ANKARA: Turkish Economy Minister Nihat Zeybekci and European Commissioner of Trade Cecilia Malmström have recently announced Turkey and the European Union’s joint ambition to modernize and expand the 20-year-old Customs Union (CU). This intention of deepening bilateral economic relations has become an urgently necessary consolidation of the CU to prevent a disruption between Turkey and the EU due to institutional weaknesses in the ex-isting trade accord.
While the political accession negotiations between Turkey and the EU have been stagnant over the past years, economic cooperation has steadily improved, particularly after Turkey joined the CU. Today, the EU is Turkey’s number-one import and export partner; mean-while, Turkey ranks seventh in the EU’s top import and fifth in export markets. Additionally, over the past five years, the EU has accounted for 75 percent of the total foreign direct in-vestments (FDI) to Turkey.
Looking at the status quo, it may seem at first that a stagnation of political integration, on the one hand, and flourishing economic relations, on the other, are acceptable means to maintain bilateral relations between Turkish and European politicians in power.
However, recent developments increasingly cast doubt on the success of this inarticulate policy agenda. In this context, EU negotiations on a Transatlantic Trade and Investment Partnership (TTIP) play a special role.
The negotiations uncovered a dramatic misalignment in the existing CU between Turkey and the EU.
Since the CU calls for a joint external tariff for third countries, Turkey is obliged to open up its market to the third country involved every time the EU signs a new free trade agreement involving industries covered by the CU. Turkey, however, does not gain access to that coun-try’s market. According to the calculations of the German Ifo Institute, the successful nego-tiation of TTIP could lead to a decrease in Turkish GDP by over 1.5 percent.
Turkey rightly favored the launch of the CU with the EU in 1996 under the expectation that it would soon become a full member of the political union and, therefore, handed over its trade policy autonomy to the EU.
In this sense, the existing trade accord between Turkey and the EU represents an intermediate state in a long-lasting economic integration process. Unfortunately, the “temporary agreement” turned out to be the basis for a bilateral eco-nomic relationship that has been lasting longer than intended. Correcting the asymmetric duties arising from the CU is not easy to achieve.
