The UAE and Turkey officially began talks on a Comprehensive Economic Partnership Agreement (CEPA) to expand trade and investment ties and support economic recovery and growth across the region.
The deal is expected to double bilateral trade from $13.7 billion, the UAE Ministry of Economy said in a statement on Wednesday.
It will also “add certainty to the economic recovery at a time when the world faces immense challenges from increasing food price volatility and soaring inflation to supply-chain disruption and lingering impact of the global pandemic”, the statement said.
The first round of negotiations began on April 26 in Istanbul and “significant progress is expected to be made” as the UAE aims to complete eight such deals this year.
“Our ambitious trade agreement with Turkey will offer tremendous benefits to businesses, investors, entrepreneurs and consumers in the UAE,” Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, said.
“By cutting tariffs, promoting the free movement of goods, facilitating capital flows and reducing trade barriers, we will make it easier than ever to do business with Turkey and vice versa. Together, we will explore new opportunities in aviation, tourism, logistics, infrastructure, food security, renewable energy and 4IR [Fourth Industrial Revolution] technologies.”
The UAE and Turkey have been expanding their relationship in recent years, with Turkish President Recep Tayyip Erdogan making his first official visit to the UAE in almost a decade in February.
The two countries signed 13 agreements and protocols in various fields at that time, including defence, health and medical sciences, sea and land transport, advanced industries and technology, climate action and culture. The central banks of the two countries also signed a currency swap agreement.
In November, the UAE formed a $10bn fund to support investments in Turkey following talks between Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, and Mr Erdogan.
The investment fund aims to increase support for the Turkish economy and will focus on sectors such as energy, health and food.
Turkey is the UAE’s seventh-largest trading partner, and non-oil trade in 2021 rose 86 per cent from pre-pandemic levels in 2019.
The CEPA deal, which has the potential to “strengthen the resilience of regional supply chains, increase investment flows, minimise economic shocks, accelerate innovation in priority sectors, create high-value jobs and generate sustainable, inclusive economic growth”, will boost co-operation between “two of the region’s most important economies”, the statement said.
“Broadening our economic horizons through deeper partnerships and closer international co-operation will also contribute to greater stability for the entire region,” Dr Al Zeyoudi said.
“This is a milestone in our progressive trade agenda that will help to double the size of our economy and lay the foundations for the next 50 years of growth and prosperity.”
This year, the UAE signed a CEPA deal with India. The agreement, which will take effect from May 1, is expected to boost non-oil trade between the nations to $100bn in five years from $60bn now.
A similar deal with Indonesia is expected to triple two-way trade in the next four years from $2.5bn in 2020.
A CEPA agreement with South Korea, which is expected to be finalised by the end of 2022, aims to enhance the economic partnership between the countries to a minimum of $20bn in the next three to five years.
The UAE has also launched trade negotiations with partners including Israel, Georgia and the Philippines, among others.
It plans to sign 27 CEPA deals in total as it looks to boost trade and foreign direct investment, Abdulla bin Touq, Minister of Economy, said last month at the Annual Investment Meeting in Dubai.
“If we want to double our economy from Dh1.4 trillion ($381bn) to Dh3tn in seven years that we have announced, we have to average a growth of about 5 per cent to 6 per cent,” the minister said on the sidelines of the event.
“I’m hoping for that target to happen this year.”
The UAE was among the top 20 economies for foreign direct investment last year as investment inflows increased 4 per cent annually to $20.7bn.
That led to the country's “cumulative foreign direct investment” over the past 10 years to reach nearly $171.6bn by the end of 2021, growth of 13.7 per cent.
“The UAE is moving quickly to strengthen ties with Africa, Asia and South America,” Mr bin Touq said.