,  By  T-VINE

UK Business Secretary Kemi Badenoch’s Istanbul visit aims to build on record trade year with Turkiye

Kemi Badenoch returned from a visit to Turkiye optimistic the UK could further strengthen bilateral trade ties with Turkiye following a raft of positive meetings and announcements.

The British Business and Trade Secretary met with her Turkish counterpart, Minister for Trade Ömer Bolat, and also visited Turkish Airlines, whose new Airbus contract is worth billions to the British economy during her one-day visit to Istanbul on 5 January.

The UK and Turkiye already share a “thriving trading relationship”, according to the Department of Business and Trade. Turkiye is the UK’s 17th largest trading partner, while the UK is Turkiye’s fourth largest export destination.

The value of trade between the two longstanding economic and military allies continues to grow, with figures in the year to June 2023 are up by 17% in current prices to a record £26.2 billion.

UK services exports to Turkiye in sectors such as transport, financial and other business services increased by 57% in the 12 months to June 2023.

However, there is still significant room for growth as the existing trade agreement between the two countries only covers goods. The UK is keen for Turkiye to adopt a new deal which will explicitly cover services, especially those in the digital sector, which form a significant part of modern trade.

Business and Trade Secretary Kemi Badenoch said: “I’m delighted to be in Turkey ahead of talks to upgrade our existing trade deal to make it fit for the 21st century.

“The UK is the second biggest exporter of services in the world – UK lawyers, accountants and architects are in high demand across the globe.

“With its major economy and strategic position, Turkey presents huge opportunities for UK businesses. And I’m excited to start discussions on ensuring our new trading relationship with Turkey unlocks those opportunities.”

The Secretary of State met with Turkish Trade Minister Ömer Bolat in Istanbul to discuss how to boost UK-Turkish trade ahead of the launch of formal talks later in the year.

The pair and their respective teams also reviewed the Technical Barriers to Trade chapter of the existing UK-Turkey goods-only FTA, which aims to boost trade between the UK and Turkiye by helping to reduce or eliminate regulatory barriers.

New UK-Turkiye trade developments

The meeting included the two government ministers announcing a £1 billion loan guarantee from UK Export Finance for the construction of a new 140km high-speed railway in Turkiye, which is expected to create new, multimillion-pound contract opportunities for the UK’s manufacturing sector.

The ministers also signed a Memorandum of Understanding on third-country collaboration, which could mean more opportunities for UK companies to support joint UK-Turkiye projects, such as the recent deal to develop 350km of drainage infrastructure in Iraq, to which UKEF will contribute £226 million.

Turkiye is also set to become a priority country under the UK’s International Science Partnership Fund (ISPF) – opening the way for the best of British and Turkish scientists and innovators to partner together and bid into a £337 million global fund.

Turkish Airlines Airbus order vital to the British economy

During her one-day trip to Istanbul on 5 January, the Business and Trade Secretary also visited Turkish Airlines, who have just contracted Airbus to supply them with 220 planes, posing with senior figures and crew alongside a Turkish Airways plane.

The wings for the 220 new aircraft will be designed in Bristol and built in North Wales, with Rolls Royce supplying engines, made in Derby, for much of the fleet.

The Turkish Airlines contract is one of the UK’s biggest export deals to date, worth billions of pounds to the economy and supporting thousands of skilled jobs.

Whilst in Istanbul the Secretary of State also met with top UK and Turkish investors, including Ford and Mott MacDonald, to discuss how the UK and Turkiye can boost investment in sectors such as manufacturing, tech and transport, building on the £8.9 billion of UK investments in Turkiye and £720 million of Turkish investments in the UK.

UK-Turkish trade relationship is “longstanding” and complementary

TheCityUK Managing Director of International Nicola Watkinson said: “Turkey holds tremendous growth potential through the rising Middle East to Asia growth corridor. The UK is well-positioned to forge innovative and forward-looking trade agreements and be part of these exciting opportunities.

“This visit not only demonstrates the UK’s commitment to fostering stronger economic relationships but also sets the stage for an ambitious Free Trade Agreement that promises benefits for our industry.”

Mott MacDonald Group Head of Strategy Simon Harrison said: “Turkey continues to play a key geostrategic role in the world and shares the UK’s position of being a large economy adjacent to the European Union, and hence a partner with whom trade ties matter.

“The UK-Turkey relationship is warm and longstanding, with many complementarities – for example UK professional services and Turkish construction are both world renowned, and these trade discussions provide an opportunity to build from a position of strength for both nations.”

Pushing UK trade abroad

Alongside Turkiye, the UK has set its sights on progressing a whole host of innovative, service-focused trade deals with countries including Switzerland, Mexico, Canada, India and South Korea, as well as the Gulf Cooperation Council, in 2024.

The deals are designed to give UK companies a competitive edge in those countries, boost UK service exports even further and support jobs up and down the UK.

The UK’s services sector – from lawyers and accountants to engineers and financial professionals, makes up around 80% of GDP.

Services exports from the UK reached a record high of £464 billion in the 12 months to October 2023, up 16% in current prices on the previous 12 months.