ANKARA: After Israeli Finance Minister Bezalel Smotrich announced on Thursday that Israel intends to scrap its free trade agreement with Turkiye and impose a 100 percent tariff on other imports from the country in retaliation for Ankara’s recent decision to halt exports to Israel, eyes are now turning to imminent implications for regional trade.
The plan, which aims to reduce Israel’s dependence on Turkiye, has not been finalized yet and will have to be submitted to the Cabinet for approval.
If approved, all reduced tariffs on goods imported from Turkiye under the current free trade agreement would be abolished, while a tariff of 100 percent of the value of the goods would be imposed on all imported products, in addition to the existing tariff.
Experts note that trade ties between the two countries had been mostly insulated from political disagreements in the past. Trade continued when diplomatic relations hit rock bottom, especially between 2010 and 2020, a politically tense period during which parties chose not to burn “trade bridges.”
But this time, Turkiye’s continuation of trade relations with Israel while at the same time being vocal in denouncing its war in Gaza stirred public reaction significantly ahead of the March 31 local elections, when large crowds and some Islamist breakaway parties criticized the government for not taking a hardline stance against Israel and for not matching rhetoric with action.
In late April, Turkiye, whose bilateral trade with Israel was worth about $7 billion a year, announced it would impose trade restrictions on 54 products exported to Israel until a permanent ceasefire in Gaza was declared.
The product range was diverse, from cement to dry food, iron, steel, and electrical devices.
However, companies have three months to fulfill existing orders via third countries.
In his statement, Smotrich described Turkiye’s move as a serious violation of international trade agreements to which Ankara is a signatory.
He added that Israel’s latest decision would last as long as President Recep Tayyip Erdogan remained in power.
Turkiye and Israel have had a free trade agreement since the mid-1990s, making Ankara a key commercial partner for Israeli importers. Relatively cheap imports were transited quite quickly, and Turkiye was Israel’s fifth-largest source of imported goods.
Israel mainly imported steel, iron, motor vehicles, electrical devices, machinery, plastics, and cement products, as well as textiles, olive oil, and fruits and vegetables from Turkiye, while Turkiye mostly bought chemicals, metals, and some other industrial products from the Middle Eastern country, with Turkiye’s trade with Israel tilted in Ankara’s favor.
“Since Erdogan announced that Turkiye would impose a trade ban on imports and exports from Israel, Israeli officials have been trying to determine how best to respond,” Gabriel Mitchell, a policy fellow at the Mitvim Institute, told Arab News.
