The UK and Turkey signed a free trade agreement (UK-Turkey FTA) on 29 December 2020. A free trade agreement aims to reduce barriers to trade between signatory countries. This is one of several agreements that the Government has created since the UK’s departure from the EU, in order to maintain as far as possible existing trade relationships with other countries.
The Department for International Trade’s guidance on trade with Turkey states that the UK’s previous trading relationship with Turkey was governed by the EU-Turkey customs union. These existing arrangements have now been transitioned into a traditional free trade agreement.
The UK-Turkey FTA has provisionally applied since 1 January 2021 and awaits ratification procedures by both countries.
What the UK-Turkey FTA does
The UK-Turkey FTA sets out how the new trading relationship between the UK and Turkey works. The Department for International Trade’s guidance on trade with Turkey summarises the provisions in the agreement:
- trade in goods – including provisions on preferential tariffs, tariff rate quotas, rules of origin and sanitary and phytosanitary measures;
- customs and trade facilitation;
- intellectual property;
- government procurement;
- technical barriers to trade;
- trade remedies; and
- dispute settlement.
The Government published several documents alongside the UK-Turkey FTA, including:
- Explanatory Memorandum: This includes policy considerations. For example, the purpose of the UK-Turkey FTA is to ensure the continuity of trade between the UK and Turkey. The Government says it is intended to have the same effect as pre-existing arrangements that the UK was a party to whilst a member of the EU. However, due to the nature of Turkey’s relationship with the EU, there are certain elements that cannot be replicated in the new agreement. This includes the free circulation of goods. In these cases, the UK-Turkey FTA provides alternative arrangements.
- Report to Parliament by the Department for International Trade: This report includes an explanation of the differences between the UK-Turkey FTA and the existing arrangements with the EU. The main difference is the transition from a customs union to a traditional free trade agreement structure. In the EU-Turkey custom union, goods benefit from free circulation between the EU and Turkey. This is different to a free trade agreement, where products can only be traded free of import duties if they originate in signatory countries. The report states that these changes impact upon trade because goods now need to meet preferential rules of origin agreed between the UK and Turkey. The new rules of origin provisions also affect the documentation requirements for traders.
- Annex to Decision No 02/2021: This provides an update on the new rules of origin provisions.
Unless the UK and Turkey agree otherwise, either country can terminate the agreement six months after notifying the other party in writing.
Scrutiny of the UK-Turkey FTA
The House of Lords International Agreements Committee considered the UK-Turkey FTA on 24 March 2021. It said that Turkey is the UK’s 19th largest trading partner. This accounts for 1.3% of total UK trade. In 2019, trade in goods and services between the UK and Turkey was worth £18.6 billion.
The committee drew the agreement to the special attention of the House due to its political importance and differences from the pre-existing EU-Turkey customs union arrangement.
The committee considered the scope of the UK-Turkey FTA. It highlighted that certain provisions would be subject to review after the EU-UK Trade and Cooperation Agreement comes into force. That agreement is currently being applied provisionally pending completion by the EU of its internal ratification procedures.
The UK-Turkey FTA converts the existing EU-Turkey customs union arrangement into a standard bilateral free trade agreement between the UK and Turkey. This, in turn, introduces rules of origin requirements for trade in goods between both countries. The committee said that the UK-Turkey FTA would not be a comprehensive free trade agreement. This is because the UK-Turkey FTA would focus on trade in goods only, unlike the pre-existing arrangements between the EU and Turkey that cover a range of provisions.
The committee noted that the UK-Turkey FTA is not intended to be permanent. It said the aim is to develop an enhanced agreement that covers trade in services, agricultural goods, and investment, amongst other things. This enhanced agreement would be created following a review that both countries have committed to undertake within two years of the agreement entering into force. The committee called on the Government to hold an early public consultation for an enhanced agreement.
In addition, the committee asked the Government to provide an impact assessment of additional costs on UK businesses as a result of the transition from the EU-Turkey customs union to a bilateral free trade relationship.
The committee spoke of regret for the absence of any references to human rights and workers’ rights in the agreement. It asked the Government to use the future review to introduce such provisions.
The Government responded to the committee’s report via a letter sent on 9 April 2021. On the issue of an early consultation on an enhanced agreement, the Government committed to gathering views of stakeholders prior to commencing new discussions with Turkey. It said this would inform its approach to potential future negotiations.
In response to the committee’s request for an assessment of costs on UK businesses, the Government said that if traders fulfilled the new rules of origin requirements then, aside from limited exceptions, the tariffs they are charged would stay the same.
Concerns about the UK-Turkey FTA have also been raised outside of Parliament. In January 2021, a Politico article highlighted concerns raised by British and Turkish trade unions. They called for a suspension of the agreement following concerns about Turkey’s treatment of public employees and trade unionists. A UK government spokesperson is cited as responding to this by saying:
Engaging with other countries through trade, rather than isolating them, is a more effective way to bring about change. Human rights are an important issue and that is why we regularly raise human rights concerns with the Turkish government at a senior level.
Before the UK-Turkey FTA can fully enter into force, both countries must ratify it.
In the UK, the Constitutional Reform and Governance Act 2010 (CRAG) requires a treaty to be laid before Parliament before it can be ratified. Once laid, a scrutiny period of 21 sitting days will commence. This gives both Houses the chance to review its contents and, where necessary, object to ratification by passing a resolution before the end of the scrutiny period. The Government can still ratify a treaty if the House of Lords has objected to it, whereas the Commons in theory has the power to delay ratification indefinitely if it repeatedly resolves against ratification.
The Government formally laid the UK-Turkey FTA before Parliament on 24 February 2021. The CRAG objection period ended on 14 April 2021.
The House of Lords is due to debate the agreement on 27 April 2021. No formal debate has been scheduled in the House of Commons.
Cover image by Meg Jerrard on Unsplash.