Turkey, Ukraine ink FTA deal, agree on battle-tested drone production

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Ankara and Kyiv on Thursday signed a long-awaited free trade agreement (FTA) dubbed “historic” by their leaders, while also inking a fresh deal aimed at expanding drone production in Ukraine.

President Recep Tayyip Erdoğan and his Ukrainian counterpart Volodymyr Zelenskyy both hailed the deal that will reduce barriers in trade between the two Black Sea neighbors and help them reach a bilateral trade volume of $10 billion, a goal set by the two leaders.

The FTA and several other deals came on the sidelines of Erdoğan’s visit to Kyiv that comes amid a standoff between Ukraine and Russia. Moscow has massed troops near Ukraine’s borders in recent weeks but denies planning to attack its neighbor.

“Signing of the free trade agreement between Ukraine and Turkey is a historic event,” Zelenskyy said in a joint press conference alongside Erdoğan after more than four hours of talks.

Erdoğan said they discussed steps to be taken to lift bilateral trade to $10 billion and stressed the FTA would have a positive impact in this regard.

He also highlighted that “today’s meetings and the agreements are a symbol of our will to move our strategic partnership even further.”

Eight agreements, including the free trade pact, were signed during Thursday’s visit – which coincides with the 30th anniversary of the establishment of diplomatic ties between Turkey and Ukraine.

Trade turnover between Turkey and Ukraine surged more than 60% to some $7.4 billion in 2021, according to official data, up from around $4.7 billion in 2020.

“This means that our goal of $10 billion (trade volume) is possible. The free trade agreement will allow us to achieve this goal faster than we expected,” Zelenskyy said.

Negotiations on the free trade deal have dragged on for about a decade due to disagreements over grains and metals, which accounted for about 70% of Ukrainian sales to Turkey.

The two countries also have high exchanges particularly in steel, yachts, the shipping industry, furniture, automotive supplies, fruits and vegetables, as well as the defense industry.

Drone production

Zelenskyy also trumpeted a deal between Ukraine and Turkey aimed at expanding drone production in Ukraine.

He said battle-tested unmanned aerial vehicles (UAVs) developed by Turkey’s drone magnate Baykar would be manufactured in Ukrainian factories.

“We have signed an agreement today which will significantly expand production of unmanned aerial vehicles,” Zelenskyy said.

The Ukrainian army already has dozens of Baykar-developed Bayraktar TB2 unmanned combat aerial vehicles (UCAV) in its inventory. Kyiv also inked a contract to purchase warships from Turkey.

The land is said to have already been allocated for the project, while the drones are expected to use engines made in Ukraine.

Ukrainian forces last October used a Bayraktar TB2 drone to strike a position controlled by Russian-backed separatists in eastern Ukraine.

The supply and the use of the drones disturbed Russia, with whom Turkey also forges cooperation on defense and energy.

The military cooperation between Ankara and Kyiv is not intended to target Russia and will not be disrupted in order to please it, Turkey’s Communications Director Fahrettin Altun was cited as saying by Bloomberg on Thursday.

Defense Minister Oleksii Reznikov told Reuters the drones deal created “favorable conditions for Turkish manufacturers to build a drone factory in Ukraine so that we can produce the entire line of drones and get their high technologies.”

On the other hand, Ukraine is providing Turkey with important equipment and parts, particularly helicopter engines. The two countries also plan joint defense industry production projects.

In addition to Ukraine, the Bayraktar TB2 has also been used by Qatar, Azerbaijan and Poland, which in May last year became the first European Union and NATO member state to acquire drones from Turkey.

Russia standoff

Turkey shares the Black Sea with Ukraine and Russia. Erdoğan has said any conflict would be unacceptable in the region and warned Russia that an invasion would be unwise.

Turkey has opposed Moscow’s policies in Syria and Libya, as well as its annexation of the Crimean Peninsula in 2014.

Erdoğan on Thursday reiterated the offer to mediate talks between Kyiv and Moscow and underlined Turkey’s commitment to Ukraine’s territorial integrity and sovereignty.

Zelenskyy welcomed Erdogan’s offer and thanked him for his “firm and consistent” support.

Erdoğan said Turkey was “prepared to undertake its part in order to end the crisis between two friendly nations that are its neighbors in the Black Sea.”

“I have stressed that we would be happy to host a summit meeting at a leadership level or technical level talks,” Erdogan noted. “Instead of fueling the fire, we act with the logical aim of reducing the tensions,” he added.

Ukrainian visitors are one of the most important markets for the Turkish tourism industry.

More than 2 million tourists arrived from Ukraine in 2021, a year-over-year increase of 106.5%, according to official data, reflecting a recovery as the impact of the initial wave of COVID-19 pandemic measures in 2020 receded. The countries agreed on visa- and passport-free travel in 2017.

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