Potential effects of the T-TIP on Turkey's motor vehicles and parts sector

Abstract

The aim of this article is to quantify the possible effects of a potential T-TIP between the US and the EU on production and exports of Turkey’s motor vehicles and parts sector. A partial equilibrium model is used to this end under two scenarios, the first one assuming only T-TIP, whereas the second one supposing a simultaneous free trade agreement between the US and Turkey. The simulations are based on the reductions in tariffs and non-tariff barriers between the T-TIP partners in the first scenario, and between the US and Turkey, as well in the second scenario. The simulation results indicate that the prospective effects on the sector’s production and exports differ significantly depending on different levels of integration. The results also reflect decreasing net welfare for Turkey and that a free trade agreement with the United States does not offer a significant market access potential for Turkey because of its production structure.

Keywords

• t-tip
• turkey
• gsim
• motor vehicles and parts sector