Why Turkey’s Free Trade Deal with the UK is Important?

Free trade agreements provide a free trade area between parties by eliminating tariff and non-tariff barriers that affect the trade between parties. These agreements aim to boost the trade, however it is undesirable for the country’s economy to completely eliminate the tariffs without agreement. The reason for this is to protect domestic production against cheap export goods and thus eliminate its negative effects on employment.

After Brexit, the UK’s trade agreements with the EU came to an end. Accordingly, quotas and tarrif restrictions determined by the World Trade Organization would apply to trade agreements that are not renewed until December 31, 2020. This, according to the Minister Pekcan, 75 percent of exports to the UK to Turkey may be faced with a tax burden and accordingly this would mean that about 2.4 billion dollars of damage could occur.
As a result of long-term negotiations between the EU and the UK, 2020 has been a transition period for the UK, which left the European Union as of 30 January 2020. After Brexit, Turkey’s trade relations with England were hosting a variety of legal and technical uncertainties and handicaps. Especially, it was of great importance to reach an agreement with the UK without deteriorating the commercial relations developed within the framework of the Customs Union with the EU. Finally, a critical threshold was crossed with the free trade agreement signed with the UK on December 29, 2020.
According to the data of the UK Foreign Trade Department, it renewed trade agreements with more than 70 countries with 40 agreements before Brexit. According to data from the United Kingdom’s trade volume in 2019, Turkey with €18,559m is the third country with one of the UK’s largest trade volume after Switzerland (€37,063m) and Iceland-Norway (€26,747m). Special trade agreements with Canada and Japan are not included in this ranking.
The primary products exported by Turkey to the UK are gold, textile and apparel products. On the other hand, diesel, semi-diesel engines and automobiles are among the imported products. According to the TUIK’s data of 2020 Turkey’s exports to the United Kingdom, $ 11 237 million, and its import was $ 5,579 million. England is the second country with the highest export volume after Germany with about $ 17 million.
As of between January 1 and December 31, 2020, the total foreign trade volume was 16.2 billion dollars with the UK and this figure is expected to grow further in the coming years. As a matter of fact, the month of January of 2021 has increased by more than 30% compared to the previous year. After the agreement with the EU, United Kingdom, made the first free trade agreement with Turkey after the Brexit. Thus, our bilateral trade relations settled on a new legal basis. The exemption advantage provided by the 25-year Customs Union has been preserved and the door to a period where we will increase our trade to 20 billion dollars has been opened.