Turkey–United Kingdom Free Trade Agreement: Increased Market Access and Tariff Reductions

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The Turkey–United Kingdom Free Trade Agreement is a significant step forward for trade between the two countries. The agreement provides increased market access and tariff reductions for businesses in both countries.

The agreement eliminates tariffs on 92% of Turkey's exports to the UK, making it easier for Turkish businesses to export their goods to the UK market. This is a major boost for Turkish businesses, particularly in the automotive and textile sectors.

The UK also benefits from the agreement, with increased access to Turkey's large and growing market. The agreement eliminates tariffs on 99% of the UK's exports to Turkey, making it easier for British businesses to export their goods to Turkey.

Tariff and Customs

Preferential tariff rates for bilateral trade in goods between the UK and Turkey continue to apply as set out in the agreement. These rates can be lower than the non-preferential applied rates for imports into the UK.

Credit: youtube.com, Decoded: UK-Turkey Deal

You can use online tools like the UK Integrated Online Tariff and Check How to Export Goods to check product-specific and country-specific information on tariffs and regulations that currently apply to UK trade in goods.

Exporters need to prove origin via self-certification to benefit from these preferential rates. This means the good must be originating in one of the parties.

To eliminate customs duties on industrial goods, each party shall eliminate all customs duties on originating industrial goods of the other Party. Industrial goods are defined as those products falling within Chapters 25 to 97 of the Harmonized System.

Neither Party shall adopt or maintain any duty, tax, fees or other charges of any kind imposed on the export of goods to the territory of the other Party, unless the duty, tax, fee or charge is also applied to like goods destined for domestic consumption.

You can use EU materials or processing in your exports from the UK to Turkey and in your exports from Turkey to the UK. However, you must ensure the working or processing you do goes beyond the minimal operations listed in the agreement.

Credit: youtube.com, Webinar: UK-Turkey Free Trade Agreement: Key terms, Procedures, and Future (1 June 2021)

To benefit from the preferential tariffs under the UK-Turkey FTA, goods must meet the UK-Turkey preferential rules of origin. Businesses and traders can still trade goods that do not meet the rules of origin, but they will not benefit from preference under the UK-Turkey FTA.

Here are the two parts of the rules of origin in the UK-Turkey FTA:

1. Primary and administrative requirements that apply to all products being traded under preference.

2. Product-specific rules of origin that set out the specific requirements for each product based on their Harmonized System (HS) code.

To be considered originating and qualify for preferential tariffs, products must be sufficiently worked or processed within the parties to the agreement.

As an importer, you must declare that you hold proof your goods comply with the rules of origin to benefit from preferential tariffs when importing into the UK from Turkey or importing into Turkey from the UK.

Key Terms and Procedures

Credit: youtube.com, How Close are Turkey and the UK to a Free Trade Agreement?

The UK-Turkey Free Trade Agreement has been in effect since its signing. The agreement supports the trading relationship worth £18.6 billion in 2019.

To benefit from the preferential tariffs under the UK-Turkey FTA, goods must meet the UK-Turkey preferential rules of origin. These rules are set out in two parts: general provisions and product-specific rules.

Businesses and traders can still trade goods that do not meet the rules of origin, but they will not benefit from preference under the UK-Turkey FTA and may have to pay standard tariffs.

The rules of origin in the UK-Turkey FTA are based on the Harmonized System (HS) code, which is used by more than 200 countries worldwide. The HS code is developed by the World Customs Organization (WCO) to describe and classify groups of goods.

To be considered originating and qualify for preferential tariffs, products must be sufficiently worked or processed within the parties to the agreement.

Calm multiracial friends holding hands with closed eyes sitting at table served with roasted turkey and other dishes and praying before having Thanksgiving dinner
Credit: pexels.com, Calm multiracial friends holding hands with closed eyes sitting at table served with roasted turkey and other dishes and praying before having Thanksgiving dinner

Here are the two parts of the rules of origin in the UK-Turkey FTA:

  • General provisions: These are rules that apply to all products being traded under preference. They include both the primary and administrative requirements.
  • Product-specific rules of origin: These are the specific rules that set out, for every product based on their HS code, what the requirements are for that product to be considered ‘originating’.

NFU Welcomes Talks Reopening

The NFU welcomes the reopening of trade talks between the UK and Turkey. This is a significant development for British farmers, who stand to benefit from increased access to the Turkish market.

The NFU President, Minette Batters, has expressed optimism about the potential for UK produce to be well-received by Turkish consumers. If granted greater access to the Turkish market, she believes that British farmers could see the value of their exports grow.

A new and updated trade deal with Turkey could present opportunities for UK farmers to sell more high-quality, climate-friendly British food overseas. This includes products such as lamb, dairy, and malting barley.

The NFU will call for member feedback to shape its response to the consultation period. This is expected to open shortly, allowing businesses, organisations, and individuals to help shape the UK's negotiation aims before talks begin next year.

The UK and Turkish governments have announced plans to begin talks on an updated FTA, which will replace the current FTA that has rolled over since the UK left the European Union.

UK Agreement: Key Terms and Procedures

Fishmonger Standing at Bazaar in Turkey
Credit: pexels.com, Fishmonger Standing at Bazaar in Turkey

The UK-Turkey Free Trade Agreement has several key terms and procedures that businesses need to be aware of. The agreement was signed on January 8, 2021, and is in effect.

To benefit from preferential tariffs, goods must meet the UK-Turkey preferential rules of origin. This means that products must be sufficiently worked or processed within the parties to the agreement.

There are two ways in which a product can be considered originating: it can be 'wholly obtained' or it has been substantially transformed in line with the relevant product-specific rule. Examples of wholly obtained goods include minerals extracted from the soil of a single country and live animals born and raised in a single country.

The ad-valorem, or 'value added' rule, is one of the three basic rules used to decide if goods are sufficiently transformed. The other two rules are the change of tariff classification and manufacture from certain products or through specific processes.

Scrabble tiles spelling 'China' and 'Tariffs' symbolize global trade issues.
Credit: pexels.com, Scrabble tiles spelling 'China' and 'Tariffs' symbolize global trade issues.

As an importer, you must declare that you hold proof your goods comply with the rules of origin to benefit from preferential tariffs when importing into the UK from Turkey or importing into Turkey from the UK. Your declaration on origin can be in electronic format.

To be considered originating and qualify for preferential tariffs, products must be sufficiently worked or processed within the parties to the agreement. This means that goods must meet the UK-Turkey preferential rules of origin.

Here are the two ways in which a product can be considered originating:

  • Wholly obtained: goods that have been exclusively obtained or produced in the territory of one country, without using materials from any other country.
  • Substantially transformed: goods that have been sufficiently worked or processed within the parties to the agreement.

Note that businesses and traders can still trade goods that do not meet the rules of origin, but they will not benefit from preference under the UK-Turkey FTA and may have to pay standard tariffs.

Conformity Assessment

Conformity assessment is a crucial process for businesses exporting or placing goods on the market in certain regions. The UKCA marking will be required for most goods placed on the market in Great Britain from 31 December 2022.

Men Sitting on Horses in Winter with Flag of Turkey
Credit: pexels.com, Men Sitting on Horses in Winter with Flag of Turkey

Businesses in Great Britain should familiarize themselves with the guidance provided to support a smooth transition to UKCA marking. This will help them avoid any potential issues with their products.

In Turkey, however, conformity assessment and marking requirements remain unchanged. Any mandatory third-party conformity assessment must be conducted by a Turkish recognized notified body.

Conducting conformity assessments can be a complex process, but being aware of these requirements will help businesses navigate it more efficiently.

Trade Facilitation

The Turkey–United Kingdom Free Trade Agreement has made significant strides in trade facilitation, reducing the time and cost of trade between the two countries.

The agreement has introduced a simplified customs procedure, allowing for the use of electronic customs declarations, which can reduce the time it takes to clear goods by up to 90%.

This has been a game-changer for businesses, saving them time and resources that can be better spent on growth and innovation.

successful negotiate and handshake concept, two businessman shake hand with partner to celebration partnership and teamwork, business deal
Credit: pexels.com, successful negotiate and handshake concept, two businessman shake hand with partner to celebration partnership and teamwork, business deal

The agreement also establishes a mechanism for resolving trade disputes, providing a clear and transparent process for resolving issues that may arise.

This has helped to build trust between the two countries, reducing the risk of trade disputes and creating a more stable business environment.

The agreement has also committed to implementing the World Trade Organization's (WTO) Trade Facilitation Agreement, which aims to simplify and harmonize trade procedures worldwide.

This will help to further reduce trade barriers and costs, making it easier for businesses to trade with the UK and Turkey.

Increased Market Access

The Turkey–United Kingdom Free Trade Agreement has already brought about some positive changes, but there's still room for improvement. Market access is good in some sectors, but there's scope to liberalise tariffs on certain products.

One area that could see an increase in exports is lamb, as Turkey has a 100% duty on UK lamb carcasses and half carcasses, and a 225% duty on specific cuts. This is a significant barrier to trade.

Flag of Turkey
Credit: pexels.com, Flag of Turkey

The existing FTA between the UK and Turkey doesn't include preferential treatment for UK lamb exports, which is a missed opportunity. Removal of technical barriers, such as the lack of an active or workable export health certificate, should be a priority.

Cheese exports are included in the current FTA, with a Tariff-rate quota allowing duty-free access up to 333 metric tonnes. However, the UK has exceeded this quota, with exports averaging 460t in 2019 and 2021.

Currently, the UK market is not available to Turkish exporters of poultry meat, with no veterinary certification available. This is a one-way street, as the UK is a significant supplier of poultry genetics to Turkey.

Tariff Rates and Duties

Preferential tariff rates for bilateral trade in goods between the UK and Turkey continue to apply as set out in the agreement.

You can use online tools like the UK Integrated Online Tariff and Check How to Export Goods to check product-specific and country-specific information on tariffs and regulations that currently apply to UK trade in goods.

Silhouette of Two People Near Sea in Distant of  Ortakoy Mosque, Istanbul Turkey
Credit: pexels.com, Silhouette of Two People Near Sea in Distant of Ortakoy Mosque, Istanbul Turkey

Exporters need to prove origin via self-certification in order to benefit from these preferential rates, for example, the good must be originating in one of the parties.

Industrial goods, defined as those products falling within Chapters 25 to 97 of the Harmonized System, with the exception of those listed in Annex 2-A, are eligible for elimination of customs duties.

Agricultural goods, defined as those products falling within Chapters 1 to 24 of the Harmonized System, and also any additional products listed in Annex 2-A, are subject to reduction or elimination of customs duties.

The UK's Most Favoured Nation tariff schedule has been updated, resulting in non-preferential applied rates for imports into the UK that may be lower than the original rates.

Clara Donnelly

Writer

Clara Donnelly is a versatile writer with a passion for crafting engaging content across various industries. With a keen eye for detail and a knack for storytelling, she brings complex topics to life through her writing. Her expertise spans a range of topics, including sustainable packaging solutions, where she explores innovative ideas and eco-friendly practices that minimize waste and promote environmental responsibility.

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