Thursday, December 8, 2022

Erdogan visits Kyiv, signs long-anticipated free trade agreement

by Alexander QueryFebruary 3, 2022 7:16 pm
Ukraine's President Volodymyr Zelensky (L) and his Turkish counterpart Recep Tayyip Erdogan (C) review an honour guard during a welcoming ceremony prior to their talks in Kyiv on Feb. 3, 2022. (Photo by Sergei SUPINSKY / AFP)

Turkey and Ukraine have straightened bilateral relations on Feb. 3 by signing the long-anticipated free trade agreement. President Volodymyr Zelensky called the signing of the agreement a "historic moment."

"We have come a long, difficult way to open new horizons of our cooperation," he added.

The signing came amid the visit of Turkish President Recep Tayyip Erdogan to Kyiv, where he met Zelensky and members of the Ukrainian government, among them Prime Minister Denys Shmyhal and Foreign Minister Dmytro Kuleba.

The deal to sign the FTA has been dragging on since 2007, with Ukrainian officials regularly promising to reach an agreement to no avail.

Now that the agreement is signed, Burak Pehlivan, chairman of the Turkish-Ukrainian Business Association (TUID), says Ukraine could boost its trade volume with Turkey to over $10 billion per year with the cancellation of customs duties, bringing the Black Sea neighbors’ economies closer.

Big deal 

Last year, Turkey ranked fourth among Ukraine's most important trading partners after China, Poland and Russia.

Business ties between the two countries are growing every year. Bilateral trade volume rose 67% year-on-year in 2021, from $5 billion in 2020 to over $7 billion.

Yet both countries have long sought to tear down barriers to increase trade.

In total, Ukrainian companies exporting products to Turkey paid $400 million in customs last year, while Turkish companies paid over $130 million. By erasing the vast majority of custom fees, the free trade agreement could increase Ukraine's gross domestic product by 2%, experts say.

First mentioned in 1998, talks over the agreement officially began in 2007 and have been dragging on ever since. Negotiations on a free trade deal were stalled due to disagreements over grains and metal.

Metal products made up over 70% of Ukraine's total exports to Turkey in 2021 and were worth $1.97 billion. Grain exports accounted for an additional $920 million.

Ukraine's President Volodymyr Zelensky (L) and his Turkish counterpart Recep Tayyip Erdogan review the honor guard during a welcoming ceremony, prior to their talks in Kyiv on Feb. 3. (Press service of Ukrainian president)

However, Ukraine's main agricultural exports - soybeans and corn, which alone make over 70% of the country's agricultural exports - were already shipped without tariff.

Pehlivan praised the deal as a massive achievement and the results of years of negotiations.

“We are in the golden age of bilateral business relations,” he told the Kyiv Independent. 

Some Ukrainian businesses tend to see the agreement as a risk, as Turkish producers are generally more competitive than Ukrainian ones.

Pehlivan insisted that a wide-ranging trade deal will benefit both partners. “We want to make the cake bigger so our Ukrainian counterparts eat more of the cake,” he said.

Turkey joined many other nations that have already sealed a free trade agreement with Ukraine, including the 27-nation European Union, Canada, Georgia and Israel.

Military support

The free trade deal aside, Ankara and Kyiv signed an agreement to develop their cooperation in the field of high tech, aviation, and space technology. Ukraine also signed a deal to manufacture Turkish-developed Bayraktar TB2 drones on home turf.

According to the agreement, the Baykar Makina company, co-owned by Erdogan’s son-in-law, will launch production in Ukraine. Kyiv will be able to build and repair Bayraktar drones at a significant discount.

The Bayraktars made it to Ukrainian headlines in October 2021, when the Ukrainian military delivered its first drone strike against Russian-led forces, in retaliation for an artillery attack that had killed a Ukrainian serviceman and injured two. The drone attack effectively silenced a piece of artillery without casualties.

According to official figures, Ukraine’s military currently operates a total of 12 Bayraktak TB2s, which are used for reconnaissance missions in eastern Donbas, parts of which are occupied by Russia since 2014.

According to Bloomberg, Turkey is ready to ship 20 more drones to Ukraine and has already sold more drones than previously disclosed.

Turkey in the middle

Erdogan's visit to Kyiv, together with ministers of defense, foreign affairs, and trade came amid the ongoing Russian military escalation.

"We support Ukraine's territorial integrity, together with Ukrainian Crimea," said Erdogan on Feb. 3. The peninsula has been occupied by Russia since March 2014.

Since November, Russia has elevated tensions on Ukraine’s border by massing over 120,000 troops along with tanks, artillery and other military equipment. Additionally, Russia has moved troops and equipment into Belarus, Ukraine’s northern neighbor, for joint military drills.

Erdogan suggested holding a meeting between Zelensky and Russian President Vladimir Putin in Turkey for the two to "talk face to face."

Erdogan’s visit ends a busy diplomatic week for Zelensky. Prior, Kyiv was visited by U.K. Prime Minister Boris Johnson and his Polish counterpart Mateusz Morawiecki on Feb. 1 and Dutch Prime Minister Mark Rutte on Feb. 2.

Alexander Query
Alexander Query
Business reporter

Alexander Query is a business reporter at the Kyiv Independent. He is the former business editor at the Kyiv Post. He worked as a TV correspondent and an anchorman at UATV in Ukraine, and received a BA in modern literature from La Sorbonne, in Paris.

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