On 1st January 2021, the UK left the EU and, accordingly, the Customs Union between Turkey and the UK would have terminated without further agreement between the two countries. When the UK was an EU Member State, the relationship with Turkey was regulated by the EU-Turkey Customs Union and by agreements on agriculture, coal, and steel.
The United Kingdom plays a key role in Turkey's economy as the second-biggest export market and highly valued trade partner in many sectors such as in automotive, television, household appliances, retail, and textiles industries with trade between both countries valued at more than $16 million. It is estimated that without a deal, 75% of Turkish exports to the UK would have been subject to tariffs, leading to losses amounting to an estimated $2.4bn in 2021.
On 28th December 2020, The UK signed a free trade deal with Turkey, the fifth-biggest FTA the UK negotiated with a single country, following deals with Japan, Canada, Switzerland, and Norway. The deal came into effect on January 1st and aims to support trade between the two countries.
This so-called “continuity agreement” replicates existing trading terms between Turkey and the UK. According to the Department for International Trade, the new deal will secure existing preferential tariffs for 7,600 UK businesses exporting machinery, iron, and steel to Turkey, while protecting the textiles and automotive sectors. The achievement of this agreement was critical to preserve the continuity of trade in goods between the UK and Turkey following the UK’s exit from the European Union.
Although some gaps remain to be filled, the new FTA is sufficient to maintain the high volume of trade in goods between the two countries, with the option to expand the deal further to include services and more liberal regulations on trade and agriculture in two years when the two nations will meet again to review the deal.
Until 31st December 2020, UK businesses were able to use ATR documents to claim preferential rate when shipping goods to and from Turkey. All goods that were in “free circulation” could be exported without any duty irrespective of where they have been produced. Under this new agreement, the ATR certificates have been withdrawn from use and preference is now based on a “declaration of origin” on a commercial document. To provide maximum continuity for businesses, the agreement states that EU materials can be recognised as part of the cumulation rule when determining the origin. If you are trading with Turkey, please see below our new course covering the changes and the new processes in place.
Are you currently trading with Turkey?
Trading with Turkey Training Course: Join us on 4th June 2021 as we will cover the changes and how to adapt to the new rules. Click here to register.
Check more information on the current UK-Turkey Trade Deal here
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Sources: Institute of Export, Mondaq, UK Government