The Cabinet of Ministers approved the draft Free Trade Agreement (FTA) with Turkey at a government meeting on Wednesday.
According to First Deputy Prime Minister, Minister of Economy Yulia Svyrydenko, the agreement will bring an additional 2% of GDP annually.
“The basis of the agreement is the zeroing of duties by Turkey for 10,337 commodity items. This is 95% of the total number of goods. Another 1,348 commodity items will be subject to tariff quotas or duty reduction,” she said, presenting the draft FTA Agreement with Turkey at the government meeting.
Currently, Ukraine exports 1,100 commodity items to Turkey, since Turkey has one of the highest levels of customs protection in the world, she said. At the same time, the level of Ukrainian customs duties is one of the lowest.
“In recent years, we have begun to observe that Ukrainian duties have generally ceased to be a barrier to Turkish goods, while Turkish duties for our goods have been an impenetrable wall for entering their market,” Svyrydenko said.
According to her, Ukraine reserves the right to apply a duty on the export of scrap metal.
“At the same time, Turkey opens the domestic market for our metal. Duties for another 130 commodity items of metallurgy goods have been partially reduced… And additional quotas have been established for 160 metallurgy goods,” Svyrydenko said.
According to her, Ukraine will retain duties on the import of used cars, setting transitional periods of three to five years for vehicles and light industry products. As for the latter, Svyrydenko announced state support in the form of affordable loans for the modernization of equipment for Ukrainian light industry companies.
At the same time, the parties reserve the right to restore the effect of duties through the mechanism of bilateral safeguard measures.
As Svyrydenko said, the review of the agreement shall take place no later than two years later.
Ukraine and Turkey will reach an agreement on signing an agreement on a free trade area (FTA) in the next two days, President Volodymyr Zelensky has said.
“We are getting ready to give a powerful economic signal, to sign an FTA agreement with Turkey already within these two days. Our groups are working. I am sure that we will agree,” he said, speaking at the Verkhovna Rada on Tuesday.
Ukrainian President Volodymyr Zelensky has said that Ukraine plans to open a new embassy building in Turkey next year.
“We have begun to build the first Embassy in Turkey over the past 10 years. It is modern and very cool. We are sure that next year we will open this Embassy. The task is to build it quickly. The main thing is still quality,” Zelensky told reporters at a conference of Ukrainian ambassadors at the state residence Synehora in Ivano-Frankivsk region on Tuesday.
He also added that within the framework of the conference, the issue of updating the diplomatic missions of Ukraine in other countries was discussed.
Turkey is preparing to supply at least 20 more Bayraktar-TB2 attack drones to Ukraine, Bloomberg reports, citing sources in Turkish government and military-industrial circles.
The Bayraktar company has sold Ukraine “dozens of drones along with control stations and missiles” since 2019, and “orders for at least two dozen more drones are under development,” Bloomberg wrote.
A source in the Turkish government also told Bloomberg that new deals are under development, including the joint production by Turkey of carrier rockets such as the Ukrainian Zenit-2. It could help Turkey develop ballistic missiles, the agency said, although a senior Turkish official said “Ankara has no such intentions.”
In September, defensenews.com reported that Ukraine and Turkey were preparing a contract for 24 Bayraktar-TB2 drones.
The issues of expanding cooperation were discussed in a telephone conversation by the presidents of Ukraine and Turkey, Volodymyr Zelensky and Recep Tayyip Erdogan.Zelensky praised Turkey’s continued support for the territorial integrity and sovereignty of Ukraine, as well as active involvement in the work of a new international mechanism – the Crimea Platform, the press service of the Ukrainian president said on Wednesday morning.Zelensky thanked the leader of Turkey for the expressed condolences over the death of Ukrainian soldiers in the east of our state.The President of Ukraine paid special attention to the issue of dismissing Ukrainian citizens illegally detained by Russia.Zelensky and Erdogan exchanged views on the security situation in the region, as well as on relevant initiatives to strengthen security in the Black Sea region.The presidents discussed issues of cooperation in the defense sector. The parties stated that the strategic partnership is already strengthening the armed forces of the two countries. The implementation of a number of important projects in the aircraft construction and development of the Navy was noted, as well as the prospects for deepening such interaction.The head of the Ukrainian state, in particular, informed Erdogan about the start of serial production of the An-178 transport aircraft.“I invite Turkey to join the circle of its customers,” Zelensky said.The leaders noted their willingness to complete the preparation of an Agreement on a free trade area in the near future. Attention was also paid to the state of implementation of the agreements reached on a number of projects on the bilateral agenda, in particular, the construction of housing for representatives of the Crimean Tatar people. The parties discussed issues of interaction in the energy sector, among other things, ways to diversify the supply of energy resources.The presidents agreed to hold the 10th anniversary meeting of the High-level Strategic Council in Kyiv in February 2022. It was noted that this important event should be preceded by thorough preparations, in particular, the holding of the second meeting of the Quadriga at the level of the foreign and defense ministers in December this year.
Turkey is continuing negotiations with Gazprom on the bulk of contracts for gas supply to the country through the Turk Stream pipeline, Turkish Deputy Energy and Natural Resources Minister Alparslan Bayraktar told reporters.
“We are in talks with Gazprom to increase gas supplies to Turkey because there is a free, uncontracted capacity of 9.75 billion cubic meters of gas in Turk Stream. The contracts expire this year, so there will be such spare capacity in Turk Stream in 2022. We’re talking about new contracts, renewal of some contracts, we are negotiating, I cannot say anything more at this stage,” he said.
He admitted that the situation with Russian gas supplies was complicated by the problem of private importer companies: “The real problem with private importers is arbitration – they offered a discount, then won the arbitration, so private importers suffered.”
“‘Gazprom needs to understand the needs of the domestic market, because today the price of gas is quite important, and it is not easy to increase the price of gas for the population, no one wants to pay more,” the Turkish official added.
“I think Gazprom wants to sell more gas to Turkey, Turkey needs gas, so it’s a ‘perfect alliance.’ Turkey is a growing market, gas consumption is growing, I think Gazprom has the capacity to supply gas to both Turkey and Europe, we have the infrastructure, enough gas pipelines, so I don’t see any problem,” Bayraktar said.
Gas consumption in Turkey is expected to rise to a record 60 billion cubic meters in 2021.
In 2015, Gazprom granted a discount of 10.25% to private Turkish importers, but a year later demanded its cancellation. Claims against Akfel Gaz, Bat Hatt, Kibar Enerji, Avrasya Gaz, and Enerco Enerji were filed with the Arbitration Institute of the Stockholm Chamber of Commerce and arbitration in accordance with UNCITRAL regulations. The arbitration bodies cancelled the discounts for private companies as of January 1, 2017. Failure or difficulty in enforcing the arbitration court ruling in Gazprom’s dispute with Turkish private importers is holding back Russian gas supplies to the country. As a result, some of the former private buyers may not participate in negotiations on new contracts and may be replaced by other importers.
Since the beginning of the 2000s, Turkey has embarked on a liberalization of the natural gas market, under which most of the contracts of state-owned Botas have been reassigned to private importers. However, after a failed coup attempt in 2016, Law N674, “On Measures Under the State of Emergency Regime,” was passed, and external management was imposed on these companies by the state Savings Deposit Insurance Fund (TMSF), which effectively meant nationalization.
