Free Trade Agreements -

Turkey's Free Trade Agreements

The Turkey-EU Customs Union constitutes the legal basis of Turkey’s free trade agreements (FTA) and autonomous preferential regimes. Under the Customs Union, Turkey shall align its commercial policy with the EU’s Common Commercial Policy. Together with the Common Customs Tariff, the preferential trade regime applied towards third countries constitutes the most important part of the trade policy of Turkey.

Customs Union is a type of economic integration model in which all the existing customs duties and duties having equivalent effect as well as quantity restrictions and measures having equivalent effect are eliminated. In customs union a common customs tariff is implemented for the goods originating in the third countries. Customs Union is based on the principle of free movement of goods. In this respect, the parties are required to develop and implement a common commercial policy and common competition rules.  

In free trade agreements the goods traded between the parties benefit from the preferences stipulated in the said agreements on the basis of the rules of origin. Besides, in the free trade agreements, there is no obligation to implement common commercial policies or common competition rules; on the contrary, the parties implement their respective customs duties to the third countries.

In this frame, FTAs are important in developing our foreign trade with the neighboring countries, ensuring our exporters compete at more advantageous or at least equal circumstances with other countries’ exporters and increasing mutual investments.

In our FTA negotiations, our own priorities regarding industrial and commercial policies are taken into consideration, since Turkey is not obliged to adopt the exact content of the FTAs that the EU has signed as it is.

So far, Turkey has concluded FTAs with 32 countries, 11 of which were repealed due to the accession of these countries to the EU. Currently, Turkey has 17 FTAs in force; namely,  EFTA, Israel, Macedonia, Bosnia-Herzegovina, Palestine, Tunisia, Morocco, Syria[1], Egypt, Albania, Georgia, Montenegro, Serbia, Chile, Jordan, Mauritius, and South Korea. Additionally, the FTAs signed with Lebanon, Kosovo,Malaysia and Moldova are under ratification process. Furthermore, the FTA negotiations with Ghana and Faroe Islands are concluded and these FTAs are expected to be signed in the first half of 2014.

Meanwhile, there are 13 countries/country blocs that Turkey has started FTA negotiations; namely Peru, Ukraine, Colombia, Ecuador, Mexico, Japan, Singapore, Dem. Rep of Congo, Cameroon, Seychelles, Gulf Cooperation Council[2], Libya, MERCOSUR. Moreover, Turkey has launched initiatives to start negotiations with 10 countries/country blocs, which are the USA, Canada, Thailand, India, Indonesia, Vietnam, Central American Countries, other ACP Countries, Algeria, and South Africa.

Studies on FTAs show that regional integrations provide reduced costs and increased productivity of resources by giving opportunity to reach economies of scale in production. FTAs also increase national income, social welfare and competitiveness of partner countries at the international scale, through the establishment of an open and competitive field of play. Furthermore, FTAs provide a more convenient environment towards increasing investment.

Consequently, our existing FTAs indicate that FTAs have positive implications on production, foreign trade and welfare indicators of partner countries   thanks to the agreements which envisage convergence in tariff reductions and areas of “deep integration” such as rules of origin, investment and intellectual property rights.

Lastly, from a general political perspective, it is remarkable that not only commercial and economic relations but also political relations with our FTA partners have turned out to have a more stable character. It is also observed that the Committees/Councils established by the FTAs enable partner countries to meet at the highest-level and to discuss further cooperation opportunities. Moreover, FTAs raise awareness of partner countries about each others’ economic and commercial potentials and improve mutual understanding among business people, which contribute in the strengthening of friendly ties among partner countries.

[1]The FTA between Turkey and Syria was suspended on 6 December 2011.

[2] The Gulf Cooperation Council suspended its all FTA negotiations.