Russia-Turkey Bilateral Trade “Should Hit US$100 Billion” – Rushar Pekcan
Op/Ed by Chris Devonshire-Ellis
Russia & Turkeys Gradual Pivot To Asian Institutionalization Will Improve Trade Prospects
Bilateral trade between Russia and Turkey is under-exploited and “should be US$100 billion per annum” according to Rushkar Pekcan, Turkey’s Foreign Trade Minister, speaking at the Russia-Turkey Joint Economic Commission held last week at the Turkish resort of Antalya.There is some way to go. The two countries’ bilateral trade, which was US$33.3 billion in 2012, just before sanctions, stood at US$25.7 billion in 2018. Turkish exports to Russia were worth US$3.4 billion, while its imports from Russia were US$22.3 billion. Russia imports house appliances, freezers, construction materials, furniture, ready-made clothes and medicine from the world, Pekcan stated, adding: “Turkey exports all of these products to the world with the most competitive prices.” Since the 2012 figures were released, trade declined due to the impact of US sanctions against Russia. However, with the United States having also imposed sanctions on Turkey, and having threatened to do so again should Ankara buy Russian made military hardware, the two countries are finding ways to support each other and defy Washington’s increasing use of economic muscle to interfere in their respective domestic affairs. Urging the use of trade in each others respective currencies, she noted that Russia conducted 12% of its exports and 0.5% of its imports in this manner and that the non-use of US dollar trade was increasing. “We expect Russia to contribute to increasing trade with local currencies,” she noted. Russia, Turkey and Iran has already signed off an agreement to permit trade in their respective currencies, in defiance of US sanctions. All of the countries are affected by Washington punishing them for trading outside the US commercial interests.
The two countries’ bilateral investments is currently around US$20 billion, she added, stressing that there was a large potential in this area as well.Turkey is a key component of China’s Belt & Road Initiative and is considered by many a gateway between Europe and Asia, as we explained in the article Turkey’s Pivotal Role In China’s Belt & Road Initiative. Turkey is also in discussions with Moscow about entering into a Free Trade Agreement with the Eurasian Economic Union, a pact that will lower import-export duties between Turkey and Russia as well as between Turkey and Armenia, Belarus, Kazakhstan and Kyrgyzstan. Turkey is also keen to join the Shanghai Cooperation Organization as a full member, which would again provide diplomatic, trade and strategic links between it, Russia and Asia. Russia and Turkey have also signed off a Double Tax Treaty, which provides for tax minimization on certain aspects of bilateral trade including the minimization of profits taxes. Professional assistance needs to be sought for exploiting such mechanisms, which can be worth savings of between 5-10% of trade turnover.
Russia entrepreneurs, already well versed in seeking opportunities in Southern Europe’s sunnier climates, can examine trade prospects between Russia and Turkey and expect to do well if they move fast enough. The same is true of Turkish businesses wishing to access the Russian market. Although there are still some developments to come down the pipeline, movement between the two countries to specifically increase trade will see these materialize. The time to examine the Russia-Turkey trade corridor has arrived.
Russia Briefing is written by Dezan Shira & Associates. The firm has a long history of dealing with both Russian and Turkish businesses and can provide support services to businesses wishing to examine trade potential in these markets. For assistance please email email@example.com or visit us at www.dezshira.com