With TTIP Agreement, still being negotiated by the US and the EU, 60% of the global trade and investments are expected to be collected in one center. So, how will this agreement affect third countries? Which steps should be taken by Turkey to avoid being affected by this process? With the Transatlantic Trade and Investment Partnership (TTIP) Agreement being negotiated by the US and the EU since 2013, a free trade and investment zone is aimed to be created between the world’s most important two blocks. The agreement, which is planned to be concluded between two blocks which form half of the total GNP and one third of the trade volume of the world, will have a meaning beyond the conventional free trade agreements. Through this agreement, which will restructure global trade and create new balances, the aim is to establish a cooperation between the two blocks regarding the nullification of tariffs, minimization of non-tariff barriers, invisible items of trade, compliance with legislations, intellectual property rights and public tenders etc. The negotiations are expected to be concluded in 2017. Many researches have been performed in terms of the effects of the agreement which will be concluded until 2017. As per the data of Center for Economic Policy Research (CEPR) headquartered in London, the effectiveness of a comprehensive agreement would provide an additional contribution of EUR 119 billion to the EU economy, and EUR 95 billion to the US economy, annually. Foreign trade between two blocks will increase by USD 460 billion. This refers to an additional growth of 0.5% - 1% for both economies. The similar data stands out in the detailed effect analysis performed by the European Commission. According to the data compiled by TEPAV from the reports of the Commission, the aforementioned agreement will positively affect EU and US citizens who are trying to overcome the effects of the crisis. Pursuant to this, the additional income to be generated over the working life per household is expected to be EUR 12,300 and EUR 6,400 for the EU and the US, respectively. More importantly, the agreement is expected to create new areas of employment and the salaries would increase by 0.6 percent. This situation seems to be compliant with the target of “creating more employment with higher salaries” considering the growth strategy of the EU. In the case that a comprehensive agreement is concluded, 60 percent of the global trade and investments will be collected in one center. Considering the size and scope of the TTIP Agreement, it is expected to have serious effects on the global trade. The reports submitted show that the third countries trading with these two blocks will be negatively affected from this process. As per the data compiled by TEPAV from the Ministry of Industry of Sweden, if the tariffs will be nullified and non-tariff barriers will be minimized comprehensively, the level of welfare will be affected by 0.15 percent and the decrease in added value of the productions will be 0.4 percent. EFFECTS OF TTIP ON TURKISH ECONOMY According to the report named “TTIP Anlaşması’nın Türkiye Ekonomisine Olası Etkileri Analizi” (Analysis of the Possible Effects of TTIP Agreement on Turkey) published by Caspian Strategy Institute, the agreement to be concluded between two important trade blocks will affect Turkish economy significantly. As per the report, trade activities of Turkey with the US and the EU account for 46 percent of its total foreign trade. The Agreement is expected to increase Turkey’s foreign trade deficit by 22.5 percent and decrease its exports by 12.4 percent. It is estimated that this situation may decrease the production volume of manufacturing industry by 5.2 percent and that GNP may be negatively affected by 1.89 percent and lead to an employment deficit of approximately 103,000. PAY ATTENTION TO THESE INDUSTRIES According to the report, it is concluded that the chemistry, automotive and textile industries will be affected by TTIP Agreement more than the others. However, the Turkish automotive industry, which is the production base of global automotive companies, produces according to the target markets and this brings a more optimistic interpretation that the damage to the industry may be less than expected. Pursuant to the report prepared by Caspian Strategy Institute, thanks to the rock gas revolution which has become apparent as of 2009 in USA, energy costs have decreased significantly. The company gets a competitive advantage especially in the energy and capital intensive industries. In this regard; following the TTIP Agreement, Turkey’s competitive power is expected to decrease for items such as chemical substances and petrochemistry products, the net export items of Turkey, and industries such as automobile and textile that the US and the EU have a great share in terms of exporting are expected to be negatively affected. WHAT STEPS SHOULD BE TAKEN IN TURKEY? In the report, it is emphasized that Turkey should take necessary measures since it may be negatively affected, although it may become a party to the TTIP Agreement and the following suggestions are offered: “The Agreement should be applied in such a way that members or candidate countries of Customs Union are included or the provisions of Customs Union Agreement concluded which are against Turkey should be reassessed. If not included in TTIP, Turkey should try to find a way to sign alternative free trade agreements. Apart from these, it should adopt a growth model which will ensure economic growth without increasing the foreign trade deficit. During this process, it is crucial to improve the investment environment and provide adequate incentives, remove bureaucratic barriers and create an intellectual environment which will develop R&D and innovation culture especially in the main industrial areas. The incentive and trade measures to be taken in this regard should be designed in such a way that makes domestic production is more attractive than imports.” What Steps should be Taken in Turkey? > It should be ensured that the Agreement will involve members or candidate countries of Customs Union > The provisions of Customs Union Agreement which are against Turkey should be reviewed. > If not involved in TTIP, Turkey should try to find a way to sign alternative free trade agreements. > In the long term, an economic model which will ensure economic growth without increasing the foreign trade deficit should be adopted. > The investment environment in main industrial areas should be improved and the bureaucratic barriers should be removed > An intellectual environment which may develop an R&D and innovation culture should be created > The incentive and trade measures to be taken should be designed in such a way that domestic production will be more attractive.