Statements by U.S. Officials

Deputy Secretary of Commerce David Sampson Interview with CNBC-e

Istanbul,  June 7, 2007

CNBC-e: Welcome to our program and welcome to Turkey.

DS Sampson: Thank you very much.

CNBC-e: I would like to begin with the possible effects of a Turkish operation into Northern Iraq. What would be the effect of such an operation on the economic ties between Turkey and the US?

DS Sampson: First of all, I need to say that that area is not part of my portfolio.  I think that the US State Department Spokesman, yesterday, Sean McCormack, went into this at very great length.  So, I think I’d refer your viewers to those definitive statements by the State Department yesterday. The United States and Turkey have a shared interest in combating terrorism. We understand that terrorism is a threat to economies; we both have a very strong interest in making sure that borders are secure; we have a shared interest in making sure that Iraq is stable; that it is a country that can govern itself and sustain itself. The United States is very aggressively working to address and to make sure that radical groups and terrorist groups within Iraq are not able to harm the people of Iraq.  Nor do we want to see those groups causing problems here in Turkey.  Clearly, this is an area of great concern for both Turkey and the United States.

CNBC-e: We saw low economic activity between Turkey and the United States after the refused bill. So, can you see such [inaudible] of economic ties after that possible operation?

DS Sampson: I’m not going to speculate on any possible operations. I think we’ve made it very clear that we shouldn’t do anything that would further destabilize Iraq.  And again, I would refer those kinds of questions back to the Embassy here, or the State Department. That’s outside of my portfolio, which is the economy.  But I would say that 2006 was a very good year for US economic relationships with Turkey. Our trade grew significantly last year. When we look at the first quarter of this year, our trade is on a pace to beat the record levels of last year.  I think as long as we focus on the basic business environment conditions; and as long we focus on removing market access barriers; as long as we focus on addressing intellectual property concerns; working together, if we are able to address transparency in the judicial process, which is always a concern in the US [inaudible]; then, yes, I think that we’re on a very good trajectory for increased trade and investment between Turkey and the United States.  I would also say, not only are we interested in promoting US investment in Turkey, but at the same time, we want to attract Turkish investment in the United States. The US is open for business and we want Turkish investors to be able to come and invest and do business in the United States.

CNBC-e: You talked about working together. There will be elections in Turkey. After the elections, what should the new government do in order to increase the economic ties with the United States?

DS Sampson: Turkey has been a friend and ally now for over 80 years.  We’ve had a very good working relationship with previous governments; we’ve had a good working relationship with this government; and I think that we’ll have a good working relationship with whatever government emerges out of the elections. I think that it’s important for Turkey to continue to build on the great momentum that has been generated over the last five or six years.  With its economic reforms that Turkey has pursued and implemented over the last five or six years, Turkey has arguably made more economic progress than any country in the world.  So, I think that our top priority would be to continue to engage Turkey, to build on that momentum and continue the [inaudible] of those reforms, so that Turkey can continue to lead the world in its sustained [inaudible], in the growth of its GDP; to have inflation at a low and manageable level; and to create an open business environment where people can come here and trade and invest.

CNBC-e: So, for the protection of the economic stability in Turkey, how should be the solution of the elections?  Should it be one party, or a coalition government?

DS Sampson: The United States doesn’t get involved in the internal, partisan, political discussions that are underway here.  Our interest is the ballot box.  We think that as long as democratic institutions and constitutional influence are pursued, that’s in Turkey’s long-term best interest.  But, certainly, the United States is not going to get involved in picking winners or losers, or expressing preferences in terms of internal, Turkish politics. Our concern is democratic institutions, the integrity of the democratic process and strong constitutional [inaudible].

CNBC-e: You said, last year [inaudible] trade [inaudible] was very good. What may be the target of this year’s trade [inaudible] between two countries?

DS Sampson: Last year, bilateral trade between the US and Turkey increased 17 percent, to 11.1 billion dollars.  As I mentioned earlier, through the first quarter of this fiscal year, our trade is already up 23 per cent.  So I think that that’s a very good growth trajectory. One of the things that I would point out, of how important this market is to us, I mentioned in my remarks earlier in the conference: Turkey is a larger market for US exports than is Russia.  And so that gives you some relative [inaudible] of how significant our economic relationship is with Turkey.

CNBC-e: But, at this point, I would like to say something.  Exporters in Turkey complained about the overvalued Turkish Lira, because of IMF’s [inaudible] program in Turkey. Do you think this program decreases the export potential of Turkey?

DS Sampson: One of the basic rules of being a Deputy Secretary of Commerce, is that I don’t comment on currency values, whether it’s the value of the dollar or whether it’s the value of the lira. Those are matters for the US Treasury Department and the appropriate officials here.  So I’m just not going to comment on the currency values.

CNBC-e: OK. Which types of products in Turkey have more export potential to the United States?

DS Sampson: Well, I hope that we gain a better idea of that out of the innovation conference here today. But clearly, I think technology, technology-based areas. Currently, there is heavy emphasis on the export of textiles. I know that’s important to the Turkish economic base. But I think that we’re looking, in our conversations here this week, at how to move up the value chain. What are the opportunities to engage in increased export relationships in higher value-added items? And I think the technology area is certainly one that’s ripe for growth.

CNBC-e: Of course, on the trade side [inaudible]. We couldn’t see as much investments from the United States, as from the European Union. Was it because of the refused bill? Do you think so? And what will you say about the future of American investment in Turkey?

DS Sampson: Well, foreign investment in 2006 in Turkey was up 73 per cent, so that’s a very healthy growth rate.  Nearly 20 billion dollars in the last year.  Currently, US foreign direct investment in Turkey has been largely concentrated in the financial services sector. We have a couple of very significant US-based companies that [inaudible] very significant investments here in Turkey.  I think GE Capital, Citigroup.  I’m going to be visiting a Citigroup site later today.  And so that’s an area where it’s been very strong, in foreign direct investment.  I think that as Turkey continues to address its fundamental business environment conditions and focuses on streamlining administrative processes, reduces market access barriers, continues to focus on the transparency of the judicial system here, there will be opportunities for increased investment, and so-called Greenfield development projects, which I know is something that Turkey wants to be more successful in attracting that kind of investment.

CNBC-e: So [inaudible] attracting Greenfield investments to Turkey?

DS Sampson: As I’m here this week, and talk to more US business leaders who are here, I hope to be able to gain a better understanding of exactly what the prospects are, and that will help me go back to the United States and engage in a more informed dialogue with US companies about the opportunities that are here.  As we mentioned, I think before the interview began, this is my first visit to Turkey, and so I’m very much here in a learning mode.  I’m doing a lot of listening, both to Turkish government officials, as well as Turkish business leaders.  Because if you’re going to invest, it takes a partnership. There’s usually a Turkish business leader on this side of the ocean that’s going to be a recipient of that investment.  So I’m talking to a lot of Turkish business leaders, to try understand what the potential is for Greenfield types of [inaudible] and other investments.

CNBC-e: So will we see upward [inaudible] in the trend between the two countries after your visit?

DS Sampson: I think there’s every reason to be optimistic.  When you look at 2006 numbers, and the improvement in bi-lateral trade, the increase in foreign direct investment, I think there is every reason to believe that we are going to see an even better performance in 2007.

CNBC-e: Thank you very much.

DS Sampson: Thank you very much.  Pleasure to be with you.