A Deadlock; Brexit

If Britain leaves the EU without an agreement, the trade balance between Britain and Turkey can be harmed. According to the report; in case of a hard Brexit, Turkey’s income from export will decrease 2.4 billion dollar and ,after South Korea and Pakistan,  Turkey will become the third country that will be affected most adversely.

EU leaders and UK agreed on the delay of Brexit until 31st October 2019. There are lots of different scenarios in Britain on what will happen next and the situation changes everyday. Even though Turkey is not a member state, the trade relations between the two countries are expected to be affected significantly. We asked the authorities about the possible scenarios;

How will Turkey be affected if a no-deal Brexit takes place?

In case of a no-deal Brexit (Hard Brexit), the situation will have negative effects on Turkey in terms of economic issues and commercial relations. If Britain exits the EU without a deal Turkey may face an annual decrease on exports of $2.4 billion. The duration demanded for Brexit, meaning the separation of the United Kingdom from the European Union has expired. However, London requested another two periods of retardation and 31st October, 2019 is agreed on as the last Brexit date. If Britain cannot reach a consensus with the EU and is excluded from the Customs Union in commercial terms within this period, Turkey is expected to lose its second largest export market for a long period of time. The automotive and textile sectors are among the ones which will highly be affected and this will most probably put the business sector in a risky situation in terms of economical loss. Every year, 170 thousand automobiles produced in Turkey, are sold to the UK. The overall number on the annual export in textile and clothes is above 2 billion dollars.

Turkey will lose an export market worth billions of dollars

According to a report by the United Nations (UN), in the advent of harsh Brexit, Turkey will be the third most badly-affected non-EU country following South Korea and Pakistan, suffering an annual loss of $2.4 billion in terms of exports. Turkey which continues to be in agreement with the EU regarding the Customs Union will not be able to issue a special treaty of commerce unless the EU and the UK come to a trade agreement between each other.  In this case, until there is a trade agreement between the EU and the UK, Turkey and the UK will have to apply customs tariffs on mutual trade, which means bad news for the trade volume that has reached to 18.6 billion dollars in 2018.  Both countries will lose free access to each other’s market. The prices of British products in Turkey and Turkish products in UK will increase and the competitive capacity will regress. 

EDF: Both countries should prepare contingency plans

According to the General Secretary of Economic Development Foundation Çiğdem Nas who spoke to Reuters, both countries should prepare precaution plans in order to overcome this issue before the stated date. Nas stated that “For instance, companies may stock their products renting warehouses in the other country for a limited time in order to handle the situation. Thus, this is not a permanent solution. In case of a harsh Brexit, it will be very difficult to change the current commercial net.”

Turkey Rapporteur of the European Parliament (EP) has added the following comments: “If we have a no-deal Brexit, Turkey and Britain can have their mutual commercial trade agreements until they have agreed on a trade treaty with the EU, which will take many years.” 

Turkey is the 19th biggest trade partner of the Britain

However, the trade relations between the two countries can be developed in the post-Brexit era when the UK will lose its member state status. According to HMRC, Turkey is the 19th biggest trade partner of the UK. In respect of Turkey’s Ministry of Foreign Affairs’ data, the trade volume between UK and Turkey reached 18,6 billion dollars in 2018 and there are more than 3,000 British companies operating in Turkey.

According to the report published by the UK’s Department of International Trade, there is not enough time to sign continuity trade agreements before Brexit’s due date. If it were to happen, the agreements would prevent possible trade disruptions between the UK and a number of countries including Turkey, Japan, Morocco, San Marino and Andorra.

The report says that; “The best way to avoid the trade cuts is to exit the EU with an agreement. This will help to protect the trade relations with the EU and existing trade relations with other countries within the EU agreement.”. It is recorded that, the Ministry continues to debate about the trade regularity after Brexit. The UK is expected to go through a busy period as the details of the Brexit agreement needingto be discussed until a new meeting date is set with the EU leaders. υ