The International Chamber of Commerce (ICC) in Paris is dedicated to fostering international trade and investment. Its very mission is to promote open markets, responsible business conduct, and a level playing field for enterprises worldwide, which was the vision of Étienne Clémentel when the ICC was originally founded. Today, the ICC represents over 45 million companies in more than 170 countries, including the United Kingdom and Türkiye.
By providing essential services such as dispute resolution and policy advocacy, the ICC and the ICC International Court of Arbitration (ICC Court) plays a pivotal role in facilitating cross-border economic activities. This commitment is particularly relevant in the context of investment relations, where the ICC’s efforts to streamline and safeguard international business operations contribute significantly to enhancing bilateral trade and economic cooperation.
At the recent event organized by Güleryüz Partners & Clyde & Co in London and supported by the ICC Court, Turkish and UK industry leaders, policymakers, investors, and thought leaders took center stage to discuss investment relations between the United Kingdom and Türkiye in the post-Brexit era. The UK’s departure from the EU has served as a catalyst to strengthen bilateral ties with Türkiye, especially concerning trade and economic collaboration with Ankara.
Historically, Türkiye and the United Kingdom have maintained strong economic ties, with the UK being one of Türkiye’s major trading partners and foreign investors. Following Brexit, the UK-Türkiye Free Trade Agreement came into effect on 1 January 2021. Both nations have confirmed that negotiations will re-open in June 2024 between them to further fortify their relationship under the existing UK – Türkiye Free Trade Agreement.
Türkiye’s cumulative FDI inflows since 2002 have surpassed USD 260 billion, of which over USD 13 billion came from foreign or international direct investment from the UK into Türkiye, which is a clear vote of confidence from British investors. More recently, trade between the UK and Türkiye reached over GBP 26 billion from June 2022 to June 2023, making Türkiye the 17th largest trading partner for the UK.
Key takeaways
During the event, participants shared experiences and discussed some of the reasons for investing in each other’s markets.
A few advantages that were highlighted for UK investors included:
- Türkiye’s access to a large domestic market; its strategic location at the doorsteps of both the EU and MENA with access to different markets;
- Türkiye has a skilled workforce and low labour costs compared to other markets;
- Wide range of services, including Turkish programmers helping develop the technology ecosystem worldwide;
- Prioritization of digital and green transformation processes, its integration into global supply chains, strong logistics, energy and digital infrastructure that is well diversified;
- Advanced manufacturing services and a healthy banking sector;
- Increase in tourism as well as important opportunities in the energy and defense sectors (e.g., recent Airbus Turkish Airlines deal);
- By 2035, Türkiye will likely be considered a high-income country – with its import market expected to double in real terms.
In turn, Turkish investors that had already set up shop in the UK, as well as market experts, highlighted the benefits of incorporating and investing in the UK:
- Global strength and stable markets;
- London Stock Exchange more beneficial for smaller to medium size companies as they have half yearly reporting obligations and underwriting costs are lower with lower rates of class action suits;
- Innovation ecosystem and IP sector is one of a kind – UK technology transfer offices are part of UK universities – and have had a major impact in the last 5 years on data-spin offs;
- All 6 venture capital funds have set up in London;
- Climate change and regional landscape is gradually developing – and the net zero transition will be costly and can provide investment opportunities;
- The findings of the review conducted by Lord Harrington to reorganize the government in a cross departmental, investment friendly way are currently being implemented and promise to further align all departments, promising to make the UK an even stronger trade partner.
Looking Ahead
Both nations have a chance to capitalize on negotiations within their current UK – Türkiye Free Trade Agreement, particularly as they serve as gateways to the EU. There is a clear desire in the UK and Türkiye, both in the public and private sectors, to seize this growth opportunity. It remains anticipated that the updated terms of the UK – Türkiye Free Trade Agreement will extend beyond the current scope, potentially encompassing facilitation of visas and collaborations concerning the legal services industry.
In this context, it will become crucial to adopt suitable dispute resolution and avoidance techniques in cross border transactions that will emerge from cooperation between these two countries. The ICC Court plays a crucial role in promoting best practices and upholding the highest standards in alternative dispute resolution (ADR) services. International arbitration and other forms of ADR will be essential for facilitating trade and fostering cooperation and economic growth across different legal systems.
This may be an opportunity for Istanbul, alongside London, to gain attention as a growing international arbitration hub in the years to come. The future is bright!
Asli Yilmaz, Managing Counsel of the ICC International Court of Arbitration