The real Brexit is for Turkey

Finally, Brexit happened: officially, it is now the European Union minus Britain. During the midnight countdown on January 31, while the Union Jack was projected on Downing Street 10, jubilant crowds surrounded by UK flags filled the Parliament Square of London, celebrating with none other than Nigel Farage, head of the Brexit Party. Literally, the Brexit Party’s leader Farage was also the leader of the fete celebrating Brexit that night. 

I am sure Mr. Farage will come up many new reasons to encourage crowds to wave the British flag for a long time to come. Brexit may be over, but it is just beginning, with long months ahead of successive trade negotiations that the UK must broker with both the European Union and all other major parties it trades with. And the Turkish economy will be impacted considerably by post-Brexit trade deals, even though the issue has not been much of an item on the agenda in Turkey. The director of the Economic Policy Research Foundation of Turkey (TEPAV) and Hürriyet Daily News columnist Güven Sak the following back on Oct. 12 in his article titled,  “Brexit is a bigger problem for the Turkish economy than Syria”:

“According to our calculations at the Economic Policy Research Foundation of Turkey (TEPAV), 70 percent of bilateral trade with the U.K. would be negatively affected by a no-deal Brexit this October. There would be a direct and an indirect negative impact on different product groups. The direct impact would be from higher U.K. tariffs to Turkey, while the indirect impact would be from lower U.K. tariffs to some of our competitors. Both require Turkish companies to focus on new arrangements.”

Veteran EU expert Nilgün Arısan Eralp, the director of TEPAV’s European Union Studies Center, prepared a policy note on Brexit’s effects in general — the only such effort from any of Turkey’s think tanks, Turkish civil society and academia. Arısan wrote the following:  

“It is highly probable that Brexit will have negative effects over Turkey. With UK's exit from the EU, citizens of the Republic of Turkey will lose their right to settle in this country with the condition that they are providing services, based on the EU Partnership Agreement. Moreover, UK’s departure from the EU without a deal, or exiting with a deal yielding results of a non-agreement will have negative consequences over the trade of Turkey-UK. In this case, as Turkey’s Customs Union agreement with the EU requires it to comply with the EU's Common Commercial Policy and the agreements that EU makes, Turkey will not be able to sign a separate agreement with the UK regulating its trade relations. In this case, Turkey will be losing its second largest export market and the sectors of automotive, textiles and electrical appliances which constitute half of the exports to the UK may be adversely affected”.

As Arısan points out, Turkey’s citizens will be suffering their right to settle in the UK under the Ankara Agreement by Dec. 31, 2020. This agreement dating from 1963 is actually the framework of cooperation between Turkey and the EU. Turkish citizens are eligible to enter and remain in the UK permitted that they are setting up a business or taking up employment at a company based at the UK. Since 2012, a total of around 13,000 Turkish nationals relocated in the UK through the Ankara Agreement. In 2018 alone, Ankara Agreement applications soared to around 8,000.

Since March 2018, obtaining a visa through the Ankara Agreement has become more difficult. The UK Home Office made an unexpected announcement at midnight on March 16, 2018, declaring that new applications will not be accepted until further notice. After three months of contemplation, new legislation regulating the terms of implementation of the Ankara Agreement was introduced by the UK Home Secretary Sajid Javid alongside other amendments concerning immigration laws and regulations. Permanent residency and citizenship application eligibility times were increased by a year, and mandatory English proficiency and “social life adaptability” tests were introduced. What's more, all of these new rules were to be applied retroactively. Since then, permanent residency and residency applications by Turkish nationals in the UK have been in limbo.

Immigration to the UK is just a part of the story. Besides the Brexit and Ankara Agreement conundrum, Turkish nationals are having a harder and harder time entering the Schengen area as visitors. While the rejection rate for uniform Schengen visa applications by Turkish nationals was around 3 to 4 percent back at the first half of 2010, by the end of 2019, rejections increased to around 9 percent. The rejection rate for that kind of visa is close to India's, which hovers around 10 percent.

The real impact of Brexit on Turkey may be on trade front though: Britain has signed 18 free trade agreements with 55 countries so far. As Arısan’s policy paper notes, due to the Customs Union, Turkey has to wait for the EU to conclude a deal to sign its own agreement due to the Customs Union. By July 2020

But in any case, Ankara wanted to engage in trade deal negotiations with the UK so that new trade tariffs will not hurt Turkish exports in the case of a no-deal scenario or an EU deal that hurts Turkey. So far, Britain has not been interested.

Britain was Turkey's second biggest trade partner after Germany. In 2019, Turkey’s exports to the UK were around 11 billion dollars, and its imports around 5.4 billion dollars.   

As Turkey is neither a part of the EU, nor completely outside of its jurisdiction, it will be the country that really gets hit by Brexit unless Ankara is able to carve out a lucrative trade deal in the coming months.

July 1 is the deadline for when the fate of the EU-Britain deal itself will materialize. The EU and the UK will have until the end of this year to conclude their deal, but if there is going to be a "one or two year extension," this decision has to be made by July 1. 

July 2020 is also the time when Germany takes over the EU Presidency. This current term may be crucial for the future of Turkey and the EU, as Angela Merkel takes some decisive steps regarding the state of relations — leaving a final legacy before she descends from the throne as chancellor. 

In other words, Brexit on one side and Germany’s upcoming EU Presidency on the other may be a make-or-break period on many fronts when it comes to Turkey’s relations with Europe.