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 tra ...

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 Geography of the European Union, located primarily in Europe. The u ...

(EU) and Turkey. 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 u ...

() 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 process of locating 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. The term may also refer to a contractual ...

. In 1996, a free trade area was established between Turkey 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 integrate Europe's coal and steel industries into a single common market based on the principle of supranationalism which would be governe ...

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

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 ...

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 importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

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

tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...

s and duties 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 state (polity), states. There are two types of trade agreements: Bilateralism, bilateral and Multilateralism, m ...

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 (TTIP), Turkey raised the prospect of leaving the customs union over the economic contraction it would suffer as American goods would enter Turkey tariff-free and Turkish goods would continue to face American tariffs. The EU and Turkey have been 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 organisation 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 Lisbo ...

(EC) since 1964, following the signing in 1963 of the Ankara Agreement (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 Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

and

German reunification German reunification () was the process of re-establishing Germany as a single sovereign state, which began on 9 November 1989 and culminated on 3 October 1990 with the dissolution of the East Germany, German Democratic Republic and the int ...

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 () is the Capital city, capital and most populous List of cities and towns in Finland, city in Finland. It is on the shore of the Gulf of Finland and is the seat of southern Finland's Uusimaa region. About people live in the municipali ...

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 primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...

has issued a report with positive recommendations to the

European Council The European Council (informally EUCO) is a collegiate body (directorial system) and a symbolic collective head of state, that defines the overall political direction and general priorities of the European Union (EU). It is composed of the he ...

, indicating the degree of compliance by Turkey of the

Copenhagen Copenhagen ( ) is the capital and most populous city of Denmark, with a population of 1.4 million in the Urban area of Copenhagen, urban area. The city is situated on the islands of Zealand and Amager, separated from Malmö, Sweden, by the ...

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 concluded with two options; Enhanced Commercial Framework (ECF) or Deep and Comprehensive Free Trade Area (DCFTA). As of 2020 March, the Council hadn't adapted either of the proposals. Since 2015, the Turkish government has had several meetings to assess updating the agreement.

Euro-Mediterranean free trade area

Turkey is also a member of the Euro-Mediterranean partnership 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, originally aimed for by 2010.

Criticism

The agreement is criticized by some, as the agreement itself does not provide any political or economic powers to Turkey in the European Union while granting some to the Union towards Turkey; thus it is compared to the

capitulations of the Ottoman Empire Capitulations of the Ottoman Empire were contracts between the Ottoman Empire and several other Christian powers, particularly France. Turkish capitulations, or Ahidnâmes were generally bilateral acts whereby definite arrangements were enter ...

Notes

References

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 also published digitally that focuses on business and economic Current affairs (news format), current affairs. Based in London, the paper is owned by a Jap ...

, 16 February 2017 {{DEFAULTSORT:European Union-Turkey Customs Union European Union Customs Union

Turkey Turkey, officially the Republic of Türkiye, is a country mainly located in Anatolia in West Asia, with a relatively small part called East Thrace in Southeast Europe. It borders the Black Sea to the north; Georgia (country), Georgia, Armen ...

Foreign trade of Turkey Turkey–European Union relations Treaties of Turkey Economic history of Turkey