Aegean Exporters Warn on EU Green Deal

Warning From Aegean Exporters on EU Green Deal The declaration of the commercial dimension of the Green Deal Industrial Plan announced by the European Commission on 1 February 2023 at the European Parliament International Trade Committee (INTA) meeting held on 1 March 2023 was among the most significant developments. According to Jak Eskinazi, Coordinator President of Aegean Exporters Unions, the largest industrial transformation ever initiated by the EU is signalling that it could result in a trade war. Aegean Exporters Unions Coordinator President Jak Eskinazi stated, "European Commission President Ursula von der Leyen first unveiled the Green Deal Industrial Plan at Davos this year. In recent days, the same subject was also negotiated between US President Biden and von der Leyen. We believe that Turkish exporters, who have long been struggling with access to financing and maintaining competitiveness due to the trade war between Washington and Beijing, export restrictions and protectionist measures, the coronavirus pandemic, the Ukraine-Russia war, inflation, energy crisis, recession, economic uncertainty, and climate crisis, will be severely affected by the EU Green Deal. The most important matters for exporters are the Ecolabel, Digital Product Passport, and Carbon Border Adjustment Mechanism (CBAM). The European Green Deal Industrial Plan prepared within this scope deepens our concerns further," he said.

The European Union is protecting itself with the Green Deal Industrial Plan

Chairman Eskinazi stated, "The European continent, Turkey's largest export and import partner, accounts for a total of 48% of our exports and we have 109 billion dollars in exports. We also carry out approximately 25% of our imports from the EU. With the Green Deal, the European Union is transforming the supply chain from top to bottom, and with the Green Deal Industrial Plan, it is protecting itself against the global financing crisis and creating its own internal dynamics. The Green Deal framework allows for a range of exemptions for EU countries such as increased support, simplified procedures, diversification, expansion and extension of processes," he expressed.

We are facing a mechanism that will weaken our competitiveness

Jak Eskinazi emphasized that this move by the EU will not only make exporting more difficult but will also increase import costs, and thus bring protectionist measures around the world. "In the end, both in the markets where we export and in the markets where we source semi-finished products for imports, we will either have to source from the EU or the countries from which we source semi-finished products will also need to meet the conditions of the EU Green Deal. In short, we are facing a mechanism that will weaken our competitiveness. While our Customs Union agreement, which has long been awaiting updates, has been seriously damaged by barriers placed in the way of bilateral trade, clustering of trade wars and protectionist measures, it is necessary to develop new strategies at the state level and ensure alignment with EU standards so that the Green Deal Industrial Plan does not turn into a new trade war."  

Legislative changes must be made

Eskinazi continued his remarks as follows; "We must urgently sit down at the table to implement an updated model to transform the Customs Union between Turkey and the EU into a Free Trade Agreement. We must also ensure controls in the countries from which we import. Within the framework of the EU Green Deal, legislative changes need to be made. Starting primarily with carbon-intensive sectors that need urgent transformation, other sectors that have a high share in our trade with the EU need to be supported. We have written a letter informing the Ministry of Trade of our views on the matter and we hope that an updated support package regarding sustainability will be announced. We need arrangements that comply with the EU Green Deal."  

The following topics were addressed at the meeting held on 1 March 2023 regarding the commercial dimension of the Green Deal Industrial Plan:

The general objective of the Green Deal Industrial Plan is to make the EU a more competitive and climate-neutral economy, In this direction, a large number of policy instruments are needed and trade policy is one of the four elements presented within the Plan scope (the others being: regulatory framework, access to financing and skills), Trade policy increases efficiency, creates economies of scale, facilitates access to necessary raw materials, makes the EU more resilient by diversifying supply chains, supports domestic market development, and contributes to EU trading partners' transition to a climate-neutral economy, Within the scope of the Plan, with trade policy; (i) great importance is given to the establishment of a rule-based trading system, particularly through the World Trade Organization; (ii) active bilateral Free Trade Agreement (FTA) work will continue; (iii) in addition to FTAs, alternative cooperation mechanisms such as the establishment of a Trade and Technology Council, sustainable investment agreements and a critical raw materials club will be emphasized; (iv) the effective use of trade defence instruments and unilateral instruments such as tools to combat economic coercion against unfair trade policies applied by third countries to protect the EU's own commercial and economic interests have been stated. Representatives who spoke in Parliament generally expressed that having a climate-neutral and competitive economy would be possible through ambitious, open and, where necessary, active trade policy capable of combating unfair competition and trade diversification; in this context, it is gratifying that the Green Deal Industrial Plan includes the trade dimension; however, a rule-based system within the WTO and participation of third countries in policies in this direction were stated to be of critical importance in order to achieve the desired objectives.