United Kingdom is one of the prominent trade partners of Türkiye. The bilateral trade volume between Türkiye and United Kingdom reached 19,5 billion USD in 2023, which almosts corresponds to the target of 20 billion.
As of 2023, there are 3,200 British companies including BP, Vodafone and HSBC operating in Türkiye. Investors from the UK are mainly interested in energy, infrastructure, health, finance, technology and defence industry sectors.
Main Turkish exports to United Kingdom are 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 United Kingdom are diesel and semi-diesel engines, automobiles, tramp iron/steel and their ingots, medicinal and pharmaceutical products to be used in treatments and protection.
“Free Trade Agreement (FTA)” between Türkiye and the United Kingdom which was signed in 29 December 2020 turned to be inadequate in the course of time due to the new developments in global scale. Especially, after the Brexit, the need to revise the FTA has become an inevitable task for both countries. The decision to start negotiations to revise the FTA has been officially announced on 14 March 2024.
Nearly 4 million British tourists visited Türkiye in 2023.
Source: https://www.mfa.gov.tr/commercial-and-economic-relations-between-turkiye-and-england.en.mfa
Details of FTA between Turkey and the UK
Turkey-UK trade relations were carried out in the framework of the EU-Turkey Customs Union before Brexit. The trade deal signed after Brexit changed these relations and ensured that trade rules are conducted independently from the Customs Union. The FTA introduced some enhancements to trade in goods, customs, and trade facilitation, technical barriers to trade, competition, and dispute settlement. These enhancements are summarized below.47
Before the UK left the EU, the trade in goods between Turkey and the EU was in line with the Customs Union rules. These rules regulate the free movement of goods between Turkey and the EU. All goods covered by free circulation are exported free of duty to the other country, regardless of where they have been manufactured. The agreement between Turkey and the UK has transitioned the Customs Union into a traditional FTA. This means that goods must be produced at one of the parties in order to be treated without import duties. One of the enhancements made by the agreement is the converted tariff commitments from Euro to Sterling. The second amendment is the elimination of agricultural tariffs in order to avoid disrupting Turkish exports of agricultural products. Thirdly, a single tariff plan has been agreed upon to replace several tariff programs in trade between the two countries. The Tariff Rate Quotas have also been modified. The quotas have been resized to prevent damage to the traders of the two countries and to ensure continued trade. The change in the Rules of Origin is that EU materials can be recognized in exports between the two countries. For this purpose, the temporary Rules of Origin Protocol has been added to the Agreement. The arrangement of Customs and Trade Facilitation on the Agreement is the acceptance of the Mutual Administrative Assistance Protocol in Customs matters. The protocol provides a legal basis for sharing information between the two countries and strengthening bilateral relations. The Agreement couldn’t regulate the technical barriers to trade to the extent required. Since Turkey’s current agreement with the EU is an obstacle a clause has been added to the Agreement to overcome the obstacle. The clause guarantees that some updates will be made about technical barriers to trade in the future. The Agreement contains a clause regulating competition rules between the two countries. This means that competition rules are committed to being transparent and fair. These rules are to be applied equally for the public and private enterprises of both countries. The agreement has made many changes in dispute settlement. The arbitration panel, which is envisioned to be established within six months of Turkey’s current arrangement with the EU, has been reduced to two months by agreement. According to the article in the agreement, it has been decided to establish a review mechanism to determine progress in compliance with the arbitration award. In the event of non-compliance, a mechanism has been added to encourage the complaining party to meet the obligations of the agreement and to encourage the other party to come into compliance.
