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Information supplied by Turkish-British Chamber of Commerce & Industry

TURKEY- UK RELATIONS
Turkey and the United Kingdom share many common outlooks and ties on a wide range of international matters. The
relationship between the two countries has been and will continue to be of crucial and growing importance. This state of
affairs has been witnessed and strengthened by the recent Strategic Partnership between Turkey and the United Kingdom
drawn by the British and Turkish Prime Ministers on 23 October 2007. The Strategic Partnership priorities include;
- Increase bilateral trade and investment,
- Promoting Turkey as a high growth, high priority market,
- Raising awareness of mutually beneficial business opportunities,
- Supporting economic reform
- Supporting co-operation many other areas of business
- Supporting Turkey’s EU accession talks
Other areas of co-operation covered by the Strategic Partnership are; defence, global security, promotion of the transatlantic
partnership, regional stability and peace, tackling climate change, promotion of education and culture, including the
establishment of a British University in Turkey, and a six monthly consultations to take forward work on these subjects.

TURKEY’S INTERNATIONAL TRADE AGREEMENTS

REGIONAL MEMBERSHIPS AND RELATIONS,

Turkey - EU Customs Union

The UK and Turkey associated by a EU Customs Union agreement, which came in force on 31 December 1995, pursuant to
the 1963 EU-Turkey Association Agreement. The Customs Union covers all industrial goods but excludes agriculture (except
processed agricultural products), services and public procurement. In 1996 a free trade area was established between Turkey
and the European Union for products covered by the European Coal and Steel Community.

Free Trade Agreements

In addition to the Custom Union with the EU, Turkey is a signatory to the Free Trade Agreements with, EFTA, Israel, the
former Yugoslav Republic of Macedonia, Croatia, Bosnia-Herzegovina, Tunisia, Morocco, the Palestinian Authority, Syria,
Egypt and Albania.

Memberships Organisations and Regional Associations

Turkey is member also of the Euro-Mediterranean partnership and as such should conclude free trade agreements with all
other Mediterranean partners, with a view to the creation (by 2010) of a Euro-Mediterranean free trade area.

Turkey is a member of
- Associate member of the Western European Union
- Council of Europe
- Founding members of the OECD and OSCE
- Black Sea Economic Cooperation,
- Economic Cooperation Organization
- Organisation for Islamic Conference and Islamic Development Bank.
- Caspian and Turkey Business Group

Unique Geographical Location and strong ties with near Emerging Markets
Turkey, in addition to the Customs Union relationship with the EU, enjoys strong regulatory and geographical position to trade
with Central Asian, Middle East and Caucasian countries. Turkey is at the crossroads between East and West, overlapping
Europe and Asia geographically. The proximity to and bilateral trade relations with the new emerging markets in the Middle
East, Caucasian republics and Central Asia can create unique business opportunities. Turkey is the leading investor in

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Caucasian and Central Asian Turkic Republics. Due to her strong cultural and historic ties, Turkey provides privileged
access and a strong base to develop business with and re-export to these countries.

TRADE BETWEEN THE UK AND TURKEY

In terms of IMF and WorldBank rankings,
the UK is world’s 5th largest economy,
Turkey, the worlds 17th and Europe’s 6th largest economy

For Turkey, UK is a major trade partner.

The trade between the UK and Turkey rose sharply between 2001 and 2007 and reached its highest value of 14.1 billion
US$ in 2007. While the first two quarters of 2008 recorded even further rises, the effect of the financial and economic crises
showed itself in the second part of 2008. The third quarter of 2008 remained stagnant and the figures in the 4th quarter
sharply declined. 2008 ended 4.3% short of 2007; 13.5 billion US$. The effect of the economic climate on UK Turkey trade
continued in the first quarter of 2009. The trade between the two countries is expected to begin risinin from the third quarter
of 2009.

[ Billion $ ]
16 14.1 13.5
14 Turkey Exports to UK
Billion $
12 UK exports to Turkey
10 8.6 8.2
6.8
8 5.9 Turkey Exports to UK
5.5
6
3.7
UK exports to Turkey
4 3.0
2.2 5.1 5.5 5.3
2 4.3 4.7
2.4 3.5
1.9
0
1
2001 2
2002 3
2003 4
2004 5
2005 6
2006 7
2007 8
2008

For UK, Turkey is an important trade partner

While UK is a major trade partner for Turkey, Turkey has recently become an important trade partner for the UK; between
2001 and 2008, among UK’s trade partners, Turkey became
ƒ 17th in terms of volume and
ƒ 5th in annual average growth rate ranking 2001-2008
ƒ 3rd between 2001 and 2007.

TRADE CATEGORIES

UK Exports To Turkey
In 2008, the 17 highest volume categories of goods exported from the UK to Turkey totaled 90% of the total; these were, in
the order of value ranking: Boilers, machinery, Iron and steel and their products, automotive, Pharmaceutical products,
Electrical machinery and equipment, Plastic, Organic chemicals. dyeing extracts, fillers stoppings, inks,
Mineral fuels, minerals oils, chemical products, Rubber, base metal, Optical, photographic, cinematographic, measuring,
precision articles,
Filament, printed books, newspapers, Essential oils, resinoids, perfumery, cosmetic and toilet preperations.

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Turkish Exports to the UK

In 2008, the top 18 categories of Turkey’s exports to the UK comprised 90% of the total: they are, in the order of value
ranking: automotive, automotive products, electrical machinery, textile, boilers, machinery,
mechanical appliances, iron & steel, articles of iron & steel, minerals, edible fruit and nuts, plastic, rubber, ceramic,
pearls, precious stones, precious metals, aliminium, furniture, articles of stone, plaster, cement, preparations of vegetables
INVESTMENT SUPPORT AND PROMOTION AGENCY OF TURKEY (ISPAT)
Regulatory changes in 2003 to improe the Investment Environment
A key Investment support organisation, ISPAT (Investment Support And Promotion Agency of Turkey, was set up at the end
of 2007 to
ƒ Attract and Monitor Foreging Direct Investment inflow to Turkey
ƒ Support settlement of the investors
The agency reports directly to the Prime Minister and has a wide international representatives network, including worldwide
and strategical partners in Turkey (Embassies, Consulates, Commercial Attaches, Chambers, NGO’s). ISPAT has a
representative office in London

UK INVESTMENTS IN TURKEY (2004-2008)

UK Direct Investment inflow to Turkey continued to increase in 2008.
International Direct Investment Inflow To Turkey (2004-2008)
[ Value: $ million ] 2004 2005 2006 2007 2008
United Kingdom 126 166 628 702 2,281
Total Foreign Investment 2,785 10,031 20,185 22,046 17,718

MAJOR UK INVESTMENTS AND COMPANIES IN TURKEY

At the end of 2008, there were 2,082 UK based FDI companies in Turkey; a significant increase from 418 before the
regulatory changes in June 2003. Among the major UK firms trading with, investing in Turkey or in partnership with Turkish
companies, we can cite Vodafone, HSBC, TESCO, Cadbury Schweppes, Marks & Spencer, Argos, John Lewis, Matalan,
Next, Sainsbury, Morrisons, Dagenham and Harvey Nichols. Aviva, BP, Shell, Unilever, Thames Water

MAJOR TURKISH COMPANIES IN THE UK

Major Turkish businesses in the UK are Beko, ExSA, Vitra, Vestel, BMC, Sabancı, Koç, Doğan, Doğus, İş Bank, Ziraat Bank
and Akbank.

SOME FACT ABOUT TURKEY NAD TURKISH ECONOMY

Progress in Regulatory Framework (EU Accession as key driver)
Changes in the Turkish investment regulations and policy; 2003
Turkey placed by UK in top 10 emerging markets
Huge Domestic Market with a population nearly 71 million of which 40% are under 22. Turkey has the world’s 13th largest
urban population (about 50 million).
Istanbul and Ankara are among the biggest cities in the world in terms of GNP. Istanbul is 34th and Ankara 94th (2005). At
$133 billion Istanbul’s GNP surpasses that of many countries such as Romania, Ukraine, Croatia and Luxembourg
FDI Companies in Turkey: 5,100 (in 2001), 21,944 (in 2008)
UK based companies in Turkey: 418 (in 2001), 2,082 (in 2008)
Structural Reforms
Hub to multiple markets North Middle East, Caucasians, Central Asia

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Energy corridor (Oil and Gas pipelines)
Investment Incentives + Low taxes
Qualified and cost-effective labour force
Appeal of living in Turkey; Property
Frequent Flights between UK and Turkey
Simple Export Procedure (EU Customs Union / ATR documentation)
Zero Duty Rates (Except Food, Coal and Steel)
Turkey has become one of the most favourite property destinations for UK nationals; more than 2 million Britons visited
Turkey in 2008.
Turkey is among the world top producers of
ƒ Refrigerators (One in 10 UK refrigerators is made in Turkey)
ƒ TV and DVD players
ƒ Buses
ƒ Light commercial vehicles
ƒ Lorries in Europe
(More than 7% of Europe's motor vehicles come from Turkey)

Turkish contractors are among the biggest players in the Middle East, North Africa and Former Soviet Union with $84billion
worth of construction projects to date. Five Turkish companies are among the world's top 100 construction companies.
Twenty Turkish companies are in the top 225.

OPPORTUNITIES IN TURKEY FOR UK BUSINESSES

Banking Sector
Financial Services Mortgage, Non-Banking Financial Sector, Insurance
Transport Sector Rail / Road Networks, Commuter, Airports,
Privatisation: Turkish Telecom, Turkish Airlines, Maritime, Food, Mining,
Petrochemicals, Textile, Transportation, Energy, Banking, Ports
Environment: Waste Management, Water Basin Management, Recycling Legislation
Under Consideration
Other Sectors: Agri-Business, Organic, Renovation, Construction Projects, Material
Engineering, ICT, Software, Education, Training, Textiles, Clothing,
Automotive, Healthcare, Medical, Pharmaceutical, Mining, Minerals,
Oil, Gas)

TURKISH BUSINESS PROFILE

Increasing skills base
European business codes
Modern management practices
Highly and often foreign educated managers