The effects of free trade agreement between Tunisia and Turkey

Throughout history, states have engaged in both domestic and foreign economic activities to sustain their existence. Presenting produced goods to foreign markets has triggered income growth and economic expansion. In this process, economic theories and foreign trade practices have undergone constant evolution. This change, ranging from mercantilism to strategic trade policies, has taken place across a wide spectrum, from bilateral collaborations to complex multilateral agreements. Particularly, the rapid advancement of technology has diminished the importance of geographical distances, increasing opportunities for economic cooperation between countries in different corners of the world. While trade was previously limited to neighboring countries, it has now transformed into a tendency for countries to choose the most efficient partners in line with their own interests. These collaborations can take the form of bilateral or multilateral agreements, but in recent years, states have increasingly focused on bilateral trade agreements. This study examines the economic, commercial, and sectoral effects of the Free Trade Agreement (FTA) that entered into force between Turkey and Tunisia in 2005. The agreement significantly increased the trade volume between the two countries, creating new opportunities in the industrial, agricultural, and service sectors. While Turkey's exports to Tunisia rapidly increased, Tunisia's foreign trade deficit widened, and its local industry faced competitive pressure. However, the FTA diversified Tunisia's exports, encouraged foreign direct investment, and deepened economic integration between the two countries. For Turkey, the FTA facilitated access to the North African market, allowing Turkish industrial products to achieve a stronger position in the Tunisian market. However, the negative impacts of the agreement on Tunisia's local producers and the deterioration in the trade balance led to steps being taken in 2023 to revise the FTA. The study evaluates the advantages and disadvantages of the FTA on the economies of both countries, offering policy recommendations for a more balanced and sustainable trade relationship.