Economic relations between two countries have been steadily developed since the very beginning of restoring the independence of Azerbaijan. In this vein, the Agreement on Trade and Economic Cooperation between Azerbaijan and Türkiye was signed on November 1, 1992 in Ankara and entered into force on January 23, 1993.
Extensive development of economic relations is bound to the activities implemented after 1994 and necessary measures focusing on upgrading legal-contractual framework between two countries.
The role of the Azerbaijan-Türkiye Intergovernmental Joint Economic Commission, established in 1996 and mainly addressing economic issues, is of special importance among numerous joint mechanisms in various fields. Currently, the Commission is co-chaired by Mr. Ali Asadov, Prime Minister of Azerbaijan and Mr. Fuat Oktay, Vice-President of Türkiye. The 9th meeting of the Joint Economic Commission was held in Ankara on 19 February, 2021. As a result of this meeting, the protocol of the 9th meeting was signed and consequently, the bilateral Action Plan was adopted. Necessary measures are currently underway to implement the provisions of this Action Plan.
Türkiye is one of the largest investors in Azerbaijan. The volume of foreign direct investment (FDI) from Türkiye to Azerbaijan in 1995-2021 amounted to $13.3 billion. ($10.4 billion in the oil and gas sector, $2.9 billion (1st place) in the non-oil and gas sector). Turkish companies are mainly operating in the areas such as energy, industry, telecommunications, banking and insurance, construction, transport and health.
Azerbaijan is also one of the largest investors in Türkiye, and these investments has been remarkably increased in recent years. Approximately 2,000 companies with Azerbaijani capital currently operate in Türkiye. The volume of direct investments from Azerbaijan to Türkiye in 1995-2021 amounted to $20.3 billion ($17.1 billion in the oil and gas sector, $3.2 billion in the non-oil and gas sector). STAR refinery built in the Petkim petrochemical complex in Aliaga, Izmir, which became operational in September, 2018, is yet another momentous project of international importance jointly implemented. The project's investment value amounts $6,3 billion, which is a single largest FDI to Turkish economy ever. Azerbaijan ranks first among the investors of Central Asian and Caucasus countries in Türkiye in terms of both the number of companies and the volume of investment.
Trade between Türkiye and Azerbaijan is constantly evolving. Türkiye is Azerbaijan's second largest trading partner in terms of imports and exports. In 2021, Azerbaijan's trade turnover with Türkiye amounted $4,661.85 million (12.06%), where includes import ($1,843.71 million, 18.00%) and exports ($ 2,818.14 million, 8.48%).
4797-Turkish companies operating in various fields have been registered in Azerbaijan. Turkish companies are also actively involved in the implementation of large-scale infrastructure projects in the liberated territories of Azerbaijan. Currently, 107 different projects are being implemented by Turkish companies in these territories.
Recently, important steps have been taken to further facilitate and increase trade between Türkiye and Azerbaijan. In this respect, the "Preferential Trade Agreement between the Government of the Republic of Azerbaijan and the Government of the Republic of Türkiye" was signed on February 25, 2020 in Baku and entered into force on 01 March, 2021. The agreement mainly addresses the mutual reduction of customs duties on imports for 15 categories of agricultural and food products with an annual tariff quota quantity.
On the other hand, Azerbaijan and Türkiye have been the main initiators of a number of regional projects of international importance that are currently being implemented. Baku-Tbilisi-Ceyhan oil pipeline (BTC), Baku-Tbilisi-Erzurum gas pipeline (BTE), Baku-Tbilisi-Kars railway (BTK), Trans-Anatolian Pipeline (TANAP) are obvious examples of such projects.
One of the most significant steps for the implementation of BTC project was signing Ankara Declaration on the construction of the Baku-Tbilisi-Ceyhan Main Export Pipeline by Azerbaijan, Türkiye and Georgia on October 29, 1998. The agreement "On transporting crude oil via the Baku-Tbilisi-Ceyhan Main Export Pipeline to the Republic of Azerbaijan, the Republic of Georgia and the Republic of Türkiye" was signed in OSCE Istanbul Summit, on November 18, 1999. The official inauguration of BTC Main Export Pipeline was held at Ceyhan Terminal on July 13, 2006. Furthermore, Baku-Tbilisi-Erzurum gas pipeline is yet another important project between two states conveying regional importance. Azerbaijan delivered first natural gas to Türkiye through this pipeline in 2007. BTC Main Export Pipeline and BTE gas pipeline enabled Azerbaijan to export its oil and natural gas reserves to the world market.
Another important project of international significance implemented by the initiative of Azerbaijan and Türkiye is TANAP project, which is one of the main components of the Southern Gas Corridor. This project plays a crucial role in energy security of Türkiye and EU countries. First gas deliveries to Türkiye via TANAP project started in 2018. The transportation capacity of the pipeline is 16 billion cubic meters (bcm) at initial stage, its volume can eventually be increased to 24 bcm and 31 bcm. 1850 km-TANAP pipeline is connected to Trans-Adriatic Pipeline (TAP), another important component of Southern Gas Corridor, in late 2019, thus enabling Azerbaijani natural gas to be delivered to the EU nations, mainly Greece, Albania, Bulgaria and Italy.