Union of Chambers and Commodity Exchanges of Turkey

TOBB President made evaluations about the new process of economy and trade at the Eskişehir Chamber of Industry’s Industry Congress hosted by Eskişehir Chamber of Industry President Celalettin Kesikbaş. Hisarcıklıoğlu stated that if they use this process correctly, they can pass ahead of other countries that are competitors especially in the EU market, “But if the necessary transformations are not provided, we may lose the advantages of the Customs Union between us and the EU. Research shows that Turkey will be the third country most adversely affected after China and Russia in the implementation of carbon at the border, which will be fully implemented in 2026. Especially in the aluminum, cement and iron and steel sectors, it is expected that this effect will be seen more.”

- Carbon footprint calculation

Hisarcıklıoğlu said that last month, the think tank TEPAV conducted a survey of companies and said: “Unfortunately, the results are not very positive. Currently, only 1 in 4 companies can calculate their carbon footprint. Most companies do not have a decarbonization policy. If hydrocarbon-intensive companies are widespread, there are no plans to replace existing energy sources. The vast majority of firms appear to have very limited knowledge of the Green Deal and Carbon Regulation at the Border. And it is determined that they do not have comprehensive knowledge of the Emission Trading System (ETS) and even doubt the feasibility of ETS in Turkey. Therefore, both our companies and the relevant ministries need to take these issues into consideration more and think about how we can be involved in this transformation process.

For this reason, we will soon launch a portal where the Turkish business world can calculate its carbon footprint.

The Russian-Ukrainian war has also brought both the issue of energy security and food security to the forefront.

It showed not only Europe's dependence on Russia for energy, but also the dependence of the world food system on Russia and Ukraine.

30 percent of global wheat production and 60 percent of sunflower oil production originate from Ukraine and Russia.

Due to the war, almost half of Ukraine's agricultural land could not be cultivated this year.

The 25 million tons of grain harvested remained there due to the Russian blockade in Ukrainian ports and was left to rot. The Global Food Price Index increased by 30 percent in April 2022 compared to last year.

In fact, while the Russian-Ukrainian war brings the issue of energy security to the forefront, it also accelerates the energy transition. This puts the European Green Deal, and therefore its importance for Turkey, on an even more solid footing. The “Re-Power-EU” plan, which aims to reduce the EU's dependence on energy raw materials from Russia, aims to diversify fossil fuel source countries for Europe in the short term and energy efficiency and renewable energy in the medium to long term.

For example, according to the plan, the EU plans to meet half of its energy needs from renewable energy by 2030.

It is considered that the obligation to install rooftop solar panels in commercial and public buildings until 2025 and in new houses until 2029 will be introduced. In addition, the Mediterranean Green Hydrogen Platform will be established and hydrogen imports will be met from here. This will bring the opportunity to make new investments and partnerships for our country's industry.

These decisions, which were taken to reduce dependence on Russia in energy, are also supported by the private sector.

Several global firms, including Microsoft and Unilever, argue that the Green Deal must be strengthened to reduce dependence on Russia. In short, we need to be aware of the new world that is being born on our doorstep.”

- We are proud of Eskişehir's industrial achievements

Hisarcıklıoğlu mentioned that the agenda of the country and the world remained intense, but mostly focused on the short term, “First the pandemic, then supply and supply problems and now the Russia-Ukraine war are occupying the agenda. But as industrialists, we need to distinguish between the superfluous and the important. Eskişehir Industrial Congress also offers us an important opportunity to get out of the near-sighted perspective and focus on the future. This was already the case for Eskişehir, the city of industry and technology in Western Anatolia. With its 3 OIZs and 13 companies among Turkey's top 500 industrial enterprises, we are proud of Eskişehir's industrial successes. Here, 849 different industrial products can be produced. In terms of production capacity, Eskişehir ranks first in Turkey in 54 products and among the top 3 provinces in 176 products. And in Eskişehir, now is the time to talk about the future of the industry.”

Explaining that the concept of “off-shoring” was discussed from the 1980s to the 2010s, the TOBB President reported that supply chains spread from developed countries to developing countries. Hisarcıklıoğlu said “China has gained the most from this” and said: “We have also benefited a lot from this trend in the medium-tech manufacturing industry such as automotive and white goods. We have transformed and developed both our industry and our exports. Then, from the 2010s, came the concept of “re-shoring”. As the weight of labor power waned, and technology and human capital came to the fore, supply chains began to return to their homeland.”

- Warning for EU and Customs Union not covering digital economy

“Also with the pandemic, the efficiency of long supply chains has decreased. And finally, with the Russian-Ukrainian war, it became clear that it was no longer possible for supply chains to spread freely all over the world, as they had been in the past 40 years. Thus, a new concept appeared in America: Friend-shoring. In other words, supply chains are now wanted to be in trusted countries.

First the U.S. and now the European countries say that our goal is no longer just free trade, but safe trade. They will implement these policies through bilateral and multilateral trade agreements.

On issues such as the digital economy, data sharing, carbon pricing and climate change, they will improve their supply chains with countries that have the same approach. So if you want to stay in your supply chains, you have to follow the new rules. In fact, instead of passively following these rules, we need to take part in this table where the rules will be shaped. For example, our Customs Union with the EU unfortunately does not cover the digital economy. The European Union and the United States are working on a transatlantic data-sharing framework and will agree soon. Therefore, in the beginning age of “friend-shoring”, we need to be at the table where the rules will be determined. Otherwise, we can experience the same problem as the free trade agreements that we ignored when we entered the same customs union, and we can be left alone.”

- There are both threats and opportunities

Stating that the products to be imported into the EU markets with the Carbon Regulation at the border will be subject to an additional tax based on carbon footprint, Hisarcıklıoğlu said that then, along with sustainable product standards, carbon footprint, water footprint and waste management conditions will be examined. TOBB President Hisarcıklıoğlu said, “The details will be shaped until the end of 2022 and accordingly, a number of products will be completely prohibited from entering the EU markets. So the Customs Union will no longer work.

In the first stage, sustainable product standards will be introduced for sectors such as furniture, bedding, tires, detergents, paints, mineral oils, iron and steel and aluminum, especially for textiles, where our country has the highest foreign trade surplus. So the opportunities and the threats are there, and it's clear what to do.”

- The opportunity that comes with TOGG

Stating that the Green Deal process is a deep new opportunity area that will allow Turkey to imagine a common future together with European partners, Hisarcıklıoğlu said, “It is a sign that we need to stop dealing with the superfluous, focus on the important. It is a real framework of economic programs in the areas we need most, from industry to foreign policy. When we start to take steps in this direction, it will be seen that new and very wide, green financing opportunities will be opened before us in terms of access to external financing, which we feel the most lacking.”

Hisarcıklıoğlu stated that they seized a similar opportunity in Turkey's automobile project and said: “This project is more than just producing a car. It is the best industrial policy move implemented in Turkey in recent years. As you know, Automotive is one of the most important industrial sectors of Turkey. We produce both cars and their parts. We are also Europe's largest supplier in this field. On the other hand, being a passive element of the supply chain is also risky. Because rival countries can get in front of us and grab our place. We have already experienced a few of these in the past years.

So we had to be the leader of the supply chain and have our own producers. It was at this moment that a window of opportunity opened for entering the automotive sector, parceled out by old brands: electric and autonomous vehicles. Using this window of opportunity, the market capitalization of Tesla for 20 years has surpassed the sum of all the other automotive companies you know.

While the device we call the car was transforming, both the opportunity to enter the market for Turkey and the necessity of taking precautions in order not to leave our automotive supplier industry out of this transformation emerged. In order to evaluate this window of opportunity, we launched the TOGG initiative. For the first time, we brought together 5 diverse and large groups. For the first time, we are producing a car whose intellectual property rights belong entirely to our country.

For the first time, we are working with start-up companies in different fields and establishing our own supplier ecosystem. For the first time, we are reversing the brain drain in this area. By employing qualified employees and engineers, we also prevent them from going abroad. In summary, we are capturing technological and mental transformation with TOGG. We are completing the story that started in Eskişehir 60 years ago but remains unfinished. We are building more than a factory. We are building a smart, environmentally friendly production center and technology base. We contribute to the green and digital transformation process of our country and the mobility ecosystem. At the same time, we are creating a new supply chain and production system within our country. The first vehicle from our production facility in Bursa Gemlik leaves on October 29. Next year, we start to see TOGG on the roads.”

Following the meeting, awards were presented to industrialists who completed 30-40 and 50 years.