European Union and Turkish Footwear Industry: A Case of Top-Down Europeanization?

Textbook, 2014, 85 Pages

Business economics - Economic Policy

Excerpt

Table of Contents

Acknowledg

ements ... 5

Table of Contents ... 9

List of Tables and Figures ... 11

Chapter 1: Introduction ... 13

1.1

Scope and Delimitations ... 13

1.2 Theoretical

Framework

...

1.3 Methodology

...

Chapter 2A: Turkey and European Union ... 17

2A.1 Historical

Glimpse

...

2A.2 Negotiations'

Timeline

...

2A.3 Current

Status

...

Chapter 2B: Footwear Industry ... 25

2B.1

Turkey's Footwear Industry ... 25

2B.2

Turkey-EU Footwear Relations ... 27

2B.2.1

Directive 94/11/EC of European Parliament and Council of 23 March

1994

... 33

A. Article

One

...

Article Two ... 34

Article Three ... 34

D. Article

Four

...

E. Article

Five

...

F. Article

Six

...

2B.3

Other Regulations ... 36

2B.3.1 Respect of WTO rules and disciplines ... 36

2B.3.2 Combating counterfeiting and piracy

... 36

2B.3.3 Combating fraud

... 36

2B.3.4 Commitment to the Environment

... 37

2B.4

Related Chapters of Negotiations ... 37

2B.4.1 Free Movement of Goods ...

2B.4.2 Free Movement of Capital

... 38

2B.4.3 Enterprise and Industrial Policy

... 39

2B.4.4 Customs Union

... 40

Chapter 3: Legal and technical arrangements ... 43

3.1

Free Movement of Goods ... 43

3.2

Free Movement of Capital ... 50

3.3

Enterprise and Industrial Policy ... 54

3.4 Customs

Union

...

Chapter 4: Conclusion ... 63

4.1

Delineating State Approache(s) and Interdependency ... 64

4.2

National and International Competitiveness ... 67

4.3

NGOs as Incentives for the Footwear Industry ... 75

Bibliography ... 77

APPENDICES ... 83

A. Turkey's annual average export growth rate (2002-2006) ... 83

B. EU trade with main partners (2011) ... 84

C. Turkey's trade with main partners (2010) ... 85

D. Imports from Turkey to EU ... 86

E. Exports from EU to Turkey ... 87

List of Tables and Figures

Table 1: Chapters of Negotiations Time Table ... 21

Table 2: Footwear Exports of Turkey by Countries (Dollars) ... 26

Table 3: Extra-EU27 trade (million Euro ) ... 30

Table 4: Top 10 suppliers in textiles (million Euro) ... 31

Table 5: Top 10 markets in textiles (million Euro) ... 32

Table 6: Turkey's Action Plan for Free Movement of Goods ... 44

Table 7: Turkey's Legislative Arrangement for Free Movement of Goods ... 48

Table 8: Turkey's Action Plan for Free Movement of Capital ... 51

Table 9: Turkey's Legislative Arrangement for Free Movement of Capital ... 52

Table 10: Turkey's Action Plan for Enterprise and Industrial Policy ... 55

Table 11: Turkey's Legislative Arrangement for Enterprise and

Industrial Policy ... 55

Table 12: Turkey's Action Plan for Customs Union ... 57

Table 13: Turkey's Legislative Arrangement for Customs Union ... 58

Table 14: Manufacture of Textiles Production Index ... 70

Table 15: Manufacture of Textiles Employment Index ... 70

Table 16: Manufacture of Textiles Export Index ... 70

Table 17: Manufacture of Textiles Partial Productivity Index ... 71

Table 18: Imports of Footwear from Main Suppliers ... 73

Table 19: Exports of Footwear from Main Partners ... 74

Chapter 1: Introduction

Brazil is slowly taking over the world shoe market with its structured, organized, and

well-equipped shoe companies and industry. It manifests the diligence and

determination among Brazilians in trying to export their shoes by marking their own

brand and be competitive in the international economic arena.

Looking back in the case of Turkey, particularly Ankara, there is a sense of

disoriented business machinery and disorganized management within the footwear

industry. The widening gap between Brazilian and Turkish shoe industries continues to

and Turkish shoes still lack the marketability, standardization, and creativity compared

with its European counterparts.

This led the researcher to surmise, contemplate, and realize that it is imperative to

make a study on how the footwear industry may be one of the political cleavages in

becoming an advantage for Turkey's accession process towards the European Union.

Thus, it hypothesized whether Turkey's accession to the membership of European

Union is an opportunity (advantage) or constraint (disadvantage) for the footwear

industry in Turkey.

1.1

Scope and Delimitations

The temporal duration of this study is from early 2007 to present. The reason being is

because of some chapters of negotiations were closed and awaiting to be reopened in the

near future.

The area of the study is in the Turkey setting only, not necessarily related to relevant

countries in discussing some issues that are specifically in consonance to the their

values and political mindset.

The scope of the study covers only the Turkey's footwear industry, its relations with

the European market, and the related chapters of negotiations which will be tackled in

the main parts of this thesis.

Information provided were limited in scale that is why the results were not able to

reveal the holistic approach to the obtained data nor emphasized the importance of the

whole and the interdependence of its parts in scrutinizing the different interpretations

given by the presented statistical reports and data gathered.

It also affects in submitting a comprehensive and thorough discernment about the

study due to scarcity in time and confined or restricted within certain limits of assessing

some scholarly/academic sources.

1.2

Theoretical Framework

The conceptual framework of complex interdependence

by Robert Keohane and

Joseph Nye will be the theoretical basis or ground in assessing its locality within the

bounds of the discipline of International Relations. Human aspirations, communications,

and economics were the interdependent factors of continuity of change in world politics.

According to the authors, interdependence means mutual dependence, it refers to

situations characterized by reciprocal effects among countries in world politics. It

involves costs and benefits in an interdependent relationship. This somehow establishes

international regimes which refer to sets of governing arrangements that affect the

relationship of interdependence. It may be incorporated into interstate agreements or

treaties.

Moreover, there are three characteristics of complex interdependence: (1) Multiple

channels which feasibly connect societies via models of interstate, transgovernmental,

and transnational. (2) Absence of hierarchy among issues such as high politics (military,

security or foreign policy) and low politics (economics, cultural exchanges or

education). (3) Minor role of military force (this according to them is the use of force

often has costly effects on nonsecurity goals that popular opposition to prolonged

military conflicts is remarkably high).

Military force could, for instance, be irrelevant to resolving disagreements on

economic issue among members of an alliance, yet at the same time be tremendously

crucial for that alliance's political and military relations without rival bloc.

In this regard, there is a political process of complex interdependence which may

theoretically support the study. First, there should be linking strategies (making

initiative on the economic plans such as trade and commerce between Turkey and EU

under the footwear industry). Second, setting the agenda via the negotiation phases of

related chapters must be comprehensively done. Third, the condition on multinational

corporations as independent actors and instruments may be run the risk of manipulation

by governments.

Contacts between governmental bureaucracies charged with similar tasks may not

only alter their perspective but lead to transgovernmental coalitions on particular policy

questions. Lastly, is the role of international organizations as mediator in the negotiation

Keohane, Robert O. and Joseph Nye, Jr. Power and Interdependence: World Politics in Transition. 3

Ed. Longman: London, 2000.

process that may help set an international agenda, act as a catalyst for coalition-

formation, and arena for political competition.

Another important component of analysis in this study is the Europeanization. Based

on Tanja Borzel's definition of Europeanization, it is taken as a "process by which

domestic policy areas become increasingly subject to European policy-making".

Kerry

Howell explains it as, "In its most explicit form Europeanization is conceptualized as

the process of downloading European Union (EU) directives, regulations and

institutional structures to the domestic level."

In this formulation, members and

candidate states follow, copy, absorb and implement European policies, rules and

regulations. However, how much these rules and regulations are internalized or

accepted is important.

This study will try to look at all the legislative changes carried out since 2007 in the

footwear industry following the EU directives as part of the accession process and will

try to analyze whether this downloaded legislation is deemed beneficial or not for the

Turkish footwear industry, as well as trying to look into sectoral developments and

characteristics.

1.3

Methodology

In this section of the study, the researcher whose works is in a discipline or engages

in an inquiry used a body of practices, procedures, and rules. This is the portion wherein

the branch of logic that deals with the general principles of the formation of knowledge

would be considered and simply discussed.

Secondary data were made available from the internet sources which are official

representatives of concerned parties (Turkey and EU), some books, magazines,

periodicals and other informational sheet being provided. Much more of electronic

journals, books and even leaflets, also articles from online news were given the

importance for gathering the information needed. Especially those sources that are

recently published or displayed at the world wide web using the google search key.

Tanja Borzel, "Towards Convergence in Europe? Institutional Adaptation to Europeanization in

Germany and Spain", Journal of Common Market Studies, vol 39, no. 4, 1999, p. 579

Kerry Howell, Developing Conceptualizations of Europeanization and European Integration: Mixing

Methodologies. In: UNSPECIFIED, Sheffield, UK, 2002, p. 8 accessed on 07/09/2012.

The large amount of academic debate on the concept of Europeanization is not within the scope of this

survey. For a detailed analysis of the conceptualization of Europeanization, see: Kevin Featherstone

and Claudio Radaelli (eds), The Politics of Europeanization, Oxford University Press, New York, 2002;

and Paolo Graziano and Maarten P. Vink (eds), Europeanization: New Research Agendas, Palgrave

Macmillan, New York, 2008.

The research design of the present investigation primarily calls for the descriptive

study. With the help of an Online Public Access Catalog or OPAC, which is a

computerized online catalog of the materials held in a library, the library staff and the

public can usually access it at several computer terminals within the library.

It is a database searchable by library personnel whose institutions have a paid

subscription by the administration of the University. It is not typically searchable by the

general public unless their local library subscribes to the OCLC FirstSearch reference

service.

Another basis for the researcher's method used is the Research Forum's database

which was designed to provide researchers, policymakers, and practitioners easy access

to research projects related to welfare and income security; child/family issues; and

community/neighbourhood issues have brought a collection of data arranged for ease

and speed of search and retrieval.

According to the host, which is the EBSCO (Elton B. Steven Company) HOST

Research Database of the university, the information is current through 2000s when

Research Forum operations will be cease.

In addition, personal queries and interviews to first-hand parties such as internal and

external shoe makers, producers, technical workers, managers, designers, traders,

proprietors, non-governmental organizations, and members of the Ministry of Industry

and Trade, Ministry of Economics. They all provided anecdotal accounts that supported

the data gathered.

Chapter 2A: Turkey and European Union

This chapter will discuss the relations between Turkey and the European Union.

From EU's inception and Turkey's first application to the current status and situation of

the negotiation of the accession process.

2A.1 Historical

Glimpse

In an official statement by the Turkish government, they regard Europe as their

"common home that they have built by uniting around common norms, principles and

values ... Today, a full account of the history of Europe cannot be made without

analyzing the significant role that Turkey played in the Continent."

The Turkish-EU relations began with the application of Turkey for membership in

the former European Economic Community (EEC) in 1959. She was an associate

member of the Community, with the potential of becoming a full member at a future

date. In 1963, Ankara Agreement was established in order to fully acknowledge the

final goal of membership which constituted legal basis and arrangement. Ever since,

Turkey has been knocking on the EU's door and thus has been waiting as a candidate

country longer than any other outsider.

In April 1987, Turkey applied for full membership in the EU, but was rejected on the

grounds that Turkey was not ready for the membership. Turkey tried again at the

European Summit Meeting in Helsinki in December 1999. Finally, on October 3, 2005

the EU decided to begin the accession negotiations with Turkey under tough

conditions.

According to Yilmaz, one of the main arguments against Turkey's membership is the

claim that it represents cultural, religious, and mental "otherness". The argument that

European culture is based upon a Judeo-Christian identity and a heritage leading back to

Greek, and Roman civilization implicitly argues that Turkey has no place in the

European Union.

In addition to the disagreements is the demographic issue where Turkey is

comparable with the population size of Germany, where it has a young population (i.e.,

there is a high fertility rate compared with most of the European countries). It will also

Republic of Turkey, Ministry of Foreign Affairs, http://www.mfa.gov.tr/relations-between-turkey-and-

the-european-union.en.mfa

Yilmaz, Bahri. "Turkey's Membership in the EU: Realistic or Merely Wishful?" International Harvard

Review (6 January 2011). Accessed on 15 August 2012 at http://hir.harvard.edu/turkey-s-membership-

in-the-eu-realistic-or-merely-wishful?page=0,0

Ibid.

make a dominant figure in the decision making processes because Turkey holds a

substantial population which gives them more seats in the parliamentary and other

institutions of EU.

Another issue is when the EU immediately accepted the Greek-part-of-Cyprus and

did not wait for the outcome of proposed "United Cyrus Republic" under the Kofi

Annan plan in 2004. It exacerbated the conflicting tension in Turkey's accession

membership process particularly on the agreed `Customs Union' between them, which

Turkey did not comply on some of its provision by rejecting to open its ports to Greek

Cypriots' ships and planes. Therefore, EU forcefully closed most of the chapters in the

communautaire acquis in the negotiation table, which prolonged the length of the

accession process.

2A.2 Negotiations'

Timeline

The EU opened membership negotiations with Turkey on 3rd October 2005. This

was done by adopting a negotiating framework for this candidate country.

On 29 July

2005, the additional protocol extending the Ankara Agreement to new member states

that acceded to the EU in 2004 was concluded by exchange of letters among Turkey, the

EU Presidency and the Commission. An official declaration which was an integral part

of the letter and signature was also made. In the declaration, it was explicitly stated that

Turkey, by signing the "Additional Protocol," did not recognize the "Republic of

Cyprus" by any means.

The first stage of negotiations started immediately with the screening process.

Screening meetings were completed in October 2006. Following this, the Commission

prepared screening reports for each chapter. The first chapter to be negotiated (Chapter

25 - Science and Research), which opened and provisionally closed on 12 June 2006.

In November 2006, the European Union expressed concern over restrictions to the

free movement of goods, including restrictions on means of transport to which Turkey

had committed by signing the Additional Protocol to the Ankara Agreement.

With no solution found, the European Council decided on 14-15 December 2006 to

suspend negotiations on eight chapters relevant to Turkey's restrictions with regard to

the Republic of Cyprus:

The official website of the delegation of the European Union to Turkey, which was accessed on 15

August 2012 at http://www.avrupa.info.tr/en/turkey-the-eu/accession-negotioations/what-is-the-current-

status.html

Republic of Turkey, Ministry of Foreign Affairs, http://www.mfa.gov.tr/relations-between-turkey-and-

the-european-union.en.mfa

Chapter 1 Free movement of goods

Chapter 3 Right of establishment and freedom to provide services

Chapter 9 Financial services

Chapter 11 Agriculture and rural development

Chapter 13 Fisheries

Chapter 14 Transport policy

Chapter 29 Customs union

Chapter 30 External relations

It was therefore decided that no chapter would be provisionally closed until Turkey

fulfils its commitments under the additional protocol to the EU-Turkey association

agreement. However, this did not mean that the process of negotiations was blocked. In

a retelling public `official' website

, records show the key milestones in the Turkey-EU

relations which are bulleted below:

1959 Turkey applies for associate membership in the European Economic

Community.

1963 Association Agreement signed, acknowledging the final goal of

membership.

1964 Association Agreement comes into effect.

1970 Protocol signed providing a timetable for the abolition of tariffs and

quotas on goods.

1980 Freeze in relations following the 1980 Turkish coup d'état.

1983 Relations fully restored following elections.

1987 Turkey submits an application for full membership on 14 April.

1989 European Commission refuses to immediately begin accession

negotiations, citing Turkey's economic and political situation, poor

relations with Greece and their conflict with Cyprus, but overall

reaffirming eventual membership as the goal.

1993 The EU and Turkey Customs Union negotiations start.

1996 The Customs Union between Turkey and the EU takes effect on 1

January.

The official website of the delegation of the European Union to Turkey, which was accessed on 15

August 2012 at http://www.avrupa.info.tr/en/en/turkey-the-eu/history.html

1999 At the Helsinki Summit in December, the European Council gives

Turkey the status of candidate country for EU membership, following the

Commission's recommendation in its second Regular Report on Turkey.

2001 The European Council adopts the EU-Turkey Accession Partnership on 8

March, providing a road map for Turkey's EU accession process. On 19

March, the Turkish Government adopts the NPAA, the National

Programme for the Adoption of the Acquis (acquis means EU law),

reflecting the Accession Partnership. In addition, at the Copenhagen

Summit in September, the European Council Decides to Significantly

increase EU financial support through what is now called "pre-accession

instrument" (IPA).

2002 European Council states that "the EU would open negotiations with

Turkey 'without delay' if Turkey fulfills the Copenhagen criteria."

2004 Turkey and the Turkish Republic of Northern Cyprus back the Annan

Plan for Cyprus. European Union agrees to start negotiations. On 17

December, the European Council Decides to open membership talks with

Turkey.

2005 Accession Negotiations open on October 3rd. Opening of 6 chapters of

the Acquis: Right of Establishment & Freedom To Provide Services,

Company Law, Financial Services, Information Society & Media,

Statistics, and Financial Control.

2006 Chapter on Science & Research opened and closed. Continued dispute

over Cyprus prompts the EU to freeze talks on 8 chapters and state that

no chapters would be closed until a resolution is found.

2007 In November, the European Commission presented to the European

Council, the Regular Report concerning Turkey's accession negotiations.

Chapters on Enterprise & Industrial Policy, Health & Consumer

Protection, and Trans-European Networks are opened. Chapter on

Statistics & Financial Control opened, but the opening of the chapter on

Economic & Monetary Policy was blocked by French President Nicolas

Sarkozy.

2008 The European Commission published in November its yearly progress

report on Turkey's preparation for EU accession. Chapters on Company

Law, Intellectual Property Law, Free Movement of Capital, and

Information Society & Media are opened.

2009 Chapters on Taxation and Environment are opened.

2010 Chapter on Food Safety, Veterinary & Phytosanitary Policy is opened.

2012 Launch of the "Positive Agenda" with Turkey started.

2A.3 Current

Status

As of January 2007, the negotiations were back on the track on the chapters that were

not suspended. To date, 12 chapters have been under negotiations, as the table below

shows it.

In the following period, there are three chapters that may be opened provided that

Turkey fulfils the technical criteria. These chapters are Competition Policy, Public

Procurement, and Social Policy and Employment.

Table 1: Chapters of Negotiations Time Table

State of Play as of 1 July 2010.

Negotiations

Opened

Negotiations

Closed

1 - Free Movement of Goods

2 - Freedom of Movement of Workers

3 - Right of Est. And Freedom to Provide Services

4 - Free Movement of Capital

19 December 2008

5 - Public Procurement

6 - Company Law

17 June 2008

7 - Intellectual Property Rights

17 June 2008

8 - Competition Policy

9 - Financial Services

10 - Information Society And Media

19 December 2008

11 - Agriculture And Rural Development

12 - Food Safety, Veterinary & Phytosanoitary Policy

30 June 2010

13 Fisheries

14 - Transport Policy

15 - Energy

16 Taxation

30 June 2009

17 - Economic And Monetary Policy

18 Statistics

26 June 2007

19 - Social Policy And Employment

20 - Enterprise And Industrial Policy

29 March 2007

21 - Trans-European Networks

19 December 2007

22 - Regional Pol. & Coord. of Structural instr.

23 - Judiciary And Fundamental Rights

The official website of the delegation of the European Union to Turkey, which was accessed on 15

August 2012 at http://www.avrupa.info.tr/en/turkey-the-eu/accession-negotioations/what-is-the-current-

status.html

24 - Justice, Freedom And Security

25 - Science And Research

12 June 2006

26 - Education And Culture

27 Environment

21 December 2009

28 - And Consumer Health Protection

19 December 2007

29 - Customs Union

30 - External Relations

31 - Foreign, Security And Defence Policy

32 - Financial Control

26 June 2007

33 - Financial And Budgetary Provisions

34 Institutions

35 - Other Issues

In the document entitled "Enlargement Strategy and Main Challenges 2011-12," a

communiqué from the commission to the European Parliament and the Council (dated

12 October 2011)

stated that Turkey's accession process remains the most effective

framework for promoting EU-related reforms, developing dialogue on foreign and

security policy issues, strengthening economic competitiveness and diversifying supply

of energy sources. In the accession negotiations, it has regrettably not been possible to

open a new negotiating chapter for over a year.

However, in supporting the enlargement process, the EU will give financial support

to Turkey. Assistance is provided essentially under the Instrument for Pre-Accession

Assistance (IPA), under which total allocation over the period 2007-2013 is 11.6

billion. Around 10% of the available IPA funds will be allocated to multi-country

projects across Turkey.

Moreover, the EU and Turkey started to intensify their cooperation on visa issues

while the Commission entered into a dialogue with Turkey on visa, mobility, and

migration, in line with the Council conclusions of February 2011.

This process started delivering results on both the issuance of visas for Turkish

travellers and the tackling of irregular immigration to the EU and will help identify

concrete steps required from Turkey in view of a future visa liberalization. In this

context, an important step would be that Turkey take the necessary action for the swift

conclusion of the readmission agreement.

As in previous years, a number of key challenges are given particular attention for

Turkey's accession process.

COM(2011) 666 final; Brussels, 12.10.2011. "Enlargement Strategy and Main Chalenges 2011-2012".

Communication from the Commision to the European Parliament and the Council.

Increased focus on strengthening the rule of law and public administration

reform.

Ensuring freedom of expression in the media. (The legal framework does not yet

sufficiently safeguard freedom of expression. The high number of legal cases

and investigations against journalists and undue pressure on the media raise

serious concern.)

Achieving sustainable economic recovery and embracing Europe 2020.

Extending transport and energy networks. (The Commission supports Turkey

financially in the further development of its transport networks, in particular

concerning high speed rail connections and the modernization of port facilities.

At the same time, Turkey should be encouraged to deepen its gas market,

increasing liquidity, and contract flexibility. Such a process would lead to the

emergence of an 'energy hub', the existence of which would achieve greater

energy security.)

Chapter 2B: Footwear Industry

In this particular chapter, the discussion on the overall setting or situation of Tur-

key's footwear industry will take place including its relations with the EU's footwear

industry. In addition, four selected chapters of negotiations for Turkey's accession

process are presented, but detailed analyses are accounted in the subsequent chapter.

2B.1 Turkey's

Footwear

Industry

The footwear sector is a diverse industry which covers a wide variety of materials

(textile, plastics, rubber, and leather) and products from different types of men's,

women's, and children's footwear to more specialized products like snowboard boots

and protective footwear. This diversity of end products corresponds to a multitude of

industrial processes, enterprises, and market structures.

Turkey's footwear industry has developed at a rapid pace due to modern manufac-

turing processes, the availability of major quality raw materials, skilled workers, and

high design capacity. Today, the Turkish footwear industry has a strong position

among exporters of high quality of fashion goods. Another sign of positive develop-

ment is the increase in foreign investments in the sector.

The industry is the second in Europe after Italy.

The Turkish shoe sector had an

export value of US$ 441 millions while imports totaled in US$ 871 millions in the

year 2011. It is also important to note that the US$ 755 millions come from the Far

East particularly China.

Furthermore, the export figure of the leather sector for 2011

was about US$ 1,262 million.

Major markets for the Turkish made shoes are the

"Overview of the Footwear Industry." European Commission`s Enterprise and Industry. Accessed on

30 August

2010 at http://ec.europa.eu/enterprise/sectors/footwear/index_en.htm

"Leather Footwear and Jewellery (Footwear in Turkey)." Fibre2Fashion. Accessed on 15 August 2010

at http://www.fibre2fashion.com/industry-article/16/1565/footwear-in-turkey1.asp

"Turkish Footwear Industry: The Second in Europe after Italy." Business Turkey Today. Accessed on

15 August 2012 at http://www.businessturkeytoday.com/turkish-footwear-industry-second-in-europe-

after-italy.html

Seyirden, Esra "AyakkabÕ ithalatÕ `koruma' dinlemiyor (Shoe imports `protection' listening)" Ticaret

(Günlük Siyasi Ticari Gazete). Accessed on 30 August 2012 at

http://www.ticaretgazetesi.com.tr/haberler_ayakkabi_ithalati_koruma_dinlemiyor-l-1-sayfa_id-666-id-

110964

"Footwear in Turkey." Official document released by the Ministry of Economy of the Republic of

Turkey. Accessed on 30 August 2012 at

http://www.tcp.gov.tr/english/sectors/sectoringpdf/footwear_2012.pdf