Strengthening cooperation in Turkic World Baku, Ankara, and Tashkent expand partnership

In recent years, the business communities of Azerbaijan, Türkiye, and Uzbekistan have been ramping up economic cooperation, with a focus on boosting trade turnover, cargo transportation, and investment partnerships.

The potential for expanding trade, new avenues for collaboration among the business sectors of these three Turkic nations, and the promotion of partnerships between small and medium-sized enterprises (SMEs) in joint non-oil sector ventures were among the key topics discussed during the Türkiye-Azerbaijan-Uzbekistan business forum held in Ankara on January 28-29. Special emphasis during the talks between Azerbaijan’s Minister of Economy, Mikayil Jabbarov, and Türkiye’s Minister of Trade, Ömer Bolat, was placed on strengthening the business partnership between Azerbaijan and Türkiye.

Türkiye is Azerbaijan's second-largest trading partner, and according to 2023 data, the bilateral trade reached a record $7.65 billion, marking a 31% increase compared to the previous year. The volume of Azerbaijan's exports to Türkiye surged by over 50% two years ago, exceeding $5.1 billion. The foundation of bilateral trade in recent years has been built on Azerbaijan's exports, which mainly include oil and gas raw materials, fuel, petrochemical products, electricity, agricultural raw materials, and more. 

On the other hand, Turkish exports to Azerbaijan are almost entirely from the non-oil sector, with a predominant focus on consumer goods. These include food, pharmaceuticals, clothing and footwear, household appliances and electronics, cars, furniture, home goods, as well as industrial equipment, power tools, and more. The dynamics of Turkish imports have notably strengthened over the past two years, partly due to the depreciation of the Turkish lira relative to the Azerbaijani manat.

The overall trade dynamics between Azerbaijan and Türkiye have maintained a positive trajectory, with bilateral trade reaching $8 billion in 2024. "As part of our visit to Ankara, we were pleased to meet with Ömer Bolat, Türkiye's Minister of Trade. Our discussions focused on strengthening the economic partnership between Azerbaijan and Türkiye, increasing trade turnover, and exploring opportunities to actively support business ties and promote investments," Azerbaijan's Minister of Economy Mikayil Jabbarov wrote on his X (formerly Twitter) account on January 29.

Notably, the Presidents of Türkiye and Azerbaijan, Recep Tayyip Erdoğan and Ilham Aliyev, have repeatedly expressed their intention to increase bilateral trade to $15 billion in the coming years during numerous meetings. To achieve this goal, a preferential trade regime was launched in March 2021, under which zero customs duties were introduced on mutual deliveries of 15 groups of goods (primarily food products). As a result, trade dynamics between Türkiye and Azerbaijan have significantly improved. 

In April 2023, the countries initialled a protocol amending the previously concluded preferential trade agreement, and shortly thereafter, the Milli Majlis (Azerbaijan’s National Assembly) passed a law "On the Approval of the Protocol Amending the Preferential Trade Agreement Between the Governments of the Two Countries." Under the new regime, since July 2024, Azerbaijani and Turkish entrepreneurs have been able to import and export 15 additional product categories (such as steel and aluminium products, plastic pipes, and agricultural goods), bringing the total number of goods benefiting from the preferential trade regime to 30. The concept of preferential trade will continue to develop, and according to Türkiye’s Minister of Trade, Ömer Bolat, Ankara, Baku, and Tashkent are continuing their joint efforts to expand trade within the framework of the Organization of Turkic States (OTS), the Economic Cooperation Organization (ECO), and the Organization of Islamic Cooperation (OIC).

Alongside the growth of trade relations, participants at the Türkiye-Azerbaijan-Uzbekistan business forum highlighted the need to expand economic ties, particularly by giving a new boost to investment cooperation and implementing large-scale joint projects in the fields of transportation, energy, and industry. The forum was attended by around 200 entrepreneurs from the three countries, representing sectors such as energy, construction, textiles, pharmaceuticals, food, logistics, and more. Business representatives held productive B2B meetings. The event also emphasized that agreements signed during the 11th Summit of the Organization of Turkic States, such as the "Digital Economy Agreement," the Karabakh Declaration, and the establishment of the Turkish Investment Fund, are helping to further strengthen economic relations.

"The volume of mutual investments between Türkiye and Azerbaijan currently stands at $37 billion, while between Türkiye and Uzbekistan, it reaches $4.4 billion. As governments, we are also intensifying efforts to further increase private sector investments in sectors such as energy, electronics, mining, agriculture, healthcare, IT, and construction," said Türkiye's Minister of Trade, Ömer Bolat, during the forum. He also highlighted that investments in the implementation of the Zangezur Corridor project are expected to be completed soon.

During the forum in Ankara, Azerbaijan’s Minister of Economy, Mikayil Jabbarov, held a meeting with Türkiye’s Minister of Energy and Natural Resources, Alparslan Bayraktar. The discussion focused on the further development of investment cooperation, particularly in the field of "green" energy.

Turkish businesses, alongside expanding investment projects, have been highly active in construction and contracting work throughout Azerbaijan's entire period of independence. In recent years, this cooperation has shifted to Azerbaijan's liberated territories, where Turkish contractors are involved in more than half of all construction projects. Overall, by early 2024, Turkish contractors had implemented a total of 526 major projects in Azerbaijan, with a combined value of $19.3 billion.

During the Türkiye-Azerbaijan-Uzbekistan business forum, it was also highlighted that trade between Azerbaijan and Uzbekistan has continued to grow in recent years, along with transit shipments through the Middle Corridor. Specifically, in 2023, the Azerbaijan-Uzbekistan trade turnover reached $231.6 million, increasing by 26.5% year-on-year. Positive trade trends have continued into the past year as well: from January to November 2024, trade between Azerbaijan and Uzbekistan nearly reached $224 million, and after accounting for December data, a slight increase is expected. The two brotherly Turkic nations are implementing eight projects with the resources of the Azerbaijan-Uzbekistan Investment Company, which has a capital of $500 million. The opening of the Mirza Ulugbek School in Fuzuli and a sewing factory in Khankendi, both built with financial support from Uzbekistan, have become symbols of the brotherhood between the two countries.

In the past three years, Azerbaijan-Uzbekistan investment cooperation has gained rapid momentum. In July 2024, Azerbaijan’s TST Textile Group LLC and Uzbekistan’s Tukımachı Sanoat Tekstıl LLC signed a contract to cultivate cotton and produce cotton oil in the Imishli Agropark. Additionally, from 2025 to 2029, the Uzbek investor plans to invest 92.5 million manats ($54.4) in the construction of factories for yarn, textiles, and clothing production, which will be located in the Mingachevir Industrial Park. Meanwhile, an Azerbaijani-Uzbek joint venture in the Hajigabul Industrial District has been assembling Chevrolet cars for several years, and during this period, nearly 6,000 passenger vehicles have been produced.

Azerbaijan-Uzbekistan cooperation in the transportation and logistics sector is also developing effectively. Although Uzbekistan does not have direct access to the Caspian Sea, it plays a significant role as a cargo carrier and partner of the countries involved in the Trans-Caspian International Transport Route (TITR), actively exploring transit opportunities through Azerbaijan. Moreover, agreements have been reached to provide Uzbek companies with a platform to establish their own terminal at the Baku International Sea Trade Port, which will be used for the transit of sugar as well as other export-import operations with Azerbaijan. In turn, Azerbaijan's subsidiary of Azerbaijan Railways (ADY Container) and the vessels of the Caspian Sea Shipping Company (ASCO) are transporting mineral fertilizers produced in Uzbekistan by block trains to the Romanian port of Constanța.