Turkey and Britain signed a landmark free trade agreement last week, a move that will strengthen ties between the two countries, experts and business professionals said.
The pact is the first inked by London since Britain formally leaves the European Union.
“This is a historic day for Turkey-UK relations,” Turkish Trade Minister Rushar Pekcan stated before she signed the agreement with her British counterpart in a televised videoconference call.
The agreement between the two NATO allies took effect on Jan. 1, 2021, ensuring a quick transition after an existing deal ends at year-end, Pekcan said.
The deal is Turkey’s most important trade deal since its 1995 Customs Union with the EU, Turkish President Recep Tayyip Erdogan said. “God willing, we are entering a new phase in which both Turkey and the UK will benefit.”
Britain is Turkey’s second largest trading partner after Germany.
Turkey exported goods of 11.2 billion U.S. dollars to Britain in 2019 and imported products worth 5.6 billion dollars, Pekcan said.
Britain said the agreement was the fifth biggest trade deal the trade ministry had negotiated after agreements with Japan, Canada, Switzerland and Norway.
While Turkey is not an EU member, it has a customs union with the EU, meaning that the new Britain-Turkey deal could not be struck until after the Brexit deal was finalized.
“Today’s deal delivers vital certainty for businesses and supports thousands of jobs across the UK in the manufacturing, automotive and steel industries,” British international trade secretary, Liz Truss, said for her part.
Experts have hailed the agreement, stating that it consolidates the bilateral relationship.
“Undoubtedly it’s a major achievement between two major economic partners,” Altay Atli, an expert on international trade and scholar at Istanbul’s Bogazici University, told Xinhua.
He stressed that without this deal, Turkey would have suffered a very serious custom tariff burden from Britain as the latter is not an EU member anymore, thus making the customs union deal between Ankara and Brussels irrelevant.
Without the deal, about 75 percent of Turkish exports to Britain would be subject to tariffs, causing losses of some 2.4 billion dollars, according to Ankara. This deal eliminates this risk.
Atli also insisted that EU will still remain a strong commercial partner for Turkey who is nevertheless seeking to diversify its trade relations with other actors as well in order to try to reduce external shocks.
He remarked that the Turkey-Britain trade deal may grant Turkey more room of movement as it is facing sanctions from both the EU and the United States over its foreign policy.
Britain and Turkey have demonstrated that increased economic cooperation is possible while not being full members of the European bloc, Atli added.
The deal has been met with relief by the struggling Turkish lira, which rose for a fifth straight day before the signing.
Turkey launched membership talks with the EU in 2005, but the accession process as well as efforts to expand its customs agreement with the bloc has so far come to nothing.
Turkey-UK Business Council says it hoped to increase the volume of trade to 20 billion dollars by 2023.
“The agreement signed by Turkey and the UK will ease the two countries’ bilateral trade target of 20 billion dollars”, said Osman Okyay, head of the Turkey-UK Business Council of the Foreign Economic Relations Board.
This pact is a milestone in growing bilateral ties and also a development which shows the strength of their commercial relations, this official told state-run Anadolu agency.
There are more than 3,000 British companies operating in Turkey. Main Turkish exports to the UK are mainly gold, made-up textile articles, garments, electrical and non-electrical machinery, motor vehicles and parts, iron and steel products, insulated wires, cables and other electric conductors.
Main imports from the UK are diesel and semi-diesel engines, automobiles, tramp iron, steel and their ingots, medicinal and pharmaceutical products.