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Article of our Board Member H.Cahit SOYSAL entitled Trade with England after FTA was published in Dünya Newspaper on 25.07.2022

Article of our Board Member H.Cahit SOYSAL entitled Trade with England after FTA was published in Dünya Newspaper on 25.07.2022

The decision to leave the European Union membership as a result of the referendum held in the UK in 2016 caused shock in many countries, especially in EU member states. Since its establishment, for the first time, a country wanted to leave the EU membership of its own accord. This exit spoiled the EU's air.

The Government of David Cameron, who served in the UK at that time, also complained about restrictions imposed by the European Union, capitulations, incorrect policies that constantly stand out in the European Union, stating that the Union reacted slowly to events and took late measures.

The wheels were really slow in the European Union. During my tenure in the public sector, I attended the European Commission Specialization Committee meetings, in which Turkey was able to attend as an “observer” within the framework of the Customs Union principles, and expressed an opinion on behalf of Turkey. In order to take a simple decision, each country representative feels obliged to speak up; there were hours of discussion over incredible details and unnecessary conflicts. According to the current procedure, even an ordinary bylaw change could not enter into force before six months.

Although a referendum was held in the United Kingdom in 2016, the exit negotiations between the parties began in June 2017. The UK has paid a hefty "exit fee" resulting from its commitments to the EU budget. An agreement has also been reached on the previously vested rights of EU and UK citizens. The transition period of BREXIT 2020 has been accepted. As a result of long negotiations, the “Trade and Cooperation Agreement” defined as the exit agreement, was signed between the parties on 24 December 2020. Accordingly, a new free trade agreement will be made between the parties; Customs duty and quota will not be applied to goods complying with the rules of origin; a common policy on the environment and combating climate change would be pursued.

While the UK was negotiating post-exit arrangements with the EU, it was also negotiating with its major trading partners on how to conduct trade and was working on draft free trade agreements (FTA) with these countries. One of these countries was Turkey. Since Turkey had established a Customs Union with the EU, an agreement had to be reached in order to protect the gains this union provided to the parties. When the agreement was signed with the EU on 24 December 2020, the “Free Trade Agreement between the Republic of Turkey and the United Kingdom of Great Britain and Northern Ireland” was signed in Ankara on 29 December 2020, five days later.

According to the Turkey-United Kingdom Free Trade Agreement, customs duty and quota will not be applied to goods that comply with the rules of origin; customs procedures and trade will be facilitated; the parties would not put up technical barriers to each other; TEV (Compensatory Tax) would be charged for non-bilateral inputs used in the manufacture of products classified in tariff chapters 50 to 63.

The most important of the conveniences brought by the agreement is that instead of issuing a certificate of origin in accordance with a form for the declaration of origin, on the invoice, delivery note or a commercial document regarding the trade carried out, "The exporter of the inputs within the scope of this document declare that these inputs originate in Turkey (or the United Kingdom), unless it is expressly stated otherwise. (Place, date and signature of the exporter)” would be sufficient for the declaration of origin. On the other hand, the declaration of origin could also be issued electronically by the exporter. In such cases, the condition that the organizer should be clearly written and the form and content should be in accordance with the example included in the protocol would be sought.

In addition, the original of the invoice, delivery note or commercial document containing the original signature of the original signature to be signed by the exporter in his own handwriting or signed electronically, without any signature image, or the copy sent to the importer by transferring to electronic media, the printout received from the printer, would be accepted as a “declaration of origin”. The “declaration of origin", which was also issued, was to be valid for 12 months, which was considered a longer period compared to its counterparts.

The FTA signed between Turkey and the United Kingdom includes more advanced provisions than the advantages of the Customs Union between Turkey and the EU, and further facilitates trade. On the other hand, it is hopeful that this FTA also leaves the door open to the free movement of services and that this issue is open to negotiation in the future.

Since it has been one and a half years since the signing of the FTA with Turkey, it is useful to examine in which direction the developments are moving. Our exports to this country between the years 2013 and 2020, when the EU Customs Union is in place, starting from the year 2013, respectively 9.2, 10.2, 10.8, 12, 9.9, 11.5, 11,3 and 11.2 billion dollars. After the entry into force of the FTA, which was signed between us, we exported 13.7 billion dollars to this country in 2021. In the first five months of 2022, the total of our exports reached 5.3 billion dollars.

Likewise, between 2013 and 2020, when we had the EU Customs Union with the UK, our imports from this country were 6.6, 6.2, 5.8, 4.5, 6.8, 7.6, 5.6 and 5.6 billion dollars, starting from 2013, respectively. After the FTA between us came into force, we imported 5.6 billion dollars from this country in 2021. In the first five months of 2022, the volume of our imports from this country reached 2.6 billion dollars. As can be seen, the Free Trade Agreement, which was replaced the Customs Union, has led to developments in favor of Turkey, not against Turkey. While our annual total exports to this country increased from 11 billion dollars to 14 billion dollars, our imports, which amounted to 5.6 billion dollars, follow a steady course.

While such an example has happened, one asks himself: "While the Customs Union between Turkey and the EU contains more severe provisions, would it be better to terminate this union and sign a free trade agreement with similar provisions between Turkey and the EU?"