is that mexico can probably aim to be better integrated in the value change, these global networks of production that have arisen over the last several decades. in part because if you produce

in mexico, you not only have andss to the u.s. market the canadian market, you can use mexico as a base from which you can export all over the world, and you can import easily from all over the world, as well, so i think mexico has been helped in that way. mexico did not do as well on the as turkey has, but it has done much better with macroeconomic stability and balance of payments, and, a big objective of the customs union is to create these closer links with europe, if you look at this, which first in turkey,migration, it has come down hugely.

it is now a very small portion. it is not part of a political arrangement, so to speak, with the united states. with mexico, they are a very important feature of the economy. that is what i wanted to say. i wanted to challenge a little but the conventional wisdom of which i associate with the secular middle class in turkey, with whom i share many, many sympathies. i am a big believer in the and in the need for turkey over time to move in that direction. nevertheless, i wanted to bring are the costs, which are very significant costs, of the trade arrangement, and

inject a note of realism about what can be done, in particular in regard to convincing the united states to take a different tact. tank you. [applause] >> we are having a technical problem. we do not have any -- should maybe very quickly respond to your remarks, and then we will take the discussion to the floor. if we had really set the cat among the pigeons, as the saying of questioningn the customs union and replacing it with a free-trade agreement, an issue that has

come up in turkey and has been discussed, debated, maybe not as extensively as we might devise place,d want to see take but the challenge here is, i think, results, with a very economic trade perspective, whereas when you look at the customs union, and you look at the relations with the european union, the political dimension is very critical, and this is put that they're in an effort to take a shortcut. you, uri, isten to was thinking of what would be the most cleverest way of responding to this, and i could not help, i could not help but

think that after all mexico is not a very good example to to question the significance of the customs union for turkey. i think you are right in all of the observations you have made as far as trade policy and as trade relations go, although, very quickly, in brackets, i would like to point out that trade experts, i am not a trade expert, are going to have to look at the fact that some of these countries, including mexico, including south korea, and now including japan, and most notably seen some other keep a cakeho could and eat it at the same time with coming to the negotiating table.

the mexican president was in turkey not long ago, and it looks like although they have , to drive mexico to the negotiating table, there that beganeen light to flicker on the mexican side. the same thing is happening on the japanese side. however, i am not experienced enough to be able to speculate on what might be happening there, and something interesting may actually be unfolding, and i will conclude the brackets there. when i look at mexico, and i am not in expert on mexico, i only look at mexico through what is debated here. although turkey has been having serious problems in the last respect toonths with

the performance of its notcracy, at least there is the kind of insecurity and instability that is in the with thepart of mexico united states when it comes to drug trafficking and kidnapping of people, smuggling. whether weondering may be able to establish -- to establish a relationship there, with the different of a free- trade agreement, and an agreement like the customs agreement, which should be coming with a political package war was coming with a political package there. the pace of mexico, in some ways, i am wondering whether the high level of mexican references

thatt also a reflection the mexican economy is not performing at the level that it should to be able to employ its own people, and the turkish economy relies on that because in the 1960s, 1970s, and partly in the 1980s, turkish people had to go to europe to earn a living and then shipped their income to turkey. whereas these days, we will see how long this is going to last, these days, most turkish laborer stays in the country or goes into the neighborhood with turkish companies to work on , etc., andn projects would be able to establish a link between the and thisnion particular development.

response, uri, to you is that i do believe there is a major transformation that is taking place. look at turkey, and i look at turkey historically, and from my point of view, and there you can turn around and point the finger at me as a member of a particular i see a majory, historical connection that has been there for centuries, and one cannot just wash one's hands of it. and when i talk to business people, including business people that may not directly be associated with what you call theyecular middle class, do give importance to the rule and to transparency and

to accountability, and the last two months since the events and the way in which the government has come hard on some of the businesses, noises have been coming out from those business circles, two. i think in turkey, in successful business circles, there is a craving for the rule of law, for a level field, and as far as i can see for the time being, that level playing field and the rule of law, it is very closely associated with the european is at a timeis when the link to the european union is weekend. the can reinvigorate primacy of the rule of law. perspective, uri.

let's turn to the floor and start taking some questions and comments, and let me remind you of the brookings customs here, talking about the customs union, ando mention your name maybe the institution you are associated with, and bear in mind that there are others who might also want to have questions and comments. yes, sir? should we take two or three together? yes? >> frank, a washington correspondent. , when youinterested unpacked the consequences of the customs union, working out a seemingly bad deal for turkey the way the trade has developed,

how serious are turkey's ruling class about renegotiating or just pulling out from the customs union, and what would be the political consequences of turkey withdrawing from the customs union? >> let's take your questions. >> thank you very much. from japan share. japan is preceding the joint study with turkey. we have started a negotiation between the eu, so what do you wish to happen between japan and turkey negotiations?

the japan u.s. i heard itone is being said that turkey is willing to join the attack against the area -- against syria. affect the economic relationship between the u.s. and turkey? shall i? >> go ahead, please. i feel you may be able to give a more balanced and objective initial response, and i would have a more biased one. >> so the first question was how serious is turkey about getting

out of the customs union, and the answer is i do not know. what i will say is based on the economic evidence i think that there is an argument for looking at it. whether they are ready to do it, whether politically they can do no doubt these are international treaties, and including, by the way, countries that have negotiated with the european cents, free trade agreements since turkey signed on, these would have to be a very so these are complicated process. nevertheless, the arguments

are very strong. thee was a second part of question, but i cannot remember. >> political consequences. >> political consequences. it is not clear to me that the political consequences would be that significant. sayingot like anybody that turkey is going to do this in five years or 10 years or 15 years or 20 years, number one. number two, as i said, i think this is a very sweet deal for the european union, and turkey has sort of unwittingly, maneuvered itself into a very difficult corner now. from the point of view of the european union, it has turkey in its back pocket. as i said, it can give away the

turkish market without asking anything in return for turkey. nothing in return for itself. so turkey pulling out of the customs union technically could actually in prove the negotiating position of turkey, views of the secession of the european union in the long term, because we would join the customs union, and you are going to get the benefit of a bigger , where you are conducting the international trade negotiation. right now, they have all of those benefits, but they are not taking the costs. >> i partly agree with his remarks there. that this is --

we have entered the period in turkey where the customs union issue and the grievances about it, i sighed the grievances of is broader eu-relationship growing. we hear that the world bank has been commissioned to study the customs union. and we have yet to see the report, and once the report comes out, this debate in turkey might liven up. however, i would like to underline this. the customs union i think is of amuch a product because lack of another term functional dependency. to 1959, whenback

together with greece, turkey europeano them the economic community to have an association relationship that culminated in the 1963 treaty, which is being celebrated this year. there is much to celebrate about it. and that treaty, you made a very important point, how the international treaty bind the countries with each other, and undoing them is a very difficult exercise, so the treaty in a way kind of wound the sides to follow a certain path, and when the customs union was signed in the mid-1990s, to remember the context, as well, it was seen as a critical step, a transitional step, towards turkey's eventual membership to the european union. the world in the meantime has

changed significantly. sides, there are those who recognize the minuses and the pluses of this and i feel that increasingly there is going to be a move, my personal opinion on this is that there is going to be a move towards improving the customs union, towards rather thang it replacing it completely with a newer arrangement. restructuring it may be, for the reasons, the technical reasons cited, might be easier. tearing it apart and throwing it away, in the context, it would really be setting the cat among the pigeons.

turkey would really polarize society, and i can imagine how all kinds of dreadful scenarios will be read into such an exercise. in the european union, yes, by and large, they want to keep turkey at arms length, but when you engage business circles, when you engage government, when you engage part of the civil society, the perspective is a different one, and things are not cut and dried. and one last observation i would like to make, even though uri mentioned that the place with the european union in turkey's overall trade has been proportionally falling, turkey's

trade to the european union continues to grow, and i have looked at the statistics for the first seven months of this year, and trade with the european union has been increasing at a time when trade with the u.s. has shrunk somewhat, and with the middle east, with some countries, it is increasing, with others, it is collapsing. the eu is there, for all of its weaknesses, and i like the remark about this we deal and the back pocket. the european union still remains an important market for businesses that may come from a secular tradition or who come from a tradition much closer to the values of this current government. yes, int about japan,

have also just found out that turkey and japan have agreed on a report that now has to be accepted on the japanese side, and on the turkish side. they are opening negotiations for a free trade agreement. if agreed upon, then negotiations will start. i suspect if they have come to the point that they have, these negotiations are actually going to take place. issue, that has merits on its own. all i can say is that the crisis in theory a is impacting on turkey politically and economically. turkey's trade with the middle east is being impacted. is egyptian crisis unfolding, or, rather, the turkish government response to the egyptian crisis is

unfolding. turkey'srtly undermine economic relations with the middle east, and the departing ambassador to egypt made it that this may actually be the outcome. i listened to the deputy prime minister yesterday when he came out from the cabinet meeting and went through the different scenarios. even though some members of the government and including the prime minister is keen to see some kind of intervention in the it is actually beyond just punishing assad for using chemical weapons. it does not look like turkey is going to go and do it out on its own. well think they are very

aware of the economic consequences, not to mention political ones. another round? we have a little bit more time. there in the back. yes. right there. and then. >> the trade counselor here with and we haveation, discussed some of the issues. we know each other. i will just make a small comment , especially on the presentation. here,ly thing i would say and this has been the case for the u.s., it is always to support turkey entering into negotiations with partners. we are negotiating. it has worked with korea. i do not know what is your assessment. soon after our

agreement was put into force. you may want to focus on that. and then the way the seemsations work, it automatic. from day one, turkey would have -- things take time. would conduct its negotiations. that is just a clarification from our side. question, steering away from controversies about what is the best path, in terms of the level of ambition with the u.s. free trade agreement and the eu free trade agreement, to what extent do you feel turkey is ready for a comprehensive free trade agreement? beyond tariffs, looking at intellectual property, the offset, measures, basically, to what extent are there issues that would be difficult for turkey, regardless

of the support of a large part of the turkish business community? inc. you. >> yes. here. >> american turkish council. you know, i am trying to think of ways in which turkey might be to think a little out of the box in the sense that are there provisions that you know of within nafta, that if turkey were to strengthen its trade ties with mexico, it could somehow gain access into the american market because of a third-party intervention, a third-party playing a role in and nothelping turkey, necessarily wean itself off the customs union, but wasted think beyond a conventional means of,

the europe ways of thinking about this issue. >> one more question there, and have --may be able to yes, we are running out of time. >> thank you so much for the report. i think the discussion is from ttip.art area of cooperation between turkey and the united states. we have seen the recent visit of the prime minister. parts toitical on both go ahead. i think there is also support for that. and for the customs union. the customs union is not something that is

deconstructive. for turkish trade and the european union. so maybe, looking at it as an area of cooperation, rather than seeing it as an area of challenges. thank you. uri, would you be able to answer that question, because i feel -- at theve not looked turkey deal, and i suppose i should have in preparing for this. should not be seen as withannot negotiate countries that have already negotiated, that turkey would

find this impossible. but it is the quality of the agreement. what is contained in the agreement that really matters. states, ande united i really am, in part, repeating said, why would the united states on economic grounds, and maybe for political and security issues, and those may overwhelm everything, but on even economists, that is very hard-nosed about these issues, negotiating a deal with the united states, and the access,tates has full to turkey's ttip

market, what interest does the united states have to give turkey access? a question about the quality of the agreement, not necessarily whether any type of an agreement can be negotiated. , am sure there are issues border issues, etc., etc., which and there arefic, some that are not the province of trade or the european union, but also the country level, which can be included. and there was a second part to the question. i cannot remember what it was. one on trade. >> the extent to which turkey might be ready for deeper integration. my cents, my reading is that turkey has done a lot in terms of taking on the competition

, and there are statistics turkish commercial law basically conforming to the eu model, and we would want to define that. they would bethat ready to go the additional mile. kemal has a better take. >> you have seen an example of how the european union through -- i believe his points were very good there, but let me make a couple of really quick observations. i think the reason why mexico,

are behaving,orea i's line of thinking, are behaving in an in dash your rational way, in the sense they have access to the turkish market, but they are excepting to come to the negotiating table and negotiate parallel free- trade agreements with turkey, it it is a puzzle. it deserves to be studied, and the answer may be to your question about thinking out-of- the-box. maybe come out of such a study. . can only speculate i would like to give some credit to the institution. i think they are putting but there is the

fact that the turkish economy has become an important economy in its region and beyond it, as well. when i was listening to uri's point about why on earth should the congress, besides political, , and other reasons, why would the congress be interested? i think they would be interest -- interested because of not only the investments that would come to the united states from turkish companies, which is already happening, and i recognized this is not going to make a major impact on a huge economy like the united states, but it may well make a difference when it comes to localities, localities within the various states around the

union, so the domestic politics could well impact itself on the congress. secondly, what i made references to, what was set up in 2009, and working very hard towards can in bar oney turkey's neighborhood. there are american companies to clearly see that with turkish companies, they can work in the neighborhood and the business, and that translates into employment and jobs even in the so we need to look at two factors there. the way in which the turkish , and it is grown beginning to attract attention and beginning to impact on the also in the wider sense

of the word, the calculus, and the second one is the way in political,e geostrategic, and security factors play on it as well. is that therk turkish economy has come to where it is, and it is beginning to impact its calculus. , and wechallenge this will see what the world bank reports will say. i think it is at least partly a function of the customs union, and a function of the fact that turkey has cooperated. made its production more competitive and more interesting to third countries, two.

even african countries trading with turkey, when they are importing from turkey. seeing what we are importing up to the standard of the european union. and they do not want to be short changed in any way. their contribution needs to be recognized there. one last remark. i need to be fed. the grievances are not one directional. there are grievances coming from the eu side towards turkey, and the fact that the eu has grievances towards turkey as far as the functioning of the customs agreement goes, i think it is making the european union think twice of the idea that they have turkey in their back

pocket, and to be able to address those grievances they have about turkey, they will have to come to the negotiating table and address turkey's grievances, two, and i believe that there are internal forces from the european union i believe we have run out of time here. exactly what they call swiss timing. i would like to thank you on behalf of brookings as well as the turkey project at the foreign-policy part of brookings . uri for