The UK and Turkey signed a free trade agreement on Tuesday to continue existing trade arrangements between the two countries after Britain exits the European Union’s single market and customs union on Dec. 31.
Turkey is not part of the EU but has a customs union agreement with the 27-nation bloc. The UK-Turkey Free Trade Agreement will enable the UK to continue trading with Turkey on preferential terms it enjoyed as part of the EU after the Brexit transition period ends on Thursday.
“It paves the way for a new, more ambitious deal with Turkey in the near future, and is part of our plan to put the UK at the centre of a network of modern agreements with dynamic economies,” she said after signing the agreement with Turkish Trade Minister Ruhsar Pekcan at a video conference.
According to Britain’s Department for International Trade (DIT), in 2019, UK businesses exported to Turkey more than £1 billion ($1.35 billion) worth of machinery, and iron and steel products worth £575 million ($777 million).
In addition to maintaining bilateral trade relations, the deal will also “shore up key supply chains across many industries after a year of disruption,” said Andy Burwell, director of Internal Trade at the Confederation of British Industry (CBI).
Both the UK and Turkey are part of the Europe-wide supply chain for European automobile manufacturers. U.S. carmaker Ford, which employs 7,500 people in the UK, imports car parts from the UK to Turkey to assemble the Ford Transit range of vehicles, a third of which are then exported to the UK.
“Ford welcomes the announcement today of a trade agreement between the UK and Turkey, and the speed with which it has been concluded underscores its importance to the economic prosperity of both countries,” said Stuart Rowley, president of Ford in Europe.
Since formally leaving the EU on Jan. 31, Britain has been seeking to replicate existing EU trade deals to ensure continuity of trading arrangements for UK businesses when the EU transition period ends.
The UK government plans to secure free trade agreements with countries that cover 80 percent of UK trade within three years, said the DIT.