The prospects and challenges as Turkiye and GCC negotiate a free trade deal
Turkiye and the Gulf Cooperation Council have agreed to begin formal negotiations for a free-trade agreement, with Turkish Trade Minister Omer Bolat and GCC SecretaryGeneral Jasem Mohammed Al-Budaiwi signing a joint communique confirming this last week. In 2005, Turkiye’s president at the time, Abdullah Gul, and the GCC secretary-general, Abdul Rahman Al-Attiyah, signed a framework agreement to commence talks on just such an agreement. During a ministerial meeting in Kuwait in 2010, Turkiye emphasized the importance of concluding a deal as soon as possible, given its growing economic ties with the GCC at that time. However, despite the economic progress that had been made, difficulties in reaching a concrete trade agreement resulted in the talks stalling. The Arab uprisings that began soon after further complicated Turkiye’s relations with the GCC, which had been on a positive trajectory since the early 2000s. Relations began to normalize again in early 2021 and both sides have now entered a new phase in their relationship that is predominantly driven by economic motivations. Three solid developments have taken place in the past year that helped cement this normalization process. In March 2023, Turkiye and the GCC adopted a joint action plan covering the period from 2023 to 2027, showing their commitment to deeper relations. This was followed by a Turkiye-GCC Economic Forum in Istanbul last November. The participants at this event, which aimed to bring the two sides closer together to explore areas for cooperation and investment, included ministers, other officials and businessmen. And now this month, talks over a free trade agreement are set to begin after stalling for more than a decade. Turkiye and the GCC are also set to hold a sixth round of strategic discussions in Istanbul soon. The fifth such meeting took place in 2016, so the upcoming talks follow a very long break during which Turkish-Gulf relations deteriorated and there were crises within the GCC itself.
The strained relations between Turkiye and
Gulf nations over the past decade adversely affected all of the institutional gains achieved up until that point, including the fledgling free trade talks and discussions about strategic cooperation. Speaking exclusively to Arab News, Al-Budaiwi stressed the importance of last week’s agreement to begin talks.
“We are now entering into the first phase of negotiations with Turkiye over a free-trade agreement,” he said.
“The signing of the joint communique was a testament that both sides have ironed out the subjects that paved the way for talks. Thus, the process of the talks will depend on both sides’ way of handling issues that need to be handled.”
The aim of the negotiations is to reach a “win-win” situation, he added.
“We neither want to have the upper hand, nor do we want any other side to have the upper hand,” Al-Budaiwi said. “It should be on equal terms for the two sides. “We are now opening all the subjects to discussion and we expect to iron out any obstacles that we might face in this agreement.” Bolat, the Turkish trade minister, expressed confidence that the talks could be concluded quickly, and said an agreement would create one of the largest free-trade areas in the world, with a total value of $2.4 trillion. However, Sinan Ulgen, a Turkish former diplomat, said that despite the agreement by Turkiye and the GCC to begin talks, one of the main obstacles to the successful conclusion to negotiations and implementation of an agreement could be the EU. “Turkiye is in the customs union with the EU and a condition of its membership is that it cannot have its own separate set of free-trade agreements with third-party countries that the EU does not have a free-trade agreement with,” he told Arab News. “This is a key structural obstacle. Therefore, Turkiye and the GCC cannot conclude the deal unless the EU and the GCC have already concluded a similar pact.”
In other words, the GCC would need to have a free-trade agreement in place with the EU if it wants a similar treaty with Turkiye. The EU and the GCC began negotiations in 1990 for a free-trade deal that was intended to provide for the progressive and reciprocal liberalization of trade in goods and services.
However, negotiations were suspended in 2008 in the face of several challenges. A more structured EU-GCC dialogue on trade and investment began in May 2017.
As a result of the long-stalled negotiations between the EU and the GCC, some Gulf states are trying negotiate their own deals with the EU. The UAE, for example, is quietly urging the EU to begin talks on a bilateral trade pact distinct from any agreement with the GCC.
The EU would prefer a deal with the wider GCC, but some EU states have voiced support for an agreement with the UAE given the lack of progress in bloc-wide talks.
According to reports, absent any significant progress in negotiations with the GCC by the summer, the EU might consider a bilateral process with the UAE. Last year, the UAE ratified a Comprehensive Economic Partnership Agreement with Turkiye that aims to increase the value of bilateral trade to $40 billion in the next five years. These bilateral trade deals are happening even though the UAE is a member of the GCC Customs Union, and while the GCC is also having free trade agreements with several countries. Last year, the GCC signed a free trade agreement with South Korea and a ‘preliminary’ free trade deal with Pakistan. It is in negotiations with China and has already started talks with Japan and India. Talks with Great Britain are also underway.
Despite the challenges, Turkiye and the GCC have taken significant strides recently in their efforts to institutionalize relations after a decade or more of little progress. A free-trade agreement could serve as a crucial tool for strengthening ties, provided both EU-GCC and Turkiye-GCC negotiations proceed positively and with determination.
The Arab uprisings further complicated Turkiye’s relations with the GCC, which had been on a positive trajectory since the early 2000s
One of the main obstacles to the successful conclusion to negotiations and implementation of an agreement could be the EU