GCC and Turkey Launch Free Trade Agreement Negotiations in Ankara

Analysts predict that the Free Trade Agreement between Turkey and the six-member GCC bloc will significantly strengthen economic and trade relations, potentially establishing “one of the world’s largest FTAs” with a trade opportunity valued at US$2.4 trillion. Turkey is keen to conclude talks by the end of 2024.

The first round of negotiations for the Free Trade Agreement (FTA) between Turkey and the Gulf Cooperation Council (GCC) countries took place from July 29 to July 31 in Ankara. The talks, involving nine Saudi governmental entities, mark an important step toward enhancing economic ties between the two regions.

Key topics discussed included goods and service trade, rules of origin, contracting, tourism and health, and steps to facilitate investments.

The trade treaty talks represent a significant milestone in the economic collaboration between the GCC and Turkey. The successful conclusion of this FTA could unlock new opportunities for trade, investment, and regional cooperation, further solidifying the strategic partnership between these two key economic regions in the Middle East.

Turkey’s large population, diverse economy, and potential for demand growth can be catered to by GCC countries. However, the extent of the negotiations will depend on political will to improve economic engagement and trade ties.

The sides have agreed to continue the talks through online meetings and to meet in Riyadh in the second half of the year for a second round of negotiations. The negotiations are aimed to be completed by the end of the year. – Turkish Trade Ministry, Official Statement

Expected advantages of a prospective FTA between GCC members and Turkey

The proposed FTA is poised to bring numerous advantages, including:

• Lower customs duties: A reduction in customs duties is expected to boost trade volumes between the GCC and Turkey.
• Increased investment opportunities: The agreement is designed to attract more business ventures by expanding the flow of investments.
• Enhanced market access: The FTA will open up better market access for goods and services from both regions.
• Protection of investor and service provider rights: The agreement ensures the rights of investors and service providers, promoting transparency in transactions.
• Intellectual property protection: The FTA will safeguard intellectual property, including patents and trademarks.

These negotiations come three months after the signing of the Ankara agreement by Jasem Mohamed Al Budaiwi, Secretary-General of the GCC, and Turkey’s Minister of Trade, Dr. Omer Bolat. The agreement laid the groundwork for these talks and underscores the deepening strategic partnership between the GCC and Turkey.

Turkey’s strategic shift toward trade and investment

Speaking to media, Nader Habibi, a Professor of Practice in the Economics of the Middle East at Brandeis University, notes that these negotiations reflect Turkey’s recent shift in foreign policy. Moving from an ideological approach, Turkey is now focusing on boosting investment and trade, viewing the GCC as a vital market for Turkish exports and a reliable source of energy and investment capital.

Habibi highlighted that, if successful, the FTA could create one of the world’s largest free trade areas, with a combined value of US$2.4 trillion.

A longstanding economic relationship

The economic relationship between Turkey and the GCC began formally with the “Framework Agreement for Economic Cooperation” signed on May 30, 2005, in Manama, Bahrain. This agreement established a Joint Committee for Economic Cooperation to oversee collaborative efforts and identify new areas for partnership.

In 2008, a Strategic Dialogue Mechanism was introduced, further deepening the relationship between Turkey and the GCC in political, cultural, and economic areas. Turkey remains the first country with which the GCC established such a bilateral mechanism.

A GCC-Turkey trade agreement could have positive ripple effects throughout the Middle East. For instance, Iraq stands to benefit from increased tourism and enhanced trade routes between Turkey and the GCC. Iraq’s recent launch of the North-South transportation project, the Development Road, aims to connect the Arabian Gulf to Turkey, boosting regional connectivity.

Meanwhile, individual GCC countries, too, have a lot to benefit from a potential FTA. For example, the UAE is in active pursuit of FTAs with various countries and trade blocs to solidify its role as a global trade hub. These agreements, covering areas like tariff barriers, trade services, and intellectual property rights, promise to enhance the scope for Emirati exports, improve competitiveness, and attract foreign investments.

Last year, the UAE signed the Comprehensive Economic Partnership Agreement (CEPA) with Turkey, aiming to increase bilateral non-oil trade from US$19 billion to over US$40 billion within five years. Additionally, the two countries signed agreements worth US$50.7 billion during Turkish President Erdogan’s visit to the UAE. In 2022, the UAE Central Bank also finalized a bilateral currency swap agreement with Turkey to enhance trade and investment relations.

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