Turkey, UK safeguard $25bn worth of trade in post-Brexit deal

According to ALJAZEERA, the post-Brexit trade deal between Turkey and the United Kingdom has safeguarded $25bn worth of business between the nations that find themselves two of the largest economies on the fringes of the European Union.

Turkish President Recep Tayyip Erdogan described it as “the most important trade deal” since Ankara signed a customs union with the EU in 1995, while the UK’s International Trade Secretary Liz Truss said it would lead to a “new, more ambitious deal with Turkey in the near future”.

Ruhsar Pekcan, Turkey’s trade minister, said: “Without a deal, about 75 percent of Turkish exports to the UK would be subject to tariffs, causing the loss of about $2.4bn; this risk is now gone.”

The free trade agreement (FTA) that came into effect on New Year’s Day replicates ties that existed when the UK was still in the EU, which became void after December 31.

It ensures continued tariff-free trade on non-agricultural products between the UK and Turkey.

Because of Ankara’s customs union with the bloc, Britain first had to sign its own deal with Europe before sealing the Turkey treaty.

Gulcin Ozkan, vice dean and professor of finance at King’s College London, said although the deal was “business as usual” it was a “huge relief” for both countries relative to the scenario of a no-deal Brexit and the absence of an FTA between Turkey and the UK.

From the Turkish perspective, the Brexit deal, rather than the FTA, could have greater implications.

“This actually opens up new territory for Turkey in negotiating a renewed and updated customs union with the EU,” said Can Selcuki, general manager of Istanbul Economics Research.

“For the first time, a large country in the periphery of Europe has made a trade deal with the EU and that could provide a model for the future of the Turkey-EU customs union and that provides the most significant partnership going forward.”

Turkey has been pressing for reform to its customs union with the EU to reflect the realities of 21st-century trade brought about by developments in information and communication technologies.

However, deteriorating relations between Ankara and the EU have slowed talks. The agreement with the UK, meanwhile, requires negotiations over the next two years to expand the deal to possibly include the agriculture and services sectors.