The newly signed free trade agreement (FTA) between Turkey and the U.K. is an important step in achieving the mutual trade target of $20 billion (TL 146 billion), a high-ranking official said Wednesday.
Osman Okyay, head of the Foreign Economic Relations Board's (DEIK) Turkey-U.K. Business Council told Anadolu Agency (AA) that the approval of the post-Brexit trade deal between the U.K. and the European Union before the new year demolished the possibility of a worst-case scenario for Turkey and ensures the unhindered flow of trade between the countries.
Any Turkey-U.K. deal would only be able to take place following an EU-U.K. FTA, as Turkey has been a member of the EU Customs Union since 1995.
Turkey had previously disclosed its aims to enact an FTA with the U.K. simultaneously with London’s deal with the bloc.
Commenting on the recently signed pact that was dubbed "historic" in terms of mutual relations, Okyay noted that the Brexit transition period once again unveils the urgency of updating the customs union agreement with the EU.
The DEIK official emphasized that one of the top priority topics in the new period needs to be this revision of the customs union.
"Since Turkey was not a part of negotiations that the EU is conducting with the U.K., it makes it necessary to revise the Customs Union agreement," he said.
Saying that the preparations had been continuing for a while with regard to the signing of an FTA between London and Ankara, he added that it is important that this agreement is the first one following the U.K.-EU deal.
"This shows the strength of our trade ties. If this agreement weren't prepared in a timely manner, our trade with the U.K. may be harmed," he said.
In the absence of a deal, about 75% of Turkish exports to the U.K. would have been subject to tariffs, causing losses of $2.4 billion.
The U.K. is Turkey’s second-largest trading partner after Germany. It is also among the 17 countries with which Turkey has increased its exports in the last year in five priority sectors: machinery, automotive, electronics, chemicals and food. Turkey’s top exports to the U.K. are electrical machinery and devices.
Okyay highlighted that the FTA will make it easier to reach the trade target between the countries. He said Turkey wishes to deepen ties with the U.K. to an extent that they also cover the services sector.
The Turkey-U.K. trade volume reached $18.6 billion in 2018, with $11.2 billion in exports and $7.4 billion in imports. As for 2019, Turkey’s exports to the country amounted to $10.87 billion, while its imports came in at around $5.43 billion, official data showed. The trade volume between the two countries hit $15.1 billion in the January-November period of this year, despite the pandemic.
In a major milestone, Turkey and the U.K. on Tuesday signed the FTA that will become effective after Thursday when Britain formally leaves the EU.
"This is a historic day for Turkey-U.K. relations," Turkish Trade Minister Rushar Pekcan said just before she signed the agreement with her British counterpart in a televised videoconference call.
The FTA takes effect on Jan. 1, ensuring a quick transition after the existing deal ends at year-end.