Examination of Witnesses (Questions 120-139)
CBI
1 APRIL 2008
Q120 Mr Weir: You have mentioned
the accession process rather than accession itself. Do you think
that resolving these problems is dependent upon the process moving
forward; and do you think that resolving them would have a significant
economic benefit for the UK?
Mr Campkin: If you are asking
me about our views on EU accession—
Chairman: We will do EU accession later.
Q121 Mr Weir: Not your views on the
accession but whether you think the two things are linked.
Mr Campkin: I think anything that
creates circumstances and an atmosphere which promotes reform
in Turkey, which continues the process of dealing with some of
the rigidities of the market place, some of the barriers to trade
and investment is going to be welcomed by British business. So
in that sense, yes, and it is important to keep the pressure up,
as we said earlier.
Q122 Mr Weir: Do you think that if
these problems with the customs union are solved it will have
significant economic benefit for the UK—the second part
of the question?
Mr Campkin: Yes. Again, if you
take the Scotch Whisky example they would say that it is millions
of pounds worth of business at stake, and we could also point
to other sectors as well; so, yes.
Ms Shearman: I think it is the
message that it sends as well that is very important because I
think quite a few companies are watching those that are already
there to see what the outcomes are before looking at the opportunities
themselves.
Q123 Mr Weir: What can be done to
ensure that Turkey adheres to its customs union commitments? Is
it a case of keep on dangling the carrot of eventual accession
or is there anything else that can be done to encourage the Turkish
Government to adhere to these commitments of the customs union?
Mr Campkin: At the end of the
day I go back to the first answer that I gave when we went into
this particular part of the discussion, which is if a country
signs up to the commitments it should honour those commitments
and obligations and if it does not then ways should be found to
ensure that the pressure is brought to bear to make sure that
they do. It is about commitments and it is about level playing
fields.
Q124 Mr Weir: Do you think it should
be the UK Government or the European Union that should be acting
to ensure compliance with the customs union?
Mr Campkin: I think both the European
Commission and Member States should be taking all avenues possible
to ensure that obligations are met.
Q125 Mr Weir: So both. So do you
think there would be any greater success then through a bilateral
UK-Turkey arrangement or an EU-Turkey arrangement?
Mr Campkin: I am not sure whether
I understand the thrust of the question.
Q126 Mr Weir: I suppose another way
of asking is, is this all dependent on progress in the EU negotiations?
Is that the real stumbling block to Turkey sorting its problems
with the customs union?
Mr Campkin: In my view no; it
has signed up to a customs union, it has made some commitments,
a lot of which it honours but some of which it does not, and that
is where we are at the moment. We have to point out, as we have
in our evidence to this Committee, as we hope Lord Jones will
do when he goes on his bilateral visit, as we hope Commissioner
Mandelson will do whenever he talks to the Turks, that there are
issues that need to be addressed, and there are ways of doing
that—I mentioned the Scotch Whisky trade barriers regulation
proposal, which we expect to see developing over the coming months—and
that is the way to ensure that some light is shed on where Turkey
has failed to live up to its commitments.
Chairman: We will move now to the question
of EU membership itself. We have heard conflicting views, and
I think the Committee would agree that the consensus among Turkish
business was that the process of negotiation was very important
to enable Turkey to continue its reforms. We did hear some contrary
views but that was the overall consensus. So what about membership?
Tony Wright.
Q127 Mr Wright: What we found generally
in Turkey was that the vast majority if not all of the businesses
put up a strong case for the reasons why they required EU membership,
and indeed your equivalent in Turkey, TUSIAD, were very strongly
supportive of accession. What is the attitude amongst your CBI
members towards Turkey's EU membership?
Mr Campkin: We do not take a view
on the merits of political membership of the EU—members
do not take a view on that. Where they do have a view, to follow
on from our earlier discussion, is that anything which can be
used to help reform in Turkey to create a better economic environment
in which to do business and to lock in the reform process and
take it forward makes sense. So we will make a judgment on that
basis and leave a political decision to the politicians.
Q128 Mr Wright: If there is not a
view on that particular issue then is there not a view with regard
to the benefits that we have seen in regard to migration from
the accession countries—certainly in regard to Poland, for
instance, and many of the eastern countries where we have seen
migration of workers coming across to fill the job vacancies.
In Turkey do your members see that as a positive contribution,
that we could actually add value to that, and certainly with the
new point system that is being suggested by the Government, in
line with what they do in Australia, is that perceived to be a
better method to try to capture the skills that may well be required
for the UK economy rather than just putting a cap on the levels
of migration with regard to an accession country like Turkey?
The question really is would your members see that Turkey would
add value in regard to the possibility of using some of these
skills?
Mr Campkin: If Turkey were to
become a member of the EU then the CBI would support free movement
in relation to Turkey, as we have done with the A8 and the A2.
However, as with the A2 we believe that it would be prudent to
assess quite carefully at the point of accession the impact of
free movement and to look at ways of addressing any concerns that
may arise at that time.
Q129 Mr Wright: So what you are saying
is really at that time—because we are some years away from
that at that time—it is probably prudent to be more selective
in terms of the freedom of movement in that particular rather
than saying that we can allow so many thousand to come through
and therefore the cap is put on that, and that certainly would
not be the best way forward, would it?
Mr Campkin: We do not necessarily
believe in caps; what I am saying is that at that moment of possible
accession, as with the A2, there would need to be a reflection
of the dynamics in play at the time and decisions would have to
be made about that. But we support the general principle that
within the EU Member States there should be freedom of movement
of people.
Q130 Chairman: We heard when we were
in Turkey quite a lot of optimism about continuing high levels
of growth in the Turkish economy, which may or may not be well
founded, but the current rates of growth are really quite high.
We were also told about the value to the EU of having a relatively
young economy joining it when the EU's economies are largely ageing
economies. We were told that the earliest date for membership
that anyone was talking about was 2015—and that is an early
date—and we heard from our interlocutors in Turkey a willingness
to think about a 10-year transition period for migration issues
over and above that, means that we are looking at an earliest
date of 2025 for an economy which might be significantly more
vibrant than it is now and therefore where people are much more
reluctant to leave. What is your comment on that analysis?
Mr Campkin: Certainly—and
I will ask Pauline to pick up some of the dynamics of the Turkish
economy—it does seem to us—and it is the reason why
UKTI has identified it as a growth market—that the dynamics
are very positive, as you rightly said, Chairman. There is a growing
youthful make-up in the economy; the way in which growth rates
seem to be locked in and you can plot those quite closely to the
reform process is encouraging; and we would certainly hope that
with further reform and with continued growth those opportunities
will continue to grow. I cannot really comment on the detail of
transition arrangements and people.
Q131 Chairman: No, but your common
sense judgment is that a vibrant, growing economy, which Turkey
is becoming—or has become—with 17 years to membership—if
it is 17 years—would mean that the risk of very high levels
of immigration—which must concern the Germans, for example—will
be significantly reduced?
Mr Campkin: I think that has to
be right in principle. If you look at creating greater opportunities
in any one country people will tend to want to stay at home rather
than travel long distances. The balance of factors is different.
Ms Shearman: I think a lot of
that will depend on the education developments within Turkey and
the training made available and the scope of that availability
to all sections of the population, including male and female.
Q132 Chairman: Thank you for those
comments. I think you have answered this question implicitly in
several of your earlier answers, but if you want to give me a
summary answer of where do you think the most urgent reforms are
needed in the Turkish economy?
Mr Campkin: For me and from the
view that I have from our members the most important thing is
to ensure that laws that are enacted are implemented fairly and
uniformly. That is a fundamental issue for business and absolutely
vital for us. In one sense a lot of the other problems flow from
that, whether that is intellectual property, whether it is in
relation to customs procedures and so on and so on.
Ms Shearman: There are a number
of issues that we have submitted in our written evidence.
Q133 Chairman: Clearly and I have
it in front of me.
Ms Shearman: One of the most important—we
have mentioned bureaucracy and possibly issues relating to the
informal economy and how to reduce that—I happen to think
that attitude to foreign investment is extremely important in
Turkey and one has to ask whether some of the issues affecting
UK companies are as a result of local interests being protected.
So, again, impartiality and regulation should improve those issues.
Q134 Chairman: That leads me on to
the next question I want to ask, about changes in investment law
and the progress of privatisation. To take a specific, the recent
constitutional court decision, which Mike Weir referred to in
one of his questions, appears to end the rights of foreign investors
to own property. What view does the CBI take of that specific
one?
Mr Campkin: I cannot give you
a judgment on that at the moment, Chairman, but would certainly
be happy to provide additional written information, if that would
be helpful.
Q135 Chairman: That would be helpful.
We visited the privatisation authority when we were there and
were taken through the process by which privatisations are conducted
and the rapidly accelerating pace of privatisation in Turkey—and
most recently the Lottery has come up for grabs. What about referral
deals to the courts? BAT has seen its acquisition of Tekel referred
to the courts, for example. Is that a matter that concerns investors
or do they see it as being part of the process of doing business
in Turkey?
Mr Campkin: I think it is variable
and that is part of the problem; there is no consistency of application.
The BAT issue is of concern and has been raised with us; but,
again, it is a question of looking at the implementation of effective
legal reforms which say that once you have a law it is implemented
uniformly across the country and done so fairly, and a lot of
the issues like that one do have a very strong element of unfairness
within them and could be rooted in ways of restricting access
to Turkey for UK businesses.
Q136 Chairman: This Committee has
always taken an interest in the government-to-government relations
of foreign trade matters and we have seen JETCOs established for
a number of countries. Now there is a proposed government-to-government
forum for UK-Turkey relations. What do you think of that?
Mr Campkin: As you will know,
Chairman, I have been involved in a number of JETCOs and we have
spoken about this on other occasions.
Q137 Chairman: Indeed.
Mr Campkin: They are a useful
vehicle for highlighting some of the issues that we have been
talking about in this Committee today. The fact that they are
government-to-government I think gives them a different sort of
level—it gives them a different imprimatur—and the
JETCO process has had mixed results but nonetheless they have
delivered some results and that is important for business because
we are looking at ways to get deliverables.
Q138 Chairman: The level of commitment
that JETCO requires, theoretically at least, at the ministerial
level, is very considerable.
Mr Campkin: It is very considerable.
Q139 Chairman: So what is the difference
between a JETCO and a government-to-government forum? You may
not know and it is a question I will ask Digby Jones, I am sure,
when he comes before us.
Mr Campkin: I think that is really
a question for UKTI. What we would be looking for is whether whatever
processes or procedures are put in place that they actually deliver.
I do know that when the Turkish Prime Minister was here recently
some of the access issues and the court issues were raised with
him, so at the highest level there is that dialogue. JETCOs and
government-to-government contacts are important at, if you like,
working minister level as well.
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