With the CU, Turkey has modernized its customs administration and approved a new customs law inspired to the European Commission’s Customs Code: to eliminate the TBTs, Turkey has harmonized its standards with the European and international ones, containing the operations of testing, certification, inspection, accreditation and metrology; Ankara has definitely developed a market surveillance and import control system from Brussels, including mutual recognition in the non-harmonized areas.
Finally, Turkey – since the formation of the CU – has successfully adopted the EU rules and regulations on trade policy instruments and is effectively implementing them.
These reforms have considerably decreased trade costs between EU and Turkey; they have also improved market access conditions for Turkish exports into the EU and vice versa. However, there are still areas where Turkey needs further alignment of its legislation with the acquis, as underlined by the European Commission in its 2015 report.
Overall, the EU–Turkey CU of 1995 has been a major instrument of integration into the EU and global markets for Turkey, stimulating also to reform its economy, towards a liberal foreign trade regime for industrial goods, with the perspective of Turkey’s participation in the EU internal market for industrial products. The outcome has been that Turkish producers of industrial goods have become exposed to competition from imports, operating within one of the largest Free Trade Agreements (FTAs) for industrial products in the world. They are then protected by tariffs from external competition exactly like the EU producers; they have so to face competition from duty-free imports of industrial goods from world-class pan-European firms. In return, Turkish industrial producers have duty-free market access to the European Economic Area.
The existing literature on the effects of the EU-Turkey CU includes both ex-ante studies and ex-post studies. One of the earliest ex-ante studies of the EU-Turkey CU is that by Harrison & others (1997): the authors concluded that the CU was generating welfare gains for Turkey of around 1.5 per cent of its GDP.
Adam and Moutos (2008), Nowak-Lehmann (2007) and Neyaptı (2007) have sustained positive impacts of the CU on trade flows.
The World Bank has estimated (2014) a 22% increase in bilateral trade due to the CU.
The general consensus in Turkey on the CU is that it has been beneficial for the country, not only because of trade creation effects of the CU due to lower tariffs, but also for its impact on welfare improvements, towards economic institutions highly integrated with the global economic system.
It is also useful to introduce what Billmeier and Nannicini call the “synthetic control” (1), as it helps us to identify the level of exports to the EU and the GDP per capita in Turkey we would have been if the CU had not been established. From the table, it is clear that the realized export growth is higher than the synthetic one for most years, especially after 2005, suggesting that both Turkey’s growth of exports to the EU and real GDP per capita would have been lower without the CU.
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1 Twenty Years of the EU-Turkey Customs Union: a Synthetic Control Method Analysis, University Association for Contemporary European Studies and John Wiley & Sons Ltd, 2016
With the CU, Turkey has modernized its customs administration and approved a new customs law inspired to the European Commission’s Customs Code: to eliminate the TBTs, Turkey has harmonized its standards with the European and international ones, containing the operations of testing, certification, inspection, accreditation and metrology; Ankara has definitely developed a market surveillance and import control system from Brussels, including mutual recognition in the non-harmonized areas.
Finally, Turkey – since the formation of the CU – has successfully adopted the EU rules and regulations on trade policy instruments and is effectively implementing them.
