Export Processing Zones

Turkey has a long history of growing cotton for clothing since Ottoman times. More recently, cotton and the textile industry it produced have provided Turkey with the opportunity to participate in the international division of labor. The success of China in developing an export platform for textile manufacturing encouraged other countries, among them Turkey, to set up export processing zones (EPZ) modeled after China’s. The incentives are similar; there are no duties levied on materials imported. The incentive for a host government lies in the fact that zones provide jobs for surplus agricultural labor. One of the ways governments attract such investment is by waiving national labor laws and banning union organizing among EPZ workers, which leads to concern over working conditions. However, Turkey has become the site of an ambitious pilot project to end sweatshop businesses.

Turkey had little opportunity to establish itself before the textile quotas, known as the Multi-Fiber Agreement (MFA), expired. Originally enacted in 1974 to allow industrialized countries the opportunity to adjust to textile imports, it limited each country to a specified amount. The MFA did little to prevent textile manufacturing from outsourcing, but it did ensure that business got spread around. Turkey and the United States attempted, unsuccessfully, to make a case to the World Trade Organization (WTO) that these quotas should be extended for another three years to enable other countries time to challenge China’s dominance. Turkey’s membership in the EU’s Customs Union provided it with an assured market for its textiles only until the end of 2007, when EU restrictions on Chinese textiles expired.