On 2 February, the Cabinet of Ministers of Ukraine has approved a draft Free Trade Agreement between Ukraine and Turkey.
“Thanks to this Agreement, all friendly countries of the Black Sea basin – Georgia, Moldova, Bulgaria, Romania, Turkey and Ukraine – will have free trade agreements with each other that have common rules. Therefore, this document is of huge importance for the entire region. The strengthening of strategic partnership between Ukraine and Turkey will open new economic and geopolitical prospects and enhance our positions, which is extremely important in the conditions of escalating Russian aggression,” Yulia Svyrydenko, First Vice Prime Minister – Minister of Economy of Ukraine, pointed out.
The key point of this agreement is the 0% import duty set by Turkey on 10,337 product items, which amounts to 95% of the total quantity of goods exported by Ukraine. In addition, tariff rate quotas or reduced-rate import duties will apply to another 1348 product items.
Thanks to the 0% duty set by Turkey on imports of cereal crops, Ukraine will receive better access to the Turkish market for processed agricultural produce. The Agreement also envisages the complete abolition by Turkey of import duties on industrial products.
To facilitate development of the domestic metallurgical sector, Ukraine reserves the right to charge a customs duty on exports of scrap metals. At the same time, Turkey is opening its domestic market to Ukrainian metals, setting a zero import duty on 510 out of 840 metallurgical products. Import duties at lowered rates will apply to another 130 products, giving Ukraine a competitive edge over Russian-produced metals. The quotas of at least 411 thousand tons are offered for 167 metallurgical products.
In addition, Ukraine retains the duties on used cars and second-hand products, and establishes three- and five-year transitional periods for duties on motor vehicles and light industry products.
After the Agreement is enacted, goods manufactured from Turkish-produced raw materials will be considered Ukrainian-made and could be marketed in all European countries duty-free under the EUR1 certificate.
The Agreement will have an overall positive effect on the Ukrainian economy. New jobs will be created in the export-oriented industries, generating added value and paying taxes. According to preliminary estimates, the Agreement will add 2.2% to GDP and 2.6% to household income every year.
“The implementation of new rules will create new realities for Ukrainian industries. In this regard, the Ministry of Economy has developed a decision package to ensure softer and gradual reorientation of a number of industries,” Yulia Svyrydenko added.