The Comprehensive Economic Partnership Agreement (CEPA) signed by the UAE and Turkey last Friday is expected to more than double the volume of bilateral trade to $40 billion over the next five years, creating joint opportunities in priority sectors.
The agreement aims to eliminate or reduce tariffs on 82 percent of goods and products, or more than 93 percent of the components of intra-regional non-oil trade.
The agreement also effectively contributes to doubling non-oil bilateral trade from its current value to $40 billion annually within 5 years and creating 25,000 new jobs in the two countries by 2031, according to the Emirates News Agency (WAM).
Trade between the UAE and Turkey jumped 40 percent in 2022 compared to the previous year. The data shows that non-oil exports from the UAE to Turkey amounted to $5.6 billion in 2022, an increase of 109 percent compared to 2021, while the value of re-exports from the UAE to the world grew by 87 percent to reach $2.3 billion in 2022.
This means that Turkey is an important trading partner for the UAE and may be a gateway to parts of Europe. The partnership agreement is also expected to generate significant opportunities for companies and investors in both countries and a range of sectors.
Turkey announced in 2021 that its goal is to become a country with a current account surplus, based on a higher volume of exports and enhancing its tourism revenues, in light of low interest rates, despite high inflation and the currency that has recently declined.
Data issued by the Ministry of Trade indicate that Turkey trade deficit rose by 138.4 percent in 2022 from the previous year to$110.19 billion, despite the increase in exports at the “highest level ever”, according to the description of Turkish President Recep Tayyip Erdogan, and by 13 percent to $254.2 billion, but imports jumped 34.3 percent to $364.4 billion.
The World Bank said Turkey two major earthquakes last month caused $34.2 billion in direct material damage, but the country’s total reconstruction and recovery costs could be twice as high.
The World Bank’s Turkey bureau chief, Humberto Lopez, said the bank estimates the earthquakes will also reduce at least half a percentage point of Turkey’s projected GDP growth to 3.5 percent from 4 percent in 2023.
It is not the first Comprehensive Economic Partnership Agreement (CEPA) concluded by the UAE. Before that, the UAE signed with many countries, the first of which was with India in February 2022, which aims to increase non-oil bilateral trade to $ 100 billion in the next five years, in implementation of its strategic plans within the “Fifty Projects”, which include strengthening its international partnerships with strategic markets around the world to work to strengthen its position as a major gateway for the flow of trade and logistics.
The UAE Ministry of Economy had earlier announced its goal of finalizing a draft comprehensive partnership agreement with Georgia and Cambodia in the first quarter of this year.
Signing Ceremony
The signing ceremony of the comprehensive agreement was witnessed by UAE President Sheikh Mohamed bin Zayed Al Nahyan and Turkish President Recep Tayyip Erdogan, during a summit held via video conference. It was signed by UAE Minister of Economy Abdullah bin Touq Al Marri and Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi. It was signed by Turkey’s Trade Minister Mehmet Muş, who visited Abu Dhabi last week.
UAE President Sheikh Mohammed bin Zayed announced in a tweet on his official Twitter account: “I witnessed with (Turkish) President Recep Tayyip Erdogan during a video call the signing of the Comprehensive Economic Partnership Agreement between the UAE and Turkey. A qualitative step in the march of relations between the two countries. Through it, we seek to enhance economic and trade cooperation for the benefit and prosperity of all.”
During the summit, Sheikh Mohamed bin Zayed said that “the signing of the partnership is an embodiment of the great and qualitative development witnessed by our relations during the last period, as the total non-oil trade between the UAE and Turkey reached nearly $19 billion in 2022, an increase of 40 percent over 2021 and 112 percent over 2020.”
Sheikh Mohammed noted that Turkey has become the fastest growing partner among the UAE’s top 10 trading partners.
He stressed that “the agreement expresses the common will to launch a new phase of relations between our two countries in various fields. It will also contribute to strengthening economic cooperation. and push the development process in both countries towards a bright future.”
He explained that the agreement not only aims to stimulate trade and investment exchange and joint economic growth, but also establishes a real development partnership, building common interests and consolidating stronger and stronger strategic relations between the two countries.
For his part, Turkish President Recep Tayyip Erdogan said: “Today we are writing together a new chapter in our relations with the UAE,” noting that the joint efforts of the two sides aim to strengthen bilateral economic relations, which are based on a common history.
Erdogan added that the CEPA signed by the two countries and the important advantages it included, such as the liberalization of bilateral goods, services and trade with a focus on small and medium enterprises, facilitating the work of investors and setting rules for the protection of intellectual property rights according to the highest standards, will be an incentive to promote trade and investments.
The Turkish president continued: “We will reap the fruits of this agreement in our countries and our region within a short period of time, which will stimulate more cooperation between the business communities in both countries.”
Erdogan referred to the earthquakes in large areas of Turkey and the great destruction they caused and their repercussions on about 14 million Turks living in these areas, looking forward to the reconstruction of these areas within a year and the construction of high-quality and safe buildings to meet the challenges of housing in the entire earthquake areas.
The CEPA between the UAE and Turkey is designed in a mutually beneficial manner that stimulates long-term, sustainable and inclusive economic growth in both countries, and improves access to the Turkish market for exporters from the UAE, including key sectors such as contracting, metals and their products, polymers and other manufacturing products.
The deal was finalized in Abu Dhabi on Friday during a visit by Turkish Trade Minister Mehmet Muş.
The two countries signed a defense industry cooperation agreement and a series of economic agreements in 2022, after the Turkish president’s visit to the UAE.
In 2021, the UAE announced the establishment of a $10 billion fund to support investments in Turkey.
“The $10 billion fund attracts a lot of investment from the UAE, but at the same time, this partnership agreement will open more doors, because there will be appropriate mechanisms for selecting projects and investments,” Thani al-Zeyoudi told Reuters.
“Turkey has huge potential for growth. It will be one of the largest emerging economies dominating global markets 20 years from now.”
