Turkey focuses on green transition in trade

ANKARA

Turkey's Green Reconciliation Working Group, which was formed under the leadership of the Ministry of Commerce, will intensify its activities in order to remove barriers to foreign trade and ensure the green transformation of companies.

The steps to be taken towards the green transformation in Turkey are important not only in terms of preserving its integration with the European Union but also in terms of both protecting and improving the country's competitiveness in exports, its position in value chains, and its share in international direct investments.

The Customs Union will act as an important anchor to prepare Turkey for the green transformation in world trade and the economy. The free movement of goods provided in industrial products between Turkey and the EU, harmonization of technical legislation and common foundations in quality infrastructure will provide significant advantages compared to many third countries for the rapid adaptation of the country to the Green Deal.

While the fight against climate change has become an important part of not only the economic and trade policies of countries but also the visions of international companies, almost all of the leading international companies have made commitments to decarbonize their value chains.

The circular on the "Green Reconciliation Action Plan" was prepared by the Trade Ministry and ensures the forming of the "Green Reconciliation Working Group" to monitor the implementation of the action plan and make the necessary coordination possible.

Following the adoption of the directive, specialized working groups will be established according to the needs on sectoral/specific issues such as sustainable agriculture, steel, textiles, aluminum, cement and plastics/chemicals as well as horizontal areas such as the SKD mechanism, circular economy, green finance and clean energy, and green transportation activities will be carried out.

Afterwards, project proposals, financing and legislative needs will be determined.

- Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism (CBAM) requires reducing the carbon and environmental footprint of products to be exported.

With the mechanism, it is aimed to determine the import price for selected sectors, taking into account the carbon content of the goods. It has been recommended by the European Commission that the implementation be started as of Jan. 1, 2023, with a three-year non-obligatory transition period that will last until 2026.

In light of the data obtained during this period, the application is expected to come into full effect in 2026.

The cross-border carbon regulation was designed to be a parallel system to the EU Emissions Trading System (ETS), and selected sectors subject to the mechanism were determined as iron-steel, cement, aluminum, electricity and fertilizer in the first place.

According to experts, the regulation will create an additional cost in Turkish exports in selected sectors unless an ETS or any carbon pricing mechanism is established.

In addition, in line with sectoral strategies, the EU is expected to implement comprehensive legislative changes in the coming years.

Within the scope of sustainable product policies, it is envisaged to reduce the environmental footprint and improve circularity through the design of products to be supplied to the EU market, especially in the textile, electronic products, furniture, plastics, batteries, food, packaging and building materials sectors.

The new criteria aimed to be brought by the EU for the products will be presented to Turkey not only as the standards to be met in exports to the EU but also within the scope of harmonization with the technical legislation that allows the free movement of goods in the Customs Union. Changes to be implemented in these areas will affect exports in a much wider range than the SKD mechanism.

These steps taken by the EU aim to create a new economic growth model centered around sustainable production, consumption, investments, finance and sustainable living.