Britain on Tuesday announced it had signed an £18.6 billion ($25 billion, 20.5 billion euro) trade deal with Turkey that “lays the groundwork” for a more comprehensive post-Brexit agreement in the future.
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Ahead of the signing, Turkish President Recep Tayyip Erdogan said it would be “our most important agreement since the customs union deal” which Turkey struck with the European Union in 1995.
Given Turkey’s status in the EU customs union, Britain had to wait until it finally agreed a trade deal with Brussels last week before it could finalize the terms of the agreement with Ankara.
The British government called the deal with Turkey, which largely replicates the current trading relationship, a “major win for UK automotive, manufacturing and steel industries”.
The agreement “paves the way for a new, more ambitious deal with Turkey in the near future, and is part of our plan to put the UK at the center of a network of modern agreements with dynamic economies”, said trade minister Liz Truss.
Preferential tariffs will be maintained for the 7,600 UK businesses that export goods to Turkey, protecting supply chains for automotive manufacturers based in Britain.
US auto giant Ford welcomed the announcement, with European president Stuart Rowley calling it “extremely significant”.
Ford’s Dagenham factory in London exports much of its diesel engine production to the Ford Otosan joint venture in Turkey, where the engines are fitted into Ford Transit vehicles.
“Given that Ford and Ford Otosan business constitutes more than 10 percent of the total trade volume between the UK and Turkey, this trade agreement is extremely significant for us and will help to secure jobs in both countries,” Rowley said.
Britain has now signed trade agreements with 62 nations following its 2016 decision to leave the EU.
Andy Burwell, director at business lobby group CBI, said Turkey’s deep trading relationship with the EU meant an agreement was “complicated”.
But the “pace at which the deal has been finalized... shows the strength and depth of the relationship”, he said.