Trade Relations between Germany and Turkey

Trade relations between Germany and Turkey are of great importance to both countries. Germany is one of Turkey’s largest trading partners, and the trade relations between the two countries have developed steadily over the years.

Trade Volume Between the Two Countries: In 2022, the trade volume between Germany and Turkey amounted to approximately $45 billion. This figure indicates that Germany is Turkey's largest trading partner and that trade with Germany represents a significant portion of Turkey's total trade volume.

Exports and Imports:

• Exports from Turkey to Germany: Turkey's exports to Germany mainly focus on the automotive, textile, electronics, and machinery sectors. In 2022, Turkey's exports to Germany were about $20 billion.
• Imports from Germany to Turkey: Imports from Germany to Turkey mainly consist of industrial goods such as machinery, chemical products, automobiles, and electronics. In 2022, Turkey's imports from Germany were approximately $25 billion.

General State of Bilateral Trade:

• Investments: Germany is one of the largest investors in Turkey. German direct investments in Turkey are concentrated in various sectors such as automotive, energy, banking, and insurance. Thousands of German companies operate in Turkey.
• Tourism: Germany is one of the countries sending the most tourists to Turkey. Every year, millions of German tourists visit Turkey, making a significant contribution to the tourism sector.
• Diplomatic Relations: The trade relations between Turkey and Germany are supported by strong diplomatic ties that have existed for many years. Both countries regularly meet on various platforms to enhance trade and economic cooperation.

Trade relations between Germany and Turkey are considered strategically important for both countries and strengthen both economic and cultural ties. The trade volume has steadily increased over the years, and this trend is expected to continue. Both countries continue to take various steps to further develop trade cooperation.

The trade relations between Germany and Turkey have developed strongly and steadily over the years. Trade between the two countries is supported by mutual exports and imports as well as various cooperation agreements.

Import and Export Figures (2022 Data):

• Exports from Turkey to Germany: In 2022, Turkey's exports to Germany amounted to about $20 billion.

Main Exported Goods:

• • Automobiles and Spare Parts: This is the largest export item from Turkey to Germany.
  • Textiles and Clothing: Among the key export goods from Turkey.
  • Electronic Products: Especially household appliances and consumer electronics.
  • Machinery and Mechanical Equipment: A significant portion of exports.
  • Chemical and Plastic Products: Other important product groups exported to Germany.
• Imports from Germany to Turkey: In 2022, Turkey's imports from Germany amounted to about $25 billion.

Main Imported Goods:

• • Machinery and Industrial Equipment: The largest import item from Germany.
  • Automobiles and Spare Parts: Other important imported products from Germany.
  • Chemical Products: Particularly pharmaceuticals, agricultural chemicals, and industrial chemicals.
  • Electronic Products: Other significant products imported from Germany.
  • Iron and Steel Products: Imported for construction and industrial purposes.

Cooperation Agreements Between the Two Countries:

• Customs Union (1995): Turkey signed a Customs Union Agreement with the European Union in 1995, with Germany playing an important role as a contracting party. This agreement led to the elimination of tariffs on industrial goods and the liberalization of trade.
• Double Taxation Avoidance Agreement (1989): This agreement, signed between Germany and Turkey in 1989, aims to avoid double taxation of income in both countries. It is significant for promoting trade and investment.
• Agreement on the Reciprocal Protection and Promotion of Investments (1962): This agreement is one of the cornerstones of economic cooperation between Turkey and Germany and aims to promote and protect investments. It provides mutual legal security for investors from both countries.
• Energy Cooperation Agreements: Turkey and Germany have also signed several cooperation agreements in the energy sector. Areas of focus include renewable energy, energy efficiency, and the expansion of energy infrastructure.
• Tourism and Cultural Cooperation: Various cooperation agreements exist between the two countries in the fields of tourism and culture. These agreements aim to enhance cooperation in the tourism sector, promote exchange programs, and strengthen the ties between the populations of the two countries.

General Situation:

Trade and cooperation between Germany and Turkey are based on strong economic ties and mutually beneficial agreements. Both countries are continuously working to further strengthen and expand these relations. While Germany remains Turkey's largest trading partner, Turkey continues to be a significant trade and investment location for Germany.

Comparison of Turkish and German Commercial Law

The Turkish Commercial Code (TTK) and the German Commercial Code (Handelsgesetzbuch - HGB) form the fundamental legal frameworks for commercial activities in both countries. These laws set out rules for how trade is conducted, how commercial enterprises operate, and how the structure and obligations of companies are organized. However, the contents and approaches of these laws may differ based on the legal traditions, commercial needs, and economic structures of the countries.

General Structure and Core Principles

• Turkish Commercial Code (TTK):
  • The TTK is the fundamental law governing commercial activities in Turkey and came into force on July 1, 2012.
  • It consists of six main books: Commercial Operations, Commercial Companies, Securities, Transport Transactions, Maritime Law, and Insurance Law.
  • The law was influenced by Swiss and German commercial law and adapted to the needs of modern commerce.
• German Commercial Code (HGB):
  • The HGB is the main law governing commercial law in Germany and came into effect in 1897. It has been revised multiple times over the years.
  • The HGB is the primary text regulating the scope of commercial activities, the structure of commercial companies, and other areas of commercial law in Germany.
  • The HGB is based on Germany's strong legal traditions and offers comprehensive and detailed regulation.

Commercial Companies

• Turkish Commercial Code:
  • The TTK classifies commercial companies into simple partnerships, general partnerships, limited partnerships, joint-stock companies, limited liability companies, and cooperatives.
  • Joint-Stock Companies (A.Ş.): One of the most important company forms and part of the capital companies. Shareholders' liability is limited to their subscribed capital contribution.
  • Limited Liability Companies (Ltd. Şti.): A preferred structure for small and medium-sized enterprises, where the liability of the partners is limited to the capital contributed.
• German Commercial Code:
  • The HGB classifies commercial companies into sole proprietorships, general partnerships (OHG), limited partnerships (KG), joint-stock companies (AG), and limited liability companies (GmbH).
  • Joint-Stock Company (AG): The most significant capital company structure in Germany, which can be either public or private. Shareholders' liability is limited to their shares.
  • Limited Liability Company (GmbH): A widely used structure, particularly for small and medium-sized enterprises, where the liability of the partners is limited to the capital contribution.

Definitions of Commercial Enterprises and Merchants

• Turkish Commercial Code:
  • The TTK defines a commercial enterprise as an economic unit operated with the aim of continuously and independently conducting commercial transactions.
  • A merchant is defined as a person who operates a commercial enterprise wholly or partially in their own name.
• German Commercial Code:
  • The HGB defines a commercial enterprise as the entirety of the commercial activities conducted by the merchant.
  • A merchant is a person or company operating a commercial enterprise and subject to the HGB. The term merchant in Germany implies comprehensive powers and duties within commercial law.

Accounting and Financial Reporting

• Turkish Commercial Code:
  • The TTK includes comprehensive provisions on accounting, financial reporting, and auditing. Companies must maintain their accounts based on the principles of double-entry bookkeeping.
  • Capital companies are subject to auditing requirements and must publish financial statements and reports.
• German Commercial Code:
  • The HGB contains detailed regulations on bookkeeping, financial reporting, and auditing. In Germany, bookkeeping is also based on the principles of double-entry bookkeeping.
  • Capital companies in Germany are required to undergo audits and disclose their annual financial statements.

Conclusion: Turkish and German commercial laws share many similarities, particularly concerning general principles and structures. However, there are differences in definitions and requirements, especially regarding specific provisions and legal traditions. Both laws provide a solid framework for commercial activities and support economic activity.

Why Legal Disputes Arise in Commercial Law Between Germany and Turkey, and How They Are Resolved

Legal disputes in commercial relations between Germany and Turkey can arise due to differences in legal systems, trade practices, and cultural differences. Such disputes often result from the interpretation of contracts, fulfillment of obligations, differing interpretations of commercial law norms, and differences in business ethics. Here are the reasons for these disputes and possible resolution approaches:

Reasons for the Occurrence of Legal Disputes

Different Legal Systems:

• Turkey: The Turkish legal system is largely based on continental European law and is particularly influenced by Swiss and German law. The Turkish Commercial Code is part of this legal tradition.
• Germany: Germany also has a continental European legal system, but with its own legal traditions and practices. The German Commercial Code (HGB) has developed over many years.

The differing approaches of these legal systems to commercial transactions and contracts can lead to disputes. For example, differing interpretations of contract terms or customary business practices between the parties can result in disagreements.

Contract Interpretation: In commercial contracts between Turkish and German companies, the parties may have different views on the interpretation of contract terms. The legal systems of both countries have different approaches to interpreting contract provisions. For example, if one party interprets a specific contract clause differently, this can lead to issues in fulfilling obligations or delays.

Different Business Practices and Cultural Differences: In trade relations between Germany and Turkey, there are differences in business practices and business culture. These differences can lead to misunderstandings and disputes during negotiations. While Germany tends to have a formal approach to business relations, Turkey may have a more flexible, relationship-based business culture. These differences can cause conflicts in business processes.

Legal and Business Ethical Differences: Business ethics and their application can vary between countries. For example, Germany expects strict adherence to business ethics and regulations, whereas Turkey might have a different view of ethics. This can lead to differing expectations and, consequently, disputes.

Methods for Resolving Legal Disputes

Contract-Based Resolution Methods:

• Arbitration: In international trade, arbitration is a widely used resolution method and is frequently applied to trade disputes between Germany and Turkey. Arbitration allows a neutral third party to resolve the dispute and is usually conducted at international arbitration centers.
• Mediation: Another method to resolve disputes without going to court is mediation. Especially in Turkey, where mediation is now mandatory, parties can resolve their disputes more quickly and cost-effectively.
• Contract Clauses: Contracts should include provisions that specify which law applies in case of disputes and which courts have jurisdiction. Parties can establish such dispute resolution mechanisms in advance.

Judicial Resolution:

• Courts in Turkey: If the dispute is adjudicated in Turkey, Turkish commercial courts have jurisdiction. The courts decide according to the Turkish Commercial Code and relevant regulations.
• Courts in Germany: If the dispute is adjudicated in Germany, German courts have jurisdiction. The German Commercial Code (HGB) and relevant German law are applied.
• International Courts: The parties may also agree to bring the dispute before an international court, though this is usually more complex and costly.

Alternative Dispute Resolution Methods:

• Mediation and Settlement: In Germany and Turkey, parties can also resolve their disputes through mediation or settlement. This method is often quicker and more cost-effective.
• International Chamber of Commerce (ICC) Arbitration: ICC arbitration is an internationally recognized and widely used method that offers neutrality and international recognition. The ICC arbitration rules provide a comprehensive framework for resolving disputes.

Conclusion: Legal disputes in trade relations between Germany and Turkey can arise due to different legal systems, business practices, and cultural differences. Disputes are typically resolved through arbitration, mediation, contractual solutions, and court proceedings. It is crucial for parties to specify in their contracts which law applies and how disputes will be resolved to ensure a quicker and more effective resolution of potential disputes.

Key Aspects in Trade Contracts Between Germany and Turkey

When drafting a trade contract between Germany and Turkey, lawyers should pay attention to a variety of critical aspects. These aspects should ensure legal compliance, protect the interests of the parties, and facilitate the avoidance and resolution of disputes. Here are the essential elements that lawyers should consider when creating a trade contract:

• Accurate Identification of the Parties: The parties, i.e., the involved companies or individuals, should be accurately and completely identified with their full legal names, registration numbers, addresses, and identities of authorized representatives.
• Determination of Applicable Law: The contract should clearly specify which law applies. This could be Turkish law, German law, or the law of a neutral third country.
• Determination of Competent Courts or Arbitration Centers: It should be established which courts are competent to resolve disputes, whether Turkish, German, or those of another country. Alternatively, arbitration may be agreed upon.
• Contract Language: The language of the contract and its validity should be determined. If the contract is drafted in multiple languages, it should be clarified which version is authoritative in case of disputes.
• Contract Subject and Definitions: The subject matter of the contract should be described in detail, as well as any technical specifications and delivery conditions. Defining important terms can avoid misunderstandings.
• Payment Terms: The method of payment, due dates, currency, and tax aspects should be detailed.
• Delivery Conditions and Risk Transfer: Delivery locations, times, and conditions, as well as the timing of risk transfer, should be clearly defined.
• Warranties and Liabilities: Warranty conditions and liability issues should be clearly regulated.
• Confidentiality and Non-Compete Clauses: Confidentiality and non-compete agreements should be included to protect confidential information.
• Force Majeure: Provisions for force majeure events, such as natural disasters, war, or strikes, should be included.
• Contract Termination and Consequences: The conditions under which the contract can be terminated, as well as the rights and obligations of the parties in the event of termination, should be clearly specified.
• Amendments and Addendums: Procedures for amending the contract and the validity of such amendments should be defined.
• Audit and Compliance: It should be specified if and how one party may monitor the activities of the other, and ensure compliance with local and international regulations.

Conclusion: When drafting a trade contract between Germany and Turkey, lawyers must consider numerous factors arising from the different legal systems and business practices of the two countries. All details should be carefully reviewed to avoid disputes and protect the parties' rights.