The European Union–Turkey Customs Union is a

trade agreement A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common tr ...

between the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...

(EU) and

Turkey Turkey ( tr, Türkiye ), officially the Republic of Türkiye ( tr, Türkiye Cumhuriyeti, links=no ), is a transcontinental country located mainly on the Anatolian Peninsula in Western Asia, with a small portion on the Balkan Peninsula ...

. The agreement came into effect on 31 December 1995, following a 6 March 1995 Decision of the European Community–Turkey Association Council to implement a

customs union A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.GATTArticle 24 s. 8 (a) Customs unions are established through trade pacts where the participant countries set up ...

( tr, Gümrük Birliği) between the two parties. Goods may travel between the two entities without any customs restrictions. The Customs Union does not cover essential economic areas such as agriculture (to which bilateral trade concessions apply), services or public

procurement Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or s ...

. In 1996 a free trade area was established between

and the European Union for products covered by the

European Coal and Steel Community The European Coal and Steel Community (ECSC) was a European organization created after World War II to regulate the coal and steel industries. It was formally established in 1951 by the Treaty of Paris, signed by Belgium, France, Italy, Luxemb ...

. Decision 1/98 of the Association Council covers trade in agricultural products. In addition to providing for a

common external tariff A common external tariff (CET) must be introduced when a group of countries forms a customs union. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which ...

for the products covered, the

Customs Union A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.GATTArticle 24 s. 8 (a) Customs unions are established through trade pacts where the participant countries set up ...

foresees that Turkey is to align to the

acquis communautaire The Community acquis or ''acquis communautaire'' (; ), sometimes called the EU acquis and often shortened to acquis, is the accumulated legislation, legal acts and court decisions that constitute the body of European Union law that came into b ...

in several essential internal market areas, notably with regard to industrial standards. According to a 2020 study, the agreement boosted trade between the EU and Turkey. In manufacturing, there was a 55–65 per cent increase in EU‐Turkey trade compared with the Ankara Agreement.

Results for Turkey

The customs union increased both

import An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. In international trade, the importation and exportation of goods are limited ...

s and

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...

s in Turkey, as well as its

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

per capita. Turkey's membership of the customs union is recognised as having played a significant part in its economy's transition from agrarian to industrial. As

is in a customs union with the EU, it has to adjust its

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and p ...

s and

duties A duty (from "due" meaning "that which is owing"; fro, deu, did, past participle of ''devoir''; la, debere, debitum, whence "debt") is a commitment or expectation to perform some action in general or if certain circumstances arise. A duty may ...

to match those of the EU. However, the

free trade agreement A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occ ...

s (FTAs) signed by the EU do not extend to Turkey, so the EU's FTA partners can export to Turkey tariff-free, while maintaining tariffs on Turkish goods, unless they also conclude a separate FTA agreement with Turkey. During the negotiation of the

Transatlantic Trade and Investment Partnership The Transatlantic Trade and Investment Partnership (TTIP) was a proposed trade agreement between the European Union and the United States, with the aim of promoting trade and multilateral economic growth. According to Karel de Gucht, European ...

(TTIP), Turkey raised the prospect of leaving the customs union over the economic contraction it would suffer as American goods would enter

tariff-free and Turkish goods would continue to face American tariffs. The EU and Turkey are in negotiations for amending the customs union agreement to add Turkey to the EU's present and future FTAs.

EU member state candidacy

Turkey has been an associate member of the

European Community The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lis ...

(EC) since 1964, following the signing in 1963 of the

Ankara Agreement The Agreement Creating An Association Between The Republic of Turkey and the European Economic Community, commonly known as the Ankara Agreement ( tr, Ankara Anlaşması), is a treaty signed in 1963 that provides for the framework for the co-oper ...

(EEC-Turkey Association Agreement (1963)) with the EEC. Turkey applied for full membership on 14 April 1987. The decision to consider Turkey's application was deferred until 1993, because the European Community was in the process of becoming the even (politically and economically) tighter

. The fall of the

Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...

and

German reunification German reunification (german: link=no, Deutsche Wiedervereinigung) was the process of re-establishing Germany as a united and fully sovereign state, which took place between 2 May 1989 and 15 March 1991. The day of 3 October 1990 when the Ge ...

delayed the decision on Turkish membership even more. During those years the European Community had also become reluctant to consider Turkey's application. At the

Helsinki Helsinki ( or ; ; sv, Helsingfors, ) is the Capital city, capital, primate city, primate, and List of cities and towns in Finland, most populous city of Finland. Located on the shore of the Gulf of Finland, it is the seat of the region of U ...

summit in December 1999 Turkey was given the status of a candidate country. At the end of 2004, the

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...

has issued a report with positive recommendations to the

European Council The European Council (informally EUCO) is a collegiate body that defines the overall political direction and priorities of the European Union. It is composed of the heads of state or government of the EU member states, the President of the ...

, indicating the degree of compliance by Turkey of the

Copenhagen Copenhagen ( or .; da, København ) is the capital and most populous city of Denmark, with a proper population of around 815.000 in the last quarter of 2022; and some 1.370,000 in the urban area; and the wider Copenhagen metropolitan a ...

political criteria. On this basis, the

decided to start accession negotiations with Turkey on 3 October 2005. Since then, no significant progress has been made towards membership nor is there evidence of political will to do so.

Update proposals

In December 2016, the

released an assessment proposing to update and modernize the agreement which includes services and public procurement. The report concludes with two options; Enhanced Commercial Framework (ECF) or

Deep and Comprehensive Free Trade Area The Deep and Comprehensive Free Trade Areas (DCFTA) are three free trade areas established between the European Union, and Georgia, Moldova, and Ukraine respectively. The DCFTAs are part of each country's EU Association Agreement. They allow G ...

(DCFTA). As of 2020 March, the Council didn't adapt the proposal yet. Since 2015, Turkish government has made several meetings to assess updating the agreement.

Euro-Mediterranean free trade area

Finally, Turkey is also member of the

Euro-Mediterranean partnership The Union for the Mediterranean (UfM; french: Union pour la Méditerranée, ar, الإتحاد من أجل المتوسط ''Al-Ittiḥād min ajl al-Mutawasseṭ'') is an intergovernmental organization of 43 member states from Europe and the M ...

and as such is interested in concluding

s with all other Mediterranean partners, with a view to the creation of a

Euro-Mediterranean free trade area The European Union-Mediterranean Free Trade Area (EU-MED FTA, EMFTA), also called the Euro-Mediterranean Free Trade Area or Euromed FTA, is based on the Barcelona Process and European Neighbourhood Policy (ENP). The Barcelona Process, developed ...

, originally aimed for by 2010.

External links

Turkey border gridlock hints at pain to come for Brexit Britain

The Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...

, February 16, 2017

References

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