The Altai union: a potential customs union between Turkey, Central Asia and South Korea

Abstract

The gravity shift from the West to the East will shape the twenty first century. China, the old dragon has finally awakened and has become an important actor in world economy and politics while the global crisis of 2008 has slowed down many developed countries‟ economies including the U.S.A., Japan and Europe. China and India, the most populous nations, have the most dynamic and fastest growing economies and are the major beneficiaries of free trade in Asia. However, they are also dependent on natural resources, especially oil. While the rise of China and India dominates Asia, existing resources of labor, capital, natural resources and knowledge among Turkey and the Central Asian States can be combined to form an union that may become a serious competitor in the region of East Asia. This alliance, called here “the the Altai Union”, between Turkey, Azerbaijan, Kazakhstan, Kyrgyzstan, South Korea, Turkmenistan and Uzbekistan, is proposed as a potential union which is backed up by historical, social and cultural connections in Asia. Considering that the the Altai states‟ share in total exports of Turkey is only 3 percent and Turkey‟s share in total the Altai states‟ imports is just 0.80 percent, Turkey has a great trade potential with these states if opportunities are created. Regular steps should be taken beginning with a “Free Trade Area” proceeded by a “Customs Union” and “Common Market” leading to a “Full Economic Integration”. The aim of the study is to investigate through bilateral relations, multilateral trade volumes, trade agreements, and sectors whether there exists a competitive advantage among candidate countries. Major trade partners and customs tariffs are analyzed and discussed to determine potential trade benefits with and without tariffs between Turkey and the the Altai states. Estimations regarding the results of this analysis indicate that Turkey‟s export volume to the the Altai states, which is currently about four billion US$ currently, can reach thirty-six billion US$ in a period of ten years. Within this, the the Altai Union can become a significant regional power, and a world giant in many fields such as mineral fuels, technology, tourism, agriculture, textile, electronics, machinery, ship building, plastics, rubber, glass, minerals, elements, energy, chemicals, ceramics, iron and steel, vehicles and military. Finally, the the gravity model is used to determine trade potential in terms of export, import and trade volume by size of the economy, distance and common language. Empirical results prove that the increase in Central Asia‟s GDP, elimination of language barriers and a transportation cost reducing project backed up with a strong internet-based infrastructure will highly increase export volumes. Regarding every Altai state‟s different advantages, the conclusion reached was that, these states would become a giant economic power in the world with the efficient use of their competitive advantages and resources. This union would create a complete economic and political independence for these seven states after completing the proposed tasks.