Turkey and the EU

TURKEY AND THE EU 

The association relationship between Turkey and the EU dates back to 1963, when Ankara Agreement was signed between the Parties. Ankara Agreement, which entered into force on 1 December 1964, has drawn up the framework of institutional relations between the Parties, paving the way for Turkey’s full membership to the EU. In this framework, Ankara Agreement besides aiming to establish free movement of goods between Turkey and the EU also aims to provide free movement of labor, services and capital in order to integrate Turkey to the European Single Market.

The Customs Union, established between the parties as of 31 December 1995 as foreseen by the Additional Protocol which entered into force on 1 January 1973, was a breakthrough in bilateral relations between Turkey and the EU, and brought the integration process to a critical level. With the completion of the Customs Union by Association Council Decision No. 1/95; custom duties, quantitative restrictions and measures having equivalent effect have been eliminated in trade of industrial goods between the parties to ensure the free movement of goods; while the Common Commercial Policy, including the Common Customs Tariffs, have been implemented towards third countries. As a result of the Customs Union, Turkey has opened its internal market to the competition of the EU and third countries, while guaranteeing free access of its exporters to the EU market. In addition, Turkey has undertaken to align itself to the preferential regimes applied to third countries by the EU and to harmonize its legislation with the EU’s acquis communautaire in a wide spectrum of areas, including the standards and technical legislation, as well as competition policies. On the other hand, trade in agricultural products is managed in the framework of the preferential system between the Parties; while trade in iron and steel products is governed by the Free Trade Agreement between Turkey and the European Coal and Steel Community. Consequently, the Turkish economy has been integrated with one of the most competitive economic bloc of the world and obviously that has given the biggest impetus to Turkish economy since the adoption of liberalization measures of the early 1980’s.

As a consequence of this high level of integration, traditionally comprehensive economic relations between Turkey and EU, especially in trade and investments, have been strengthened significantly. In this respect, the volume of trade with the EU increased from 33.0 billion USD in 1996 to 143 billion USD in 2020. By 2020, Turkey’s exports to the EU reached 69 billion USD and its imports from the EU reached 73 billion USD. In this context, the EU accounts for 41.3% of total exports and 33.4% of total imports of Turkey. On the other hand, Turkey is an important trade partner of the EU according to the foreign trade statistics of the EU, indicating that in 2020 Turkey ranks sixth at imports and exports of the EU with shares of 3.7% and 3.6% respectively.

Following the establishment of the Customs Union, the product composition of Turkish exports transformed in parallel to changing production scales and structure due to the improved competition conditions and market access advantages gained from the Customs Union. Apart from traditional sectors like agriculture or textile and clothing, certain high value added sectors such as electronics, machinery and automotive increased both their shares in total exports and improved their competitiveness in the EU and world market. In this respect, in Turkey’s exports between 1995 and 2020, the share of agricultural products to the EU decreased from 15.4% to 7.9% and the share of textile and clothing products decreased from 42.1% to 20.1%; while the share of automotive products increased from 2.5% to 20.8%, the share of machinery products increased from 2.7% to 10.9%, the share of iron and steel products increased from 3.2% to 7.8% and the share of electronic products increased from 4.5% to 5.6%.