Turkey and the United Arab Emirates (UAE) have officially launched talks on a Comprehensive Economic Partnership Agreement (CEPA), which is expected to significantly lift their trade, officials said on Tuesday.
The announcement comes as the two countries seek to build economic bridges after a yearslong rift.
The agreement will enable Turkey and the UAE to develop their commercial and economic relations more comprehensively and deeply, Trade Minister Mehmet Muş told a joint press meeting with Emirati Minister of State for Foreign Trade Thani al-Zeyoudi.
The UAE is seeking broad free trade agreements, known as CEPAs, with several countries and has signed such pacts this year with India and Israel.
The agreement looks to remove trade barriers and promote the free movement of goods by cutting tariffs.
The deal will enable Turkey and the UAE to achieve a bilateral trade volume of nearly $15 billion, Muş said, referring to the highest level ever recorded back in 2017, before declining as relations strained.
Al-Zeyoudi said the CEPA is expected to double trade between the two nations.
"By cutting tariffs, promoting free movement of goods, facilitating capital flows and reducing trade barriers, we will make it easier than ever to do business. It will also underpin a new era of cooperation," he noted.
Turkey and the UAE have moved to put years of tense relations behind them, opening the doors to a new phase in bilateral relations marked by deeper economic cooperation after a yearslong dispute, during which the sides maintained economic ties.
President Recep Tayyip Erdoğan paid a return visit to the UAE in mid-February, after a trip by the UAE’s de facto ruler Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (MBZ) to Ankara in late November that marked a significant move toward overcoming disputes.
The visit, which was Erdoğan’s first to the Gulf country since 2013, was marked by a score of agreements, including on trade, industry, defense, health and medical sciences, land and sea transportation and climate action.
During the trip, the two countries signed a joint statement on starting negotiations for the bilateral trade and investment deal CEPA.
The visit in November had yielded investment accords worth billions of dollars and was MBZ’s first official trip to Turkey since 2012 and the highest-level visit by an Emirati official since relations between the two countries hit a low.
The UAE in November said it earmarked a $10 billion fund to support mainly strategic investments in Turkey. The fund will focus on strategic investments, including in the energy and health sectors.
Earlier this year, the two countries agreed on a nearly $5 billion swap deal in local currencies.
Top trade partners
Erdoğan dubbed the UAE as Turkey’s prominent trade partner in the Gulf region, and said trade volume and buoyancy in private sector partnerships were maintained even during a period of tense relations.
"The United Arab Emirates is currently the largest trading partner of Turkey in the Gulf region with a bilateral trade volume of around $8 billion," Muş said.
The turnover had dropped to as much as $6.9 billion in 2018, before rebounding to nearly $7.9 billion in 2019, according to the Turkish Statistical Institute (TurkStat) data. The volume rose further to $8.3 billion in 2020 despite the coronavirus pandemic, before dropping slightly to $7.6 billion last year.
Turkey and UAE changed roles when it comes to registering a surplus in their exchange. Turkey’s exports to the country had hit an all-time high of nearly $9.2 billion in 2017, compared to imports worth $5.5 billion.
However, Turkey registered a trade deficit in the following years, before it reversed the trend again last year. Its exports had totaled $3.14 billion, $3.52 billion and $2.72 billion in 2018, 2019 and 2020, respectively, versus imports of $3.78 billion, $4.34 billion and $5.57 billion, according to the data.
Turkey exported around $5.2 billion worth of goods to the UAE last year and bought nearly $2.4 billion worth of products from the country.
New generation deal
Both Turkey and the UAE will become more resistant to cyclical risks and tests when the CEPA negotiations are completed as soon as possible, Muş said.
"Recently, we have been witnessing that the UAE has become a global player in many service sectors such as finance, tourism, aviation and technical consultancy."
Muş said the sides were not negotiating a conventional free trade agreement covering only the trade of goods, "but as the name implies, we are setting out to implement a new generation agreement model compatible with the global trade dynamics of the future."
The deal will also enable the implementation of new investments and projects in areas where it is necessary to capture global trends such as renewable energy, electric transport and transportation, as well as software, the minister added.
We have entered into an effort within the scope of the cooperation agreement with all the countries of the world, said al-Zeyoudi.
"With the Comprehensive Economic Partnership Agreement, we aim to increase industry, investments and make the most of human resources and other resources, whether human or financial, in the coming period," he noted.
"The world has just been liberated from the COVID-19, and we are about to open the horizon for new partnerships. This partnership agreement shows that the UAE will turn into a more flexible economy."
Al-Zeyoudi stressed both sides need to make a profit from the agreements.
"Turkey is an important partner for this, and it has recently made great strides. We are continuing our efforts to ensure regional peace and stability," he added.
He said relations between Turkey and the UAE are promising, citing trade and investments.
"And if we look at the UAE’s 2020 figures, it had $5 billion in investments in Turkey, which we can increase with cooperation. With the partnership agreement, we can increase these figures. I wish that the cooperation of the two countries will increase even more."