The U.S. – Türkiye Market

1. An Introductory Perspective on the U.S. – Türkiye Market

The United States (“U.S.”) and the Republic of Türkiye (“Türkiye”) have maintained a strong economic relationship for more than a hundred years. Under the current socioeconomic environment, we see huge potential for growth. Overall bilateral trade between the nations has dramatically increased in the last decade and nearly reached $28 billion in 2021, with U.S. exports to Türkiye being approximately $11.9 billion and imports from Türkiye being approximately $15.9 billion.[1]

Aircraft, mineral fuels, iron and steel, machinery, optical and medical instruments are the top categories of U.S. exports to Türkiye. Machinery, vehicles, carpets and other textile coverings, precious metals and stone, plaster, and cement are the top export categories of Turkish goods to the U.S.[2] Türkiye also exports services to the U.S. including personal and business travel, transportation, insurance and business services, and telecommunication services.[3]

Pursuant to the latest data from Türkiye’s Central Bank, U.S. foreign direct investment (“FDI”) in Türkiye reached $4.3 billion in 2021.[4] On the other hand, Türkiye’s FDI in the U.S. reached $2.272 billion in 2021.[5] The industries with the largest portion of Turkish FDI projects in the U.S. include metals, consumer products, chemicals, business services, food & beverages, and communication.[6]

One of the largest industries in the U.S. with a high portion of Turkish FDI is metallurgical, with a 2020 value of $362.4 billion and an expectation to surpass $473.7 billion by 2031. This expectation is linked to the expansion of the U.S. construction sector due to the rise in public sector investments in non-residential buildings and structures.[7]

The consumer goods industry is another appealing sector to Turkish investors. The U.S. is the leader in this sector, which reached a$635 billion valuations in 2019 and includes capabilities related to market research, product innovation, manufacturing, and branding and marketing.[8] The chemical industry, one of the U.S.’ largest manufacturing industries, also attracts significant Turkish investment. The U.S. is home to more than 13,000 firms producing 70,000+ products and has strong product identification and quality, a highly educated workforce and world-class research centers.[9] The market for professional services is another appealing sector for investors who want to serve the large and dynamic so-called corporate America. In 2019, professional services firms in the U.S. generated $2 trillion in combined revenue.[10]

Supporting U.S. Jobs / 4.900 / Number of U.S.workers employed by U.S. affiliates of majority Turkish-owned firms in 2020.

Investing in Innovative R&D / $47.9 billion / Value of research and development (R&D) spending by U.S. affiliates of majority European-owned firms in 2020.

Expanding U.S. Exports / $ 37.0 million / Value of U.S. goods exports by majority Turkish-owned firms operating in the United States in 2020.[11]

It should come as no surprise that bilateral trade and investments between these two large economies require extensive due diligence, negotiations, and legal acumen. Bringing in trusted and qualified counsel with an understanding of both markets, legal systems and cultures will help reduce the time and cost of doing business, as well as increase efficiency in the decision-making process.

2. Why can the U.S. market provide an interesting and appealing business opportunity?

For the 10th consecutive year, the U.S. ranks first on the 2022 Kearney Foreign Direct Investment Confidence Index.[12]

The size of the U.S. market is one of the most appealing reasons to investors. The U.S. is the largest economy in the world with a nominal GDP of $22.99 trillion in 2021, an annual growth of 5.7%, and a population of more than 330 million.[13] However, this alone may not justify expanding overseas.

According to the Kearney FDI Confidence Index report, the primary factors considered by investors when choosing where to make foreign direct investments are: (i) transparency of government regulations and a lack of corruption; (ii) technological and innovation capabilities; (iii) tax rates and ease of tax payments; (iv) ease of transferring capital into and out of the country; and (v) strength of investor and property rights.[14]

The U.S. fulfills all of these factors.  Foreign investors may choose to invest in the U.S. to benefit from its strong corporate governance, independent, transparent, and predictable legal system and institutions as well as from its due process of law—all of which creates a secure investment environment for foreign businesspeople and ensures that all companies, regardless of national origin, compete on an even playing field.[15] The U.S. Corruption Perception Index score is 67/100 which is significantly higher than the global average and ranks 27th in the world.[16]

Further, the technological and innovation capabilities of the U.S. are almost limitless. The U.S. is the number one tech market in the world representing 32% of the world’s total technology sector for 2020[17], and its Global Innovation Index is 61.3, ranking third worldwide.[18] Foreign investors can also benefit from a highly developed, liquid, and efficient U.S. financial market, which includes sophisticated banks and investment companies. Last but not least, foreign investors’ rights are well protected in the U.S. pursuant to bilateral and multilateral investment treaties.

3. Expanding to the U.S.: Primary Considerations

Some of the primary aspects to be considered when doing business—or thinking about doing business—in the U.S. relate to restrictions on foreign investments (both in terms of ownership and industry); international tax optimization; selection of the proper corporate structure as well as implementation procedures; financing needs and navigating the U.S. banking system; IP and trade secrets protection; and immigration matters. We bring to the attention of Turkish companies and businesspeople interested in doing business in the U.S. a helpful first-step resource, Investor Guide, prepared by the U.S. Department of Commerce. For those interested, an opportunity for establishing connections with U.S. businesses will be provided at the SelectUSA Investment Summit, which will take place in National Harbor, Maryland between May 1-4, 2023.[19]

Additionally, for those considering doing business in the U.S. - and for those already doing business in the U.S. - understanding some of the specific features of the U.S. legal system will be key for avoiding mishaps. Paying close attention to the drafting and negotiation of the first set of commercial agreements, understanding the mechanics for hiring and discharging employees, and having a clear idea of which of the business' IP, confidential information, and trade secrets should be protected are recurrent themes in our conversations with Turkish and other foreign investors.

As important as the substantive provisions of a commercial agreement, dispute resolution and choice of law provisions should always be given proper consideration. Often labeled as the “midnight provisions,” since these tend to be left for the eleventh hour of the closing of a transaction, it is advisable to treat these provisions with the same importance as the more substantive provisions of the agreement. Advising on which dispute resolution mechanism is more suitable for a specific transaction will in fact depend on the transaction, bargaining power of the parties, location of the parties' assets, and comfortability of the parties with the applicable legal system, among others. While assuming on a general basis that including arbitration in the agreement as a preferred dispute resolution mechanism might be advisable, there might also be circumstances in which choosing a local court (even a foreign court), might also be preferable. And while spending time and effort identifying the more suitable dispute resolution mechanism during the negotiation of a transaction might seem counterintuitive (especially when the parties are focused on closing a deal and aim for a smooth commercial relation), doing so can prevent further challenges down the road.

Please stay tuned for more content. After this brief introduction, we will dive into the world of international arbitration in our second blog post.

The articles published by Dunning Rievman & MacDonald LLP are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice should always be sought separately before taking any action.

[1] International Trade Administration, Turkey – Country Commercial Guide, available at Turkey- Market Overview | International Trade Administration

[2] U.S. Department of State – Bureau of European And Eurasian Affairs, U.S. Relations with Turkey Bilateral Relations Fact Sheet, available at U.S. Relations WithTurkey - United States Department of State

[3] Observatory of Economic Complexity (OEC), United States/Turkey, available at UnitedStates (USA) and  Turkey (TUR) Trade |OEC - The Observatory of Economic Complexity Observatory of Economic Complexity (OEC), Turkey, available at Turkey (TUR) Exports, Imports,and Trade Partners | OEC - The Observatory of Economic Complexity

[4] Central Bank of the Republic of Türkiye, Foreign Direct Investments in Turkey by Countries - Stock, available at EVDS| All Series (tcmb.gov.tr)

[5] Central Bank of the Republic of Türkiye, Residents’ Foreign Direct Investments Abroad by Countries – Stock, available at EVDS |Residents Foreign Direct Investments Abroad by Countries (tcmb.gov.tr)

[6] U.S. Department of Commerce - SelectUSA, Foreign Direct Investment (FDI): Turkey, available at ForeignDirect Investments: Turkey (trade.gov)

[7] Transparency Market Research, U.S. Metal Fabrication Market, available at Metal Fabrication Market| U.S. Industry Report, 2031 (transparencymarketresearch.com)

[8] U.S. Department of Commerce – SelectUSA, Consumer Goods Industry, available at SelectUSA ConsumerGoods Industry (trade.gov)

[9] U.S. Department of Commerce – SelectUSA, Chemicals Industry, available at SelectUSA ChemicalsIndustry (trade.gov)

[10] U.S. Department of Commerce – SelectUSA, Professional Services Industry, available at SelectUSAProfessional Services Industry (trade.gov)

[11] U.S. Department of Commerce - SelectUSA, Foreign Direct Investment (FDI): Turkey, available at Foreign Direct Investments: Turkey (trade.gov)

[12] Kearney, Optimism dashed: The 2022 FDI Confidence Index® Report, available at The 2022 KearneyForeign Direct Investment Confidence Index®: Optimism dashed - Kearney

[13] U.S. Department of Commerce – Bureau of Economic Analysis, Gross Domestic Product, Fourth Quarter and Year 2021 (Advance Estimate), available at Gross Domestic Product, FourthQuarter and Year 2021 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)

[14] Kearney, Optimism dashed: The 2022 FDI Confidence Index® Report, available at The 2022 KearneyForeign Direct Investment Confidence Index®: Optimism dashed - Kearney

[15] U.S. Department of Commerce – SelectUSA, Why Invest? – Ease of Doing Business, available at SelectUSA Investor (trade.gov)

[16] Transparency International, Corruption Perceptions Index, available at https://www.transparency.org/en/cpi/2021

[17] Foothold America, Why Invest in the USA? available at Why invest in the USA? | Foothold America

[18] World Intellectual Property Organization, Global Innovation Index 2021 – Tracking Innovation Through the Covid-19 Crisis, available at Global Innovation Index 2021(wipo.int)

[19] For more information, please refer to SelectUSA Investment Summit 2023 (selectusasummit.us)   

Tagged with: Dispute Resolution, Dunning Rievman & MacDonald LLP, Damián Vallejo, Joshua D. Rievman