Turkish business says time is needed to adapt to EU laws

By Andrew Beatty

Date: 22/06/06

Turkey's leading business organisation has urged the European Commission and EU member states to give his country's firms adequate transition periods to apply Union laws on competition and public procurement.

According to Bahadir Kaleagasi, the head of the Brussels office of TUSIAD, the Turkish industry and business association, Turkish firms are well placed to absorb reforms, but will need to be given time to adapt to the changes.

"Turkey is an old free- market economy," he said, "the capacity of the business community to adapt is there."

Kaleagasi's comments come as the country tries to implement conditions set by the EU to open talks in two areas that are likely to be the subject of tough negotiations.

In the area of public procurement, four benchmarks have been set out for Turkey and three for Croatia before talks can begin.

One of the main conditions for Turkey will be to scrap laws that give Turkish firms a competitive advantage over foreign firms.

Major sectors such as energy, water, telecoms, transport and postal services could be affected.

Under current Turkish legislation, domestic contractors can charge up to 15% more than foreign competitors for projects without losing competitive edge.

Experts say this often forces foreign firms to register as a Turkish company in order to have a chance of winning contracts.

Ankara will also be asked to justify its use of closed systems of tendering which allow deals to be negotiated in private.

Although this so-called negotiated process is used elsewhere, experts say it is overused in Turkey.

Figures from Turkey's public procurement auth-ority for 2004 show that at least 17,805 contracts were awarded by negotiated procedure, including 283 for large-scale projects.

Peder Blomberg, a specialist in public procurement for Sygma, a joint initiative between the EU and the Organisation for Economic Co-operation and Development (OECD), said that more open systems of procurement would need to be used more frequently.

"The problem is the degree of transparency...[negotiated procedures] remain a problem, but it is gradually better than before."

Turkey is also being asked to develop its assessments of the social and environmental impact of projects and to develop online tendering. Kaleagasi admitted that reforms to Turkey's public procurement rules may need to be re-examined.

"Transition periods are needed," Blomberg said, "as long as they are justified and temporary."

Adhering to EU competition rules is also likely to be a difficult and lengthy process.

Turkey's iron and steel industries, worth around 10% of gross national product, are likely to be in the firing line as Turkey develops administrative capacity to boost state- aid rules.

Kaleagasi admitted that the negotiation on competition will be "one of the most difficult", as major administrative reforms were needed in Turkey. To ease the process he urged the EU not only to negotiate transition periods, but also to explain the decisions fully to avoid alienating ordinary Turks.

Earlier this month, Turkey provisionally closed negotiations on science and research, areas which have little in the way of EU law.

Both Turkish diplomats and their Croatian counterparts hope to open talks on education and culture shortly.

Article reports that Turkey's leading business organisation, te Turkish industry and business association (TUSIAD), urged the European Commission and EU Member States to give the country's firms adequate transition periods to apply Union laws on competition and public procurement.