Examination of Witnesses (Questions 100-119)
CBI
1 APRIL 2008
Q100 Mr Weir: But if a company has
a local representative is there any evidence that that improves
their chance of getting something done quickly? Does it matter?
Does it matter with a joint partnership with a Turkish company?
Ms Shearman: It is clear that
familiarisation with the administrative and regulatory set-ups
is much easier if you do have a local representative, I think
there is no doubt about that; but the exact terms whether it has
to be working through a Turkish company or employing a local representative
to work on these issues for you is up to the individual company.
Mr Campkin: If I can just add,
I think what has been interesting in terms of our contacts with
our Turkish counterparts is that they recognise that the system
is slow and cumbersome and delays them as well. So I think there
is a commonality of interest in trying to ensure that legislative
procedures are speeded up. If what you are getting at is, is there
discrimination in the market place between foreign companies and
local companies I think the answer has to be in some cases there
is. There is a new law which the Turkish Government is contemplating
at the moment, updating their trade law, which is due to be taken
through to the Turkish Parliament, we believe some time this spring
and summer, which will be fairly substantive in terms of trying
to level some of the playing field. Our initial concern would
be even if it gets passed will it be implemented effectively because,
as Pauline was saying earlier, a lot of the problems are not with
the basic legislation but with the implementation.
Q101 Mr Weir: Does the CBI itself
provide any help or assistance to its members doing business in
Turkey either yourself or your Turkish equivalent, TUSIAD?
Mr Campkin: Yes, we do have contacts
with TUSIAD, both bilateral contacts in the context of discussions
at Business Europe where they are also a member. But Pauline deals
with, if you like, the desk issues in dealing with companies at
the sharp end.
Ms Shearman: We tend to deal with
the issues on an issue by issue basis in the sense that my trade
policy colleagues will be contacted by our member companies who
may have an issue on a given activity they have, say, in this
instance, in Turkey, and we will collate that information, consult
with other members and present that information to our Turkish
counterparts but also to committees such as your own, and any
other bodies that are relevant or looking at the market.
Q102 Mr Weir: You mentioned earlier
that one of the problems is the way that the law is perhaps interpreted
differently in other areas of Turkey. Are there areas which perhaps
have considerable foreign investment where it is a safer investment
opportunity, if you like, than other areas that perhaps are not
used to foreign investment? If that is something that comes up
with companies do you perhaps say to them, "Go to place A
rather than place B because the legal system is more used to dealing
with foreign companies and it may be quicker"? Does that
sort of thing come up?
Ms Shearman: We do not have that
amount of local knowledge, we tend to work directly with our counterparts
in the Foreign Office and UKTI based on the ground to advise on
those issues, and of course there are other organisations, such
as the Turkish Investment Agency, and so on, to explain the benefits
of various regions to potential investors.
Q103 Mr Bailey: When we were in Turkey
we had a meeting with the Chamber of Commerce and were very intrigued
by their set-up there, the compulsory registration, and the fact
that they seemed to enter into all sorts of activities which our
local Chambers do not do, almost as if it were a devolved industrial
policy. I am interested in your perspective on it. Are there any
particular advantages or disadvantages that that structure would
have that you see?
Mr Campkin: Organised business
around the world sets itself up in various forms. We in this country
have voluntary membership of organisations like the CBI and like
the Chamber movement and we live or die by the quality of the
service that we give to our members; we think that makes sense.
Germany and France have a different set-up. In terms of the specifics
of compulsory membership and that sort of activity it is very
difficult to judge from a UK perspective, but our inherent judgment
would be that business organisations are best constituted on a
voluntary basis and limit themselves to representing business
views. But there are different ways of looking at it and we acknowledge
that.
Q104 Mr Bailey: Can I move on to
UKTI? From your perspective do you think it is doing a good job?
Mr Campkin: Overall or in connection
with Turkey?
Q105 Mr Bailey: With Turkey.
Mr Campkin: I think what is important
with UKTI and the Turkish strategy is that it has recognised Turkey
has a potential for growth of UK exports and a growing business
relationship, and from that perspective it is doing a good job.
It has fed into the UK Government's strategy with some deliverables
which we would support, and the key thing is to ensure that UKTI
delivers on those commitments.
Q106 Mr Bailey: Do you think that
the recent increase in resources has benefited yourselves? Have
you seen any improvement in outcomes as a result of it?
Mr Campkin: I will pass that over
to Pauline, if I may.
Ms Shearman: As far as Turkey
is concerned we are aware that a programme of events around the
UK is being set up to explain the opportunities in Turkey to companies
at a regional level, and that is something we welcome, and we
have our CBI regional offices who we would be happy to notify
of these initiatives as well. So, yes, there has certainly been
a clear programme being set out as a result of the additional
funding as far as we are aware.
Q107 Mr Bailey: What would you say
that your members need from UKTI that perhaps they are not yet
getting, or needs to be developed?
Ms Shearman: We will have to see
how the road show develops and the level of take-up from companies
and so on, but I do think that if we are looking at the whole
energy security issue some kind of forum for looking at not only
energy security but other options such as climate change and so
on might be useful. Those may well be elements that are yet to
be rolled out from the strategy but clearly they would provide
a focal point as far as we are concerned for key areas of interest
to our members.
Q108 Mr Bailey: Have any of your
mid-corporate members benefited from the new High Growth Markets
Programme specialist?
Ms Shearman: I am not sure that
I can comment on that. Companies tend to go direct obviously to
UKTI or through FCO or through the Consulate General in Istanbul
to talk about their business issues; they tend to talk to us when
they have policy issues they would like us to raise, so on the
promotional side and take-up side it is rather difficult for us
to assess correctly.
Q109 Mr Bailey: Basically you have
had no feedback?
Ms Shearman: No. Not yet.
Q110 Mr Bailey: Turning now to Lord
Jones' proposed visit in September, how do you think he might
be involved and add value to it?
Mr Campkin: What tends to happen
is that officials will contact us in advance of the visit by the
Trade Minister and ask if we have, from the CBI perspective, specific
issues that we would like the minister to raise, and normally
we would feed into that process and would expect to do so in terms
of the Turkey visit. I am not aware that we have had a direct
contact yet.
Ms Shearman: No, we are aware
of it being imminent.
Q111 Mr Bailey: What sort of issues
would you like to raise, assuming you are given the opportunity?
Mr Campkin: I am sure that we
will be and what we will be saying is that it is important to
focus not just on the promotional work but also looking at some
of the difficult barriers and issues that we outlined in our written
evidence. We believe that the visit of the Trade Minister is an
important way of highlighting some of the difficulties and some
longstanding difficulties in the Turkish market, and at ministerial
level it is important that those issues and problems are discussed
and raised and that pressure is maintained on the Turkish Government
to either meet their commitments or reform in a way which will
grow our business relationship.
Ms Shearman: We would be particularly
looking at intellectual property rights as an issue and Turkey's
obligations under the customs union and where these are letting
down our joint business—
Q112 Chairman: I am having a little
difficulty hearing you.
Ms Shearman: We would be particularly
looking at where Turkey is failing to implement the obligations
of the customs union.
Chairman: Which we are in fact going
to turn to now. We are now going to a section of questions looking
at the customs union and EU membership. We will take the customs
union first, if we may, and take the EU membership second. They
are obviously going to overlap, I understand that.
Q113 Mr Weir: In your submission
it seems that the existing customs union is riddled with holes
and beset by issues and you quote many examples of this. With
all of these issues, why should a UK company invest in or trade
with Turkey? And how significant are these problems for trade
and investment?
Mr Campkin: I think one needs
to start by saying that commitments that are entered into by any
government, including the Government of Turkey, need to be adhered
to and it is very important that where those commitments are not
being met that they are highlighted, which is one of the reasons
why we presented this Committee with quite a detailed snapshot
of some of those problems. It does not necessarily mean that you
cannot find a way to deal with them or that you cannot continue
to do good business, but it is not optimal and I think it is important
to continually focus on issues that are problematic. To highlight
one issue as an example, if I may, I know this Committee always
gets very good input from the Scotch Whisky Association and rightly
so, but they have some very difficult issues that certainly contravene
Turkey's commitments under the customs union and under WTO obligations,
and I believe that the Scotch Whisky Association is leading a
European examination of whether there ought to be a trade barriers
complaint raised under the EU mechanisms on those very long running
and complex issues. So I think it is important to keep the pressure
up, to use all the avenues that are possible to ensure that Turkey
does meet its commitments under the customs union.
Q114 Chairman: I think it is fair
to tell you that as far as I recall I promised the Invest in Turkey
Organisation based in the Prime Minister's office that we would
send them a copy of your memorandum because they were a little
alarmed by some of the issues we raised with them and we invited
them to comment on some of the concerns you expressed in your
memorandum to us.
Mr Campkin: I am delighted to
hear it.
Chairman: We hope it will contribute
to that process of keeping up the pressure, of which you just
spoke.
Q115 Mr Weir: Do you see any improvement
recently in the Turkish attitude towards the customs union?
Mr Campkin: There has been some
improvement. In areas where some regulation has been deficient
or indeed in areas like financial services they have met some
of the requirements, but at the end of the day the important thing
is to continue to highlight where the problems exist and to continue
to push for compliance. Reform has come a long way in quite a
short period of time but it is not enough and that, I think, is
the flavour behind the memorandum which we gave to this Committee.
Q116 Mr Weir: Your memorandum does
not refer to work permit issues and labour market rigidity. Are
these problems that companies find in Turkey?
Mr Campkin: I will ask Pauline
to talk about whether she has had any issues relating to work
permits.
Ms Shearman: Basically the CBI
has not directly received any complaints about work permits. However,
in conversation with fellow members of the TBBC I have been made
aware of the fact that some of our major investors are experiencing
problems in that area; but I do not have the detail.
Mr Campkin: In terms of labour
market rigidity, certainly unemployment in Turkey is relatively
high. We also believe that there is quite a lot of disguised unemployment
in Turkey and certainly some of the rigidities within the labour
market we believe constrain the ability of companies to create
jobs effectively. So, yes, it is a problem but, as Pauline said
in relation to our work permits issue, it is not something that
we hear every day is a major burning issue for companies.
Q117 Mr Weir: You say that some of
these issues prevent the creation of jobs. What specific issues
and what are the main issues which prevent the creation of jobs
in Turkey?
Mr Campkin: If you are looking
at the ability to have a flexible labour force, to train people,
you have to have a pool of people who are trained and have the
basic skill sets which a company can then take and develop to
meet its own product or manufacturing requirements, and there
are some concerns that we have heard about some of the basic skill
sets in some areas, so that is an example of where that—
Q118 Mr Weir: But is that a problem
with the education and training system in Turkey rather than anything
else?
Mr Campkin: Yes. Companies do
say that it is sometimes difficult to get hold of suitably qualified
people and they do have to do quite a bit of training and education
themselves. Of course companies do that all over the world in
a range of circumstances, so you can deal with it, but at entry
level it can sometimes be a problem, yes.
Q119 Mr Weir: Do you think that the
customs union has delivered for UK businesses? And what are the
most serious problems that your members come up against in business
with Turkey?
Mr Campkin: The customs union
has certainly played a part in increasing levels of trade. Whether
it has reached its full potential I think is questionable, partly
I think because of some of the lack of follow-through in discussion.
Pauline may want to say something about the practical perspective,
but we would consider that the customs union has been an important
step forward but that reform needs to continue and indeed that
is one of the reasons why the accession process could be a useful
tool for delivering more reform in areas where we think it is
needed.
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