EU-Turkey customs union: The time for change is now

Source:Middle East Eye Date:27Jul2023

The customs union was designed with the flawed assumption that Ankara would eventually accede to the EU. It was thus intended to be transitional, but it ultimately became structural. Post-1995 changes to the global trade environment, the expansion of the EU, and a substantial increase in bilateral trade deals between the EU and third countries gradually led to an erosion of Turkey’s preferential position.

With the Treaty of Lisbon, the EU’s trade policy became part and parcel of its security and foreign policy, making it a geopolitical tool. This can be seen in its more ambitious and active post-2009 stance in inking free trade agreements with third countries.

Sitting on the sidelines

The BPTF requires Turkey to align with the EU’s common commercial policy, resulting in Ankara having to bear the brunt of bilateral trade deals between the EU and third countries. Because Ankara does not have a role in the pre-negotiation phase of such agreements, it is forced to sit on the sidelines and merely witness how such deals erode its preferential trade position.

Because these third countries get access to the Turkish market via their free trade agreements with the EU, and subsequently via the EU-Turkey Customs Union, they have no incentive to ink similar free trade deals with Ankara.

As a consequence of this asymmetrical situation, Ankara does not always comply with the rules set out by the BPTF, which in turn spurs EU criticism. The lack of a dispute settlement mechanism has further exacerbated the situation. This dysfunction is compounded by the fact that the visa issue and impediments to economic freedoms are intertwined with the customs union framework.

Turkish businesspeople are being prevented from entering the EU to perform economic activities, while the BPTF also fails to cover certain areas, such as services and procurement, and lacks deeper liberalisation in agriculture – leaving trade potential untapped and hindering GDP growth and economic welfare.