The IKV Brief titled “A Golden Era in Post-Brexit Trade: Towards a Comprehensive Update of the Türkiye-United Kingdom Free Trade Agreement” authored by IKV Researcher Ahmet Emre Usta was published from IKV Brief series. This brief discusses the current state of bilateral trade and economic relations following the Türkiye-United Kingdom Free Trade Agreement signed in 2020, the ongoing negotiation process for its comprehensive update, and the implications of this process for the modernisation of the Türkiye-EU Customs Union.

A Golden Era in Post-Brexit Trade: Towards a Comprehensive Update of the Türkiye-United Kingdom Free Trade Agreement

Ahmet Emre Usta, IKV Researcher

In the “Brexit” referendum held on 23 June 2016, 51.9% of voters opted to leave the EU, marking the first time in EU history that a Member State initiated the withdrawal process. Following this referendum, Prime Minister David Cameron resigned and was succeeded by Theresa May. On 29 March 2017, the United Kingdom officially triggered Article 50 of the Treaty of Lisbon by formally notifying the European Council of its intention to withdraw, thereby commencing the formal exit process. On 19 June 2017, the first phase of negotiations between the parties officially began, focusing on the Withdrawal Agreement and the framework for future relations.[1] During this period, the EU adopted a three-stage approach to the negotiations, prioritising citizens’ rights, financial obligations, and the Ireland/Northern Ireland border.[2]

On 14 November 2018, Theresa May’s government reached an agreement with the EU on the draft Withdrawal Agreement, which EU leaders subsequently approved at a special meeting of the European Council on 25 November 2018. However, the agreement was rejected by the House of Commons on 15 January 2019 by 432 votes to 202, marking the largest defeat for a sitting government in modern British parliamentary history. The agreement was also rejected in the second and third votes held on 12 March 2019 and 29 March 2019, respectively.[3]

During the Transition Period, negotiations were held between the parties to agree on a comprehensive treaty for their future relationship. Ultimately, on 24 December 2020, the two sides agreed on the “EU-UK Trade and Cooperation Agreement”. The agreement was provisionally applied from 1 January 2021; it was approved by the European Parliament on 28 April 2021 and formally entered into force on 1 May 2021.[4]

The agreement ensured that trade between the parties would continue free from customs duties; however, bureaucratic procedures and border checks relating to the free movement of goods increased significantly. Moreover, the agreement introduced limited provisions in areas such as trade in services, data transfers, public procurement and security cooperation. Notably, matters such as financial services and the mutual recognition of professional qualifications were left outside the scope of the agreement.[5]

On the other hand, the Northern Ireland Protocol stipulated that the region would effectively remain aligned with EU Single Market rules. This arrangement led to the introduction of customs checks between Great Britain and Northern Ireland. The protocol became the subject of intense political debate in the following period and was subsequently revised in 2023 through a new agreement known as the “Windsor Framework”.[6]

Post-Brexit Türkiye-United Kingdom Relations

A no-deal Brexit between the United Kingdom and the EU would have created significant risks to Türkiye-United Kingdom trade relations. This is because, under its Customs Union obligations, Türkiye may only conclude similar trade agreements with countries with which the EU has already signed a preferential trade agreement. In other words, Türkiye can’t establish a free trade agreement (FTA) or similar arrangement directly with countries that do not have an agreement with the EU. Therefore, to sign an FTA between Türkiye and the United Kingdom, an agreement first needed to be concluded between the EU and the United Kingdom. In this regard, shortly after the EU and the United Kingdom reached a comprehensive FTA at the end of December 2020, the negotiations between Türkiye and the United Kingdom were also finalised, and the Türkiye-United Kingdom FTA was signed on 29 December 2020.[7]

The Türkiye-United Kingdom FTA, which is based on the principle of preferential treatment in trade, was provisionally applied as of 1 January 2021 and formally entered into force on 20 April 2021. With this agreement, trade relations between the two countries were placed on a new legal footing, thereby eliminating uncertainties that could have arisen in the post-Customs Union period. Had the agreement not been signed, approximately 75% of Türkiye’s exports to the United Kingdom would have been subject to customs duties, resulting in an estimated financial loss of around 2.5 billion dollars. In this respect, the agreement has ensured both the protection of mutual economic interests and the continuity of trade.[8]

The Türkiye-United Kingdom FTA is a continuation of the provisions of the Customs Union, the Association Council Decision between Türkiye and the EU concerning trade in agricultural products, and the free trade agreement covering coal and steel products under the ECSC Treaty. It primarily covers trade in goods. Under the agreement, customs duties on industrial products were eliminated to preserve the rights acquired under the Customs Union, and a system based on exporters’ declarations of origin was introduced for exports. In this context, customs duty exemptions continue to apply to industrial products exported from Türkiye to the United Kingdom, while reduced tariff rates and quotas are applied to agricultural products.[9]

Under the export regime for agricultural products, reduced tariffs apply within specified tariff rate quotas to items such as:

• Sheep, goat, and turkey meat,
• Cheese,
• Potatoes, onions, aubergines, and courgettes,
• Fresh grapes, watermelons, and citrus fruits
• Fruit and vegetable juices,
• Preserved tomatoes,
• Olive oil,
• Chocolate and cocoa-containing products,
• Sugar confectionery and chewing gum
• Malt extract, pasta, cereals and cereal products
• Various food preparations
• Breakfast cereals, toasted bread, and bread
• Cakes, pastries, biscuits, waffles, and wafers
• Jam, jelly, fruit puree, and ice cream.[10]

Updating the Türkiye-United Kingdom Free Trade Agreement

The Türkiye-United Kingdom FTA includes a review clause that allows the parties to re-evaluate the agreement in the future. Within the framework of this clause, a review process was launched in 2022 to broaden the agreement’s scope, making it more comprehensive by including areas such as services, digital trade, and investment. As a result of the technical review work carried out by the parties, a shared view emerged that the current agreement, which is limited to trade in goods, should be broadened in line with contemporary requirements to cover areas such as digital trade, services, investment, and public procurement. Accordingly, on 18 July 2023, Türkiye and the United Kingdom issued a joint statement expressing their intention to launch formal negotiations to update the existing FTA. In this statement, both sides declared that the review clause had led them to reassess their trade relations and expressed the view that updating the agreement by further broadening and deepening bilateral cooperation would be mutually beneficial.[11]

As part of the update process of the Türkiye-United Kingdom FTA, both parties conducted public consultations to gather stakeholder input. The United Kingdom’s consultation, seeking views from business representatives and the public on priorities for the updated FTA, concluded on 5 January 2024. Similarly, Türkiye’s public consultation, focused on trade in services, concluded on 17 January 2024.[12]

An important step in the update of the Türkiye-United Kingdom FTA was taken in London on 7 May 2025. On that date, the parties signed a revised text of the Technical Barriers to Trade (TBT) chapter, which includes annexes covering the chemicals and motor vehicles sectors. The updated TBT chapter aims to reduce technical barriers in sectors of strategic importance for bilateral trade, particularly these sectors. These two sectors currently account for 33% of total trade between the two countries. Addressing regulatory misalignments in these areas is expected to facilitate market access, reduce bureaucratic burdens and costs, and make exports faster and more predictable through mutual recognition of conformity assessment.[13]

The Annex on Chemicals promotes the use of international frameworks such as the United Nations Globally Harmonised System of Classification and Labelling of Chemicals (GHS) in the classification and labelling of chemical products. It is based on the principles of mutual regulatory cooperation and information sharing. The Annex on Motor Vehicles encourages the recognition of approvals granted under UN Regulations (UNECE). It also supports the use of international norms over national regulations and seeks to ensure that the introduction of new technologies is not hindered by regulatory gaps.[14]

These were designed to be closely aligned with the provisions on TBT under the Trade and Cooperation Agreement currently in force between the United Kingdom and the EU. They also reflect Türkiye’s ongoing process of harmonising its technical legislation with that of the EU. Through this approach, both countries aim to better position themselves to adapt to future regulations emerging in areas like the green transition, climate-oriented industrial policies and sustainable product strategies.

Beyond these developments, the first round of negotiations to update and expand the Türkiye-United Kingdom Free Trade Agreement was held from 23 June to 2 July 2025, in line with the agreed timeline, following Minister of Trade Ömer Bolat’s official visit to the United Kingdom in May 2025. The talks took place in Ankara with broad participation from the Ministry of Trade of the Republic of Türkiye and the United Kingdom’s Department for Business and Trade and were conducted in a highly constructive atmosphere. During the discussions, the following topics were addressed with a view to broadening the scope of the FTA:

• Rules on market access,
• Regulations on services trade,
• Professional services,
• Investment,
• Digital trade,
• Trade facilitation and customs procedures,
• Plant health (phytosanitary measures),
• Innovation and SMEs,
• Consumer protection,
• Dispute settlement,
• Women’s participation in the economy,
• Development,
• The protection of patent and design rights,
• General provisions of the agreement.[15]

As a result of the meetings, concrete progress was achieved on draft texts of the agreement, particularly in the areas of consumer protection, SMEs, women’s economic empowerment, innovation, development, and intellectual property rights. In addition, a broad consensus was reached on the technical roadmap to be followed during the remaining phases of the negotiations, an issue-specific structure for future discussions, and the working procedures. The parties also agreed to deepen their engagement through interim technical meetings in various thematic areas.

The most prominent issues in the update of the agreement have been services, investment, agricultural concessions, and digital trade. These four core areas form the primary focus of the negotiations to update the agreement and are regarded as the areas with the highest potential to deliver tangible outcomes for the business community. At the same time, a wide range of complementary and increasingly important areas surrounding these core areas are included on the agenda for the negotiations.[16]

• Enhancing Türkiye’s agricultural exports to the United Kingdom by expanding product diversity and strengthening market access through the inclusion of additional agricultural goods in the agreement,
• Developing comprehensive and mutually beneficial provisions on trade in services, considering Türkiye’s competitive advantages in areas such as Islamic finance, healthcare services and audiovisual services,
• Addressing issues such as the strengthening of digital trade, the free flow of data and the protection of intellectual property rights through new regulations supporting growth in sectors such as financial services, transport, technology and professional services,
• Taking joint steps to facilitate investment,
• Achieving mutual recognition of geographical indications,
• Introducing awareness-raising measures and measures to facilitate market access for SMEs,
• Identifying concrete areas of cooperation in innovation, consumer protection and the economic empowerment of women,
• Aligning trade practices with the objectives of sustainable development in the fields of environment and labour,
• Simplifying both traditional and digital customs procedures to facilitate trade.[17]

Conclusion: A Golden Era in Bilateral Trade

As of the first half of 2025, the United Kingdom ranks as Türkiye’s second-largest export destination and tenth-largest source of imports. From the perspective of the United Kingdom, Türkiye is the 23^rd-largest export market and 14^th-largest source of imports.

Following the entry into force of the Türkiye-United Kingdom FTA in 2021, bilateral trade has grown substantially. Total trade between the two countries rose from 16.3 billion dollars in 2019 to 22.1 billion dollars in 2024, marking a 35.8% increase. Over the same period, Türkiye’s exports to the United Kingdom grew by 40.6%, from 10.9 billion dollars to 15.3 billion dollars, while imports from the United Kingdom increased by 26.1%, from 5.4 billion dollars to 6.8 billion dollars.

Table 1: Türkiye’s Goods Trade with the United Kingdom Before and After the FTA, (million dollars, 2019-2024)

Source: Compiled from TurkStat data.

The United Kingdom is one of the countries with which Türkiye records its highest trade surplus, a trend that has intensified since the FTA entred into force. As of 2024, Türkiye’s trade surplus with the United Kingdom reached 8.4 billion dollars, making the United Kingdom Türkiye’s second-largest trade surplus partner after Iraq.

Table 2: Türkiye’s Top Five Trade-Surplus Partners, (million dollars, 2019-2024)

Source: Compiled from TurkStat data.

Data on Türkiye’s top export product groups to the United Kingdom show that the share of the top 10 product groups in Türkiye’s total exports increased from 46% in 2019 to 49%. Over the same period, the total export value of these 10 groups rose by 45%, from 5 billion dollars to 7.2 billion dollars.

In 2024, the top three exports from Türkiye to the United Kingdom were motor vehicles for the transport of goods, passenger cars, and gold in unwrought forms. Motor vehicles for the transport of goods jumped to first place in 2024. Their export value surged by 141% to 1.8 billion dollars, up from third position in 2019. Passenger cars, which ranked second in 2019, maintained that position in 2024. Exports in this category grew by 44%, to 1.4 billion dollars. Gold in unwrought forms, which had been Türkiye’s leading export to the United Kingdom in 2019, increased by a slight 7% to 1.2 billion dollars, and ranked third in 2024. However, its share of total exports fell from 10.3% to 8.2%.

A particularly notable rise was recorded in the petroleum oils category, reflecting its growing contribution to the overall increase. The export value, which stood at 108.4 million dollars in 2019, soared 550% to 704.2 million dollars in 2024. This surge propelled the product group’s share of total exports from 1% to 4.8%.

Despite these increases, there was a pronounced decline in Türkiye’s exports of ready-made clothing to the United Kingdom. Exports of knitted garments such as T-shirts, vests, and similar items dropped by 35%, to 242.6 million dollars. Exports of women’s clothing declined by 37%, amounting to 217.5 million dollars. In the category of knitted items such as pullovers, cardigans, and waistcoats, exports recorded a more modest 3% decrease, totalling 243.9 million dollars. The combined share of these three product groups in Türkiye’s total exports to the United Kingdom fell from 8.9% to 4.9%.

Table 3: Türkiye’s Top 10 Export Product Groups to the United Kingdom (million dollars, 2019-2024)

Source: Compiled from TurkStat data.

As of 2024, the United Kingdom ranks as Türkiye’s third-largest destination for services exports and fourth-largest source of services imports. From the perspective of the United Kingdom, Türkiye ranked as its 31??-largest export partner and 15??-largest import partner in services as of the first quarter of 2025.

Following the entry into force of the Türkiye–United Kingdom Free Trade Agreement in 2021, bilateral trade in services has increased significantly, mirroring the upward trend in goods trade. Excluding travel services, Türkiye’s exports of services to the United Kingdom rose from 1.843 billion dollars in 2019 to 3.741 billion dollars in 2024, a rise of 103%. During the same period, Türkiye’s imports of services from the United Kingdom increased 94%, from 1.877 billion dollars to 3.641 billion dollars. As a result, the total volume of services trade between the two countries reached 7.382 billion dollars, nearly doubling the 2019 level. In terms of the trade balance, there was a marked shift in Türkiye’s favour, as a deficit of 35 million dollars in 2019 transformed into a surplus of 100 million dollars by 2024, a net positive swing of 135 million dollars.

Table 4: Türkiye’s Services Trade with the United Kingdom Before and After the FTA (excluding travel, million dollars, 2019-2024)

Source: Compiled from TurkStat data.

Finally, as of end-2023, Türkiye’s FDI stock in the United Kingdom stood at 4.9 billion dollars, while the United Kingdom’s FDI stock in Türkiye amounted to 8.6 billion dollars.[18]

In conclusion, the bilateral economic and trade relations between Türkiye and the United Kingdom are experiencing one of the strongest periods in their history Since its entry into force in 2021, the FTA has effectively shielded the economic partnership from the disruptions associated with Brexit, while simultaneously transforming the bilateral relationship into a more dynamic and growth-oriented structure.

This new era in Türkiye-United Kingdom relations carries important implications not only at the bilateral level but also in the context of Türkiye–EU relations. Indeed, Türkiye has succeeded in advancing its trade relations with a non-EU country through an FTA rather than the Customs Union. Unlike the Türkiye-EU Customs Union, which has not been updated for years due to political obstacles, the Türkiye–United Kingdom FTA presents a concrete example of how two sovereign nations can rapidly deepen their trade ties through shared political will. This also highlights the cost of the EU’s inertia in addressing the modernisation of the Customs Union.

Soon, the planned update of the Türkiye-United Kingdom FTA with next-generation provisions will further strengthen this partnership and widen the gap between the FTA and the outdated EU-Türkiye Customs Union. The EU would be well-advised to closely examine this advanced model of cooperation that one of its most important post-Brexit trade partners has developed with Türkiye. The data clearly underline that the modernisation of the Customs Union is not merely a bilateral economic goal but a strategic necessity for both Türkiye and the EU to preserve their positions in an increasingly competitive global environment.