GCC countries to begin free trade pact negotiations with Turkey

Image credit: GCC Media Centre

The first round of negotiations of the Free Trade Agreement (FTA) between the Gulf Cooperation Council (GCC) countries and Turkey, are to be held July 29-July 31, in Ankara.

The talks will see the participation of nine Saudi governmental entities, as per state news agency SPA.

Benefits of GCC FTA

• Reduction of customs duties: Aims to boost trade volume by lowering customs duties.
• Increase in investments: Encourages greater business opportunities by enhancing the volume of investments.
• Improved market access: Facilitates better access for local and service products in markets.
• Investor and service provider rights: Guarantees the rights of investors and service providers, ensuring transaction transparency.
• Protection of intellectual property: Safeguards property rights, patents, and trademarks.

The announcement of these talks follows three months after Jasem Mohamed Al Budaiwi, secretary-general of the GCC and Turkey’s Minister of Trade Dr Omer Bolat signed the Ankara agreement to commence negotiations on the FTA.

Al Budaiwi stated that this new direction underscores the strong and strategic partnership between the GCC countries and Turkey, highlighting successful cooperation at regional and international levels across various sectors, including commerce, economics, and finance.

Al Budaiwi also noted that the GCC countries are actively engaging in free trade negotiations with other nations to promote economic cooperation regionally and globally, opening up trade opportunities and creating robust markets for goods and services provided by the GCC. These efforts are part of the GCC’s strategy to diversify income sources and foster economic growth.

At the time of the signing, Bolat said that Ankara hopes to complete the talks as soon as possible, he added, saying the pact would lead to one of the world’s largest free trade areas, between Turkey and members of the GCC, with a total value of $2.4tn. 

Nader Habibi, professor of Practice in the Economics of the Middle East at Brandeis University, wrote for the Stimson Centre, “The negotiations reflect Turkey’s recent shift in foreign policy from an ideological focus to prioritising investment and trade. The GCC countries are of high priority for Turkey due to their attractive markets for Turkish exports and reliable sources of energy and investment capital.”

A history of GCC-Turkey trade relations

Institutional trade relations between Turkey and the GCC began with the “Framework Agreement for Economic Cooperation between Turkey and the Cooperation Council for the Arab States of the Gulf (GCC)” signed on May 30, 2005, in Manama, Bahrain. This framework agreement aims to monitor economic cooperation activities and identify new areas of cooperation, establishing a Joint Committee for Economic Cooperation.

On September 2, 2008, during the Turkey-GCC Foreign Ministers Meeting in Jeddah, Saudi Arabia, a Memorandum of Understanding establishing a Strategic Dialogue Mechanism was signed. This mechanism set the foundation for deepening Turkey’s relations with the GCC in political and cultural areas, in addition to existing economic cooperation.

Turkey is the first country, with which the GCC established, such a bilateral mechanism.

Habibi further noted that “a Turkey-GCC trade agreement could positively impact other Middle Eastern economies.”

For instance, Iraq could benefit from the expansion of tourism and the movement of goods between Turkey and GCC countries.

Iraq announced the launch of a significant North-South transportation project, the Development Road, in May 2023. This project involves constructing a 1,200-kilometre highway and railroad from the Al Faw commercial port in the Arabian Gulf to the Turkish border, connecting to Turkey’s east-west transportation system.

Read: Iraq, Turkey, Qatar, UAE sign preliminary deal for $17bn Development Road project

UAE’s role in FTAs

As part of the GCC, the UAE has signed FTAs with several countries and trade groups worldwide to enhance its position as a global trade hub and a major destination for investments. These agreements aim to increase Emirati exports, improve competitiveness in foreign markets, regulate competition, reduce trade barriers for national products, and boost its investments abroad.

The UAE’s trade agreements cover various aspects, including tariff barriers, trade services, investments, intellectual property rights, dispute settlement, and investment in manufacturing sectors. Negotiations are currently underway with several countries and trade groups, including the European Union, Japan, China, Korea, Australia, Pakistan, India, Turkey, and Mercosur member countries (Argentina, Brazil, Paraguay, and Uruguay).

The upcoming negotiations in Ankara represent a significant step forward in strengthening economic ties between the GCC and Turkey, with the potential to create new opportunities for trade, investment, and cooperation in the region.

Read: Turkey sees cash flow from $51bn UAE deal starting by end of this year