Türkiye Comprehensive Economic Partnership Agreement (CEPA)

Introduction

The United Arab Emirates (UAE) and the Republic of Türkiye (Türkiye) Comprehensive Economic Partnership Agreement (CEPA) was signed on 3 March 2023 and officially entered into force on 1 September 2023. To enforce CEPA, UAE Federal Decree No. 91 of 2023 and a notice from the Federal Authority for Identity, Citizenship, Customs, and Port Security were issued. 

CEPA aims to strengthen economic relationships and increase bilateral trade between the UAE and Türkiye by establishing a free trade area, eliminating or reducing tariffs, removing trade barriers, and providing a favorable climate for trade. 

As an all-inclusive agreement, CEPA addresses trade in goods and services, protection of intellectual property rights, government procurement, competition, digital trade, and investment facilitation with the aim of promoting trade and investment.

Trade in goods

The agreement has been outlined in 18 chapters with several clarifying annexes attached, covering various aspects of trade and investment between the two countries. Chapters 2, 3, 4, 5, 6 and 7 address different aspects related to trade in goods including technical barriers to trade, Customs procedures and trade facilitations, originating goods and are, accordingly, the most relevant from customs and global trade perspective.

For more than 90% of the goods traded between the two countries, CEPA offers preferential treatment in the form of tariff elimination or reduction. CEPA accordingly provides better market access for UAE products to Türkiye, covering more than 83% of tariff lines and 93% value of trade with Türkiye.

CEPA specifies three categories of Preferential Tariff Rates, which vary depending on the type of goods. These categories include:

• Immediate tariff elimination - Majority of tariff lines will be subject to 0% customs duty rate 
• Phased tariff elimination - Other tariff lines will be benefited from gradual elimination of customs duties over a period of 3 and 5 years 
• Tariff reductions - Custom duties will be reduced in comparison with those existing.

To avail the above preferential treatment, it is imperative to adhere to the Rules of Origin stipulated in chapter 7 of the CEPA.

According to such provisions, a product must fulfill one of the following origin criteria to be eligible for the benefits:

• The product must be wholly obtained or produced in the territory of the contracting party.
• If not wholly obtained, then, such materials must have undergone sufficient working or production in the territory of the contracting party.
• The product satisfies all other applicable requirements of Chapter 7 of the agreement.

Compliance with the Rules of origin must be substantiated by a proof of origin (i.e., certificate of origin, whether in paper or electronic format or an origin declaration made by an approved exporter). If non-compliance with the Rules of Origin is established, preferential treatment will be denied, duties will be levied and penalties will be imposed. 

Trade in services

In order to liberalize trade in services, CEPA dedicates chapter 8 and its annexes to trade in services, ensuring enhanced market access for service providers in both countries. 

It covers 12 service sectors regarding Turkey and 11 service sectors for UAE along-with the schedules of specific commitments for both the parties.

The covered 12 sectors are generally as follows:

• Business services (including professional services such as legal, accounting, and auditing services)
• Communication services (including postal services and telecommunication services)
• Construction and related engineering services
• Distribution services (including wholesale trade services and retailing services)
• Education services
• Environmental services
• Financial services (including banking and insurance services)
• Health related and social services
• Tourism and travel related services
• Recreational, cultural, and sporting services
• Transport services
• Other services not included elsewhere, such as hairdressing and other beauty services.

Other provisions

CEPA emphasizes on reducing and simplifying customs procedures and adopting international best practices for customs management such as (Illustrative):

• Encourage the digital trade by way of electronic submission and processing of documentation
• Eliminate technical barriers to trade (TBT), enhance transparency, and promote cooperation and good regulatory practice 
• Commitments on working towards implementation of Authorized Economic Operators (AEO) mutual recognition agreement
• Agreement on cooperation towards government procurement and negotiation to add a new chapter in this respect after two years from the entry into force of CEPA 
• CEPA as well incorporates the regulation of competition, dispute settlement, the protection of intellectual property rights, etc.
• A joint committee is established to assess, revise, and suggest amendments.

Conclusion

To conclude, UAE businesses can, as illustrated above, enjoy many benefits under CEPA, including:

• UAE products to Türkiye will have better market access, as CEPA covers more than 83% of tariff lines, and more than 93% of value of trade
• UAE products will not be subject to Türkiye’s anti-dumping investigations as such products are merely transshipped
• UAE service providers will have enhanced market access with removal of unnecessary technical barriers to trade.

For more information regarding CEPA, please refer to the link from the website of Ministry of Economy, UAE.

How can Deloitte help?

Our team of professionals undertake an impact assessment for your business to ascertain extent of imports and exports made between Türkiye and the UAE, and how the CEPA impacts these trades. This will cover: 

• Evaluation of price impact of CEPA on your business’ revenue in the short and medium term
• How to comply with CEPA requirements to ensure CEPA benefits can be accrued
• Review trade contracts in place to assess if terms should be amended to address risks and opportunities brought in by CEPA.

As such, it is imperative to agree on a detailed action plan and next steps for CEPA impact assessment. Fully acknowledging the actions may be different for goods and services.