The centennial of diplomatic ties between Turkey and Japan falls in August. Turkiye’s commerce with East Asia practically meant trading with Japan as it started opening its economy in the 1980s and 1990s. But early in the 2000s, something very different happened. China deposed Japan as Turkiye’s top Asian trade partner. Soon South Korea drove Japan down to third place. Turkiye’s trade imbalance against China alone accounts for 37% of the nation’s overall deficit.

The structural shift corresponds with the collapse of Japanese high-tech companies in worldwide markets and the emergence of its rivals from China and South Korea. Two decades ago, the issue was that Japanese companies, creating some of the greatest technology and finest hi-tech items, were content to manufacture mostly for the domestic market. Although they are more closely linked to global markets now, Chinese and South Korean companies have become leaders.

But early in the 2000s, something very different happened. China deposed Japan as Turkiye’s top Asian trade partner.

China sees Turkiye as a geostrategic center in its Belt and Road Initiative. Hence, it is entering a new chapter in its ties. Political factors drive some of the Chinese investments in Turkiye as well. The first foreign-invested car manufacturing in Turkiye since a closed Honda Motor facility opened in 1997, BYD said it would establish a $1 billion EV plant there.

The newly-proposed Free Trade Agreement (FTA) and Economic Partnership Agreement (EPA) with Turkey provide a case in point. Starting in 2014, official discussions were stopped in 2019 without an agreement reached. The primary challenges are Turkiye’s desire for agricultural commodities export concessions and Japan’s refusal to provide access to its farm industry.

Turkiye is concerned about these things as well. Signed in 2014, the FTA with South Korea just served to increase the significant trade imbalance; the promised FDI to Turkiye did not come to pass. The Japanese side also argues that Japanese FDI will balance off Turkiye’s losses, particularly from Japan’s very vibrant small and medium-sized businesses some of which are generating world-class technology. From the Turkish side, such pledges make one dubious.

Turkey’s trade imbalance against China alone accounts for 37% of the nation’s overall deficit.

While monetary policy uncertainty is a challenge, Turkiye’s very delicate economy is suffering from great inflation and currency rate volatility. Turkiye must raise its macro balances. Conversely, since an FTA will increase Japanese exports, Japan will gain from it. Giving Turkiye some concessions will not damage Japan. More importantly, Japan will inspire Turkish companies to turn their faces away from Japan and gain their confidence.

Japan’s current economic negotiations with Turkiye are not headed in the intended line. Though there hasn’t been much activity since Japan failed in 2018 to negotiate a deal in Turkiye’s first-ever nuclear power plant project, which could have been the first nuclear power project for Japan in the post-Fukushima era, Japanese investments in Turkiye usually concentrated on major infrastructure projects. Apart from technological and financial factors, declining ties between President Recep Tayyip Erdogan and the United States may be attributed to the impact of Washington’s foreign policies on Japanese companies.

Notwithstanding the obstacles, popular opinion of Japan in Turkiye has always been favorable; Turkish people practically have sentimental ties to Japan no matter what. Still, this might be the reason Japanese politicians undervalue relations with Turkiye.

Japanese FDI will balance off Turkiye’s losses, particularly from Japan’s very vibrant small and medium-sized businesses.

One might see a fascinating parallel between Turkiye’s ties with the European Union and those of Japan towards it. Turkiye made one error in discussions with the EU when it treated the nations already backing the country lightly. The golden rule of strategic influence-making is that you must satisfy people who support you if you want not to lose them. Regarding Turkiye, which they see as a bird in the hand, Japanese officials appear to be making a similar error in their approach.

In Turkiye’s commercial contacts with Asia, the tide has already swung against Japan. It is time for Japanese officials to choose the course of the direction they want the relations to go. The centennial of the relations will provide both parties with sufficient inspiration to rethink this. This is a call to wake up.

Though this year is significant, the Japanese prime minister does not have any scheduled trips to Turkiye. Fumio Kishida is occupied attempting to guarantee his place as party leader in the next Liberal Democratic Party presidential contest. Strong leadership is required with a vision wherein Turkiye’s position is that of a partner rather than a Japanese subsidiary. There is a deglobalizing of the international economy and fragmentation in progress. Japan would gain economically from bettering ties with a big rising economy like Turkiye.