Sharpening the mettle, the Turkish Investors have started preparing their agendas to enter the UK’s investment market. This has come after the signing of the new free trade agreement between Turkey and the UK on December 29 last year, in the Turkish capital, Ankara.
The agreement will enter into force at the beginning of 2021, in conjunction with the UK’s exit from the European Union. Thus, the new year has brought with it an end to the obstacles that faced the development of trade relations between Turkey and the UK, while recalling the unstable economic conditions globally, not to mention the repercussions of the Corona epidemic.
UK, the great country with the most prominent position in the EU and with the post-brexit, is now looking for a new market to fill the void that will occur in its markets which has been covered by the European Union countries for years.
On the other hand, Turkey faces many regional challenges, in addition to internal economic challenges. Despite the Turkish economy achieving qualitative leaps that exceeded expectations in the last year, Turkey seeks to expand its common investment interests with a country with a large economy such as the UK.
Although Turkey seeks to maintain its relationship with the European Union, with which it has a customs union agreement, this new agreement fulfilled the aspirations of Turkish businessmen and investors to enter the British market more easily by exporting their products easily and without obstacles. It also opened the horizons for investors who obtain Turkish citizenship to expand their work in the UK, in particular.
Facts and Information:
- The volume of trade relations between the two countries reached 18.6 billion pounds (25.25 billion dollars) in 2019.
- London ranks second in the list of Turkey’s partners after Germany in terms of importing Turkish products.
- Turkey’s exports to UK are twice the British exports to Turkey.
- 2,500 British companies in Turkey.
- UK is the seventh largest trading partner of Turkey, in contrast Turkey is the seventeenth largest trading partner of UK.
- The most important commodities exchanged between the two countries are cars, precious metals, household appliances, and ready-made clothes, in addition to exports in other sectors.
- Turkey is linked to the European Association Agreement (ECAA) or what is known as the Ankara Agreement between the Republic of Turkey and the European Economic Community, which governs Turkey’s relationship with the European Union and the UK before brexit. This agreement regulates the Turkish investors affairs by establishing a new business and obtaining residency.
- In addition to the ECAA agreement, businessmen in general and the Turks in particular can obtain investment residency in UK in what is known as the Manager’s Residency in UK, which is based mainly on opening a company branch there.
Content of the new agreement:
The removal of customs barriers between the two countries, and reach the trade arrangements that include exempting products and goods from customs taxes. These exemptions could reach zero after the completion of the transition. It may not need to go through a transition phase.
The Turkish-British Free Trade Agreement regulates “rules for market entry and origin in commodity trade,” “customs and trade facilitation, technical barriers to trade, trade policy measures, sanitary and phytosanitary measures, competition, public procurement, and property, administrative and institutional rights. Inclusion of provisions for provisions and dispute settlement chapters.
Goods included in the agreement:
The agreement covers all agricultural and industrial goods but is of particular interest to the UK’s auto, manufacturing and steel industries.
Turkish exports to the UK are gold, textiles, ready-made clothes, electrical machinery, cars, spare parts, iron and steel products, transport vehicles, wires and cables, while Turkey’s imports from the UK are diesel engines, helicopters, cars, iron, medical and pharmaceutical products.
Benefits of the agreement for both countries:
This agreement is highly competitive between the two countries, due to the fact that they have very high production capabilities in the fields of industry and agriculture. However, both countries have major benefits from it:
- It will contribute significantly to the continuity of trade exchange without impurities or obstacles.
- It will give confidence to thousands of people working in the UK in the manufacturing, auto and steel sectors.
- This agreement included treating Turkish workers on an equal footing with European workers, which Britain was obligated to give priority to them more than other nationalities.
- It will lead to an increase in jobs and employment opportunities between the two countries.
- This agreement will encourage Turkey to raise the efficiency of its agricultural and industrial sector to compete with its British counterpart.
- The increase in British investments in Turkey.
- The benefits of free trade will be enjoyed in exchanges and goods of Turkish origin will have to enter the British market without hindrance.
- As a result of the cheapness of Turkish labor, Turkish goods will be at a competitive price compared to their British counterpart.
This free trade agreement obliges both countries to work toward a more ambitious trade agreement over the next two years, including liberalizing trade in services and agriculture. Where a clause was added regarding the need to expand the scope of the agreement to include areas such as services, investments and advanced agricultural concessions.
Experts believe that the rapprochement with the UK will transfer Turkey within four or five years to the Group of Seven industrialized countries, which are considered one of the largest economic countries.