The agreement between Turkey and UK will go into effect New Year’s Day on January 1st. Turkish Trade Minister Ruhsar Pekcan says the deal is historic for ties between the two countries.
Turkey and the United Kingdom have signed a free trade deal days before Britain formally leaves the European Union, to keep up the existing flow of goods.
The trade ministers of the two countries signed the agreement in a televised videoconference call on Tuesday. It will take effect on January 1, 2021, ensuring a quick transition after an existing deal ends at year-end, Turkish Trade Minister Ruhsar Pekcan said.
It is one of many post-Brexit trade deals the British government is pursuing with nations around the world and came days after it finalised a trade agreement with the EU.
The UK trade ministry said on Sunday the deal would replicate existing trading terms. The trading relationship was worth $25.25 billion (18.6 billion pounds) in 2019.
The UK left the EU on January 31 of this year but remained subject to the bloc's business regulations and within its customs union during a transition period that ends on December 31.
Turkish Trade Minister Ruhsar Pekcan and Dominick Chilcott, the British ambassador to Turkey, signed the British-Turkish agreement.
'Most significant trade pact since 1995'
Pekcan hailed the deal as the most significant trade pact for Turkey since the signing of a customs union agreement with the EU in 1995.
“The free trade agreement is a new and special milestone in the relationship between Turkey and United Kingdom,” Pekcan said during the ceremony. Britain is Turkey’s second-largest export market.
Absent a deal, about 75 percent of Turkish exports to the UK would be subject to tariffs, causing losses of some $2.4 billion, but the deal eliminates this risk, said Pekcan.
"We reached a tariff-free agreement, as planned, which includes all industrial and agricultural goods," she said.
Stating that the trade volume between the two countries hit $15.1 billion in January-November, Pekcan said in 2019, Turkey's exports to the UK, its second-largest export market, stood at $11.3 billion, while imports totalled $5.6 billion.
The UK's investments in Turkey are around $11.6 billion, Pekcan said.
'More comprehensive agreement' to come
British trade minister Liz Truss has said that she was hopeful a bespoke deal between the countries could be struck soon.
"We agreed the direction" toward an updated trade deal with the UK and would like to complete it "as soon as possible," Pekcan told Reuters after the deal was signed. "We are ready."
A British government statement said the deal will secure existing preferential tariffs for some 7,600 British businesses that exported goods to Turkey in 2019, ensuring the continued tariff-free flow of goods.
Both countries have said the deal will lead to a more comprehensive agreement in the future.
"The agreement is part of our plan to put the UK at the centre of a network of modern agreements with dynamic economies," she noted, saying there is greater trade potential in the areas of finance and biotechnology.
"In this sense, I believe that as two trading countries, from products, vehicles to other sectors, we can gain great momentum in the field of services and technology trade much faster."
She also said Britons will be able to buy high-quality products, including white goods, manufactured in Turkey.
"Apart from this, it will also make a great contribution to the consumers to buy decent products at decent prices in agricultural products."
Truss said that in the last two years, in the countdown to Brexit, the UK reached agreements with 62 countries, and the EU to cover $1.20 trillion (£885 billion) of UK trade.
"We are not only accelerating trade but also aiming to grow. Today we open a new page in the cooperation between Turkey and the UK."
Bolstering key supply chains
Vital UK-Turkey supply chains will also be protected for automotive manufacturers, such as American company Ford, which employs 7,500 people in the UK, it noted.
Also commenting on the deal, Stuart Rowley, the president of Ford of Europe, said:
"Ford welcomes the announcement today of a trade agreement between the two countries, and the speed with which it has been concluded underscores its importance to the economic prosperity of both countries.
"Given that Ford and [Ford-Turkish Koc Holding co-owned] Ford Otosan business constitutes more than 10 percent of the total trade volume between the UK and Turkey, this trade agreement is extremely significant for us and will help to secure jobs in both countries."
Andy Burwell, director for international trade and investment at the Confederation of British Industry (CBI), also underlined the historic pact will bolster key supply chains across many industries after a year of pandemic disruption.