Brexit threatens Turkish businesses
Anews piece on daily DUNYA’s headline published last week was important: “Brexit threatens Turkish textile.” After the May government receives vote of confidence, if there is no agreement between London and Brussels and the parties do not change their current positions, Britain will be separated from the EU without an agreement. While it is known that both sides have been preparing for this possibility for some time, it is obvious that the cost of this option will be very high. Duty-free trade will end between the parties and the customs regimes of the World Trade Organization will be applied unless a trade agreement is signed.
England is not happy about that scenario, especially if it means leaving the EU without signing a Free Trade Agreement. The same uneasiness and unhappiness apply to Tukey. The loudest reproach arose from garment and apparel sector but every sector in Turkey is discussing the issue with EU General Directorate. Many sectors such as automotive, steel and plastic have been questioning the status of trade with the UK after the Brexit.
The future of our textile and ready-to-wear sector’s $2 billion in exports to the UK is at risk. If the UK is not included in the Customs Union, it will slap a 12 per- cent tariff on Turkish products. Mustafa Gultepe, the President of the Istanbul Ready-to-Wear and Apparel Exporters’ Association, stated that there may be a 1520 percent market loss due to the price increase and stressed that a free trade agreement should be made with the UK.
A failure to sign any agreement means buyers in the UK will have to pay 12 percent additional tax on imports from Turkey, which will put Turkish products at a disadvantage in terms of competition. We will see whether there will be an agreement by the final date of March 29. The UK is the third largest export market in the ready-to-wear sector after Germany and Spain. To add insult to injury, additional customs duty on the import of cotton and synthetic yarn, which are the basic raw materials of the sector, has also increased our costs considerably.
A knife serves a good purpose in surgery and becomes a threat when used incorrectly. When we try to be frugal on imports on one hand, we may miss another opportunity or not be able to keep up with developments on the other. The ready-to-wear sector is just one example. Hopefully the Ministry of Trade will take the necessary measures as soon as possible. I am sure being prepared for every scenario that may come after Brexit will reduce the losses of our sectors.