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TradeTrade
EU – Turkey Customs Union
“EU-TR Joint Consultative Committee "Brussels, 7 November 2013
TradeTrade
EU – Turkey
Customs UnionJan 1,1996
Customs UnionJan 1,1996
Candidate countryDec 11,1999
Candidate countryDec 11,1999
Accession negotiationsOct 3, 2005
Accession negotiationsOct 3, 2005
TradeTrade
Customs Union
• Covers all industrial goods but does not address agriculture (except certain PAPs), and coal and most steel products; both are covered by bilateral concessions (FTA type)
• Commits TR to align to the acquis communautaire in several essential internal market areas, notably customs legislation, common commercial policy, industrial standards, IPR, competition policy.
TradeTrade
Benefits of the Customs Union
• Turkey has benefited from an “early” legislative alignment process before its accession negotiations started.
• Turkey is participating to a large extent in the EU single market for goods.
• Turkish producers gained competitive advantage in adopting (most) EU technical standards.
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Benefits of the Customs Union (cont'd)
• Customs Union: driving force for trade liberalisation and integration into global markets
• Turkish companies are more and more integrated into the production network of the EU
• Increased sophistication of Turkish exports
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Increased trade and investment relations
• Since 1996, trade between the EU and Turkey has increased more than fourfold (from 22.6 bn € in 1995 to 105.3 bn € in 2012, for EU 15 only)
• The EU has been an open and secure market for Turkish exporters
• Despite increased trade, diminishing share of Turkey's exports to the EU (in 2012 below 40%).
• However, to be emphasized that both the EU and Turkey are benefiting from the CU
TradeTrade
EU trade with Turkey
010,00020,00030,00040,00050,00060,00070,00080,000
EU Imports
EU Exports
Trade Balance
Source: Eurostat
Millions of euro
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EU's Trade With Main Partners (2012)
The Major Imports Partners The Major Exports Partners The Major Trade Partners
Rk Partners Mio euro % Rk Partners Mio euro % Rk Partners Mio euro %
Extra EU27 1,791,727 100.0% Extra EU27 1,686,774 100.0% Extra EU27 3,478,501 100.0%
1 China 289,915 16.2% 1 United States 291,880 17.3% 1 United States 497,658 14.3%
2 Russia 213,212 11.9% 2 China 143,874 8.5% 2 China 433,789 12.5%
3 United States 205,778 11.5% 3 Switzerland 133,341 7.9% 3 Russia 336,474 9.7%
4 Switzerland 104,544 5.8% 4 Russia 123,262 7.3% 4 Switzerland 237,885 6.8%
5 Norway 100,437 5.6% 5 Turkey 75,172 4.5% 5 Norway 150,258 4.3%
6 Japan 63,813 3.6% 6 Japan 55,490 3.3% 6 Turkey 122,961 3.5%
7 Turkey 47,789 2.7% 7 Norway 49,821 3.0% 7 Japan 119,303 3.4%
8 South Korea 37,861 2.1% 8 Brazil 39,595 2.3% 8 Brazil 76,685 2.2%
9 India 37,295 2.1% 9 India 38,468 2.3% 9 India 75,764 2.2%
10 Brazil 37,090 2.1% 10 South Korea 37,763 2.2% 10 South Korea 75,624 2.2%
Turkey is the EU’s 6th trade partner and ranks higher than some developed countries such as Canada (11) and Australia (15)
Source: Eurostat
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EU imports from Turkey (2012)
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EU exports to Turkey (2012)
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Turkey's Trade With Main Partners (2012)
The Major Imports Partners The Major Export Partners The Major Trade Partners
Rk Partners Mio euro % Rk Partners Mio euro % Rk Partners Mio euro %
World (all countries)
167,582 100.0% World (all countries)
109,041 100.0% World (all countries)
272,622 100.0%
1 EU27 62,233 37.1% 1 EU27 42,280 38.8% 1 EU27 104,513 37.8%
2 Russia 17,291 5.0% 2 Iraq 5,989 3.1% 2 Russia 21,601 4.0%
3 China 15,573 4.5% 3 Russia 4,310 2.2% 3 China 17,345 3.2%
4 United States 11,529 3.3% 4 United States 3,315 1.7% 4 United States 14,845 2.8%
5 Iran 8,924 2.6% 5United Arab Emirates
2,673 1.4% 5 Iran 11,510 2.1%
6 India 4,667 1.4% 6 Iran 2,586 1.3% 6 Iraq 6,051 1.1%
7 South Korea 4,533 1.3% 7 Saudi Arabia 1,983 1.0% 7 India 5,210 1.0%
8 Switzerland 3,605 1.0% 8 Egypt 1,983 1.0% 8 South Korea 4,914 0.9%
9 Ukraine 3,457 1.0% 9 China 1,772 0.9% 9 Ukraine 4,702 0.9%
10 Japan 3,062 0.9% 10 Israel 1,717 0.9% 10 Switzerland 4,688 0.9%
The EU is Turkey's major trading partner.
Source: IMF
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EU accession negotiations"Would you say that Turkey's accession negotiations with the EU have improved or deteriorated your perception of its attractiveness for FDI?"
Source: Ernst & Young's 2013 Turkey attractiveness survey on 201 investors
TradeTrade
EU – Turkey investment relations
• The EU represents around 75% of incoming FDI to Turkey (average 2008-2012)
• Some 15,350 companies in Turkey with EU capital• 2007-2012, the EU directed 202 projects to Turkey,
focusing mainly on sectors with a high technology component. But business services, transport and logistics have also drawn investor attention.
TradeTrade
EU-Turkey CU is a success story but …
Turkish complaints (e.g.): • FTAs issue – trade policy making• SPS controls on exports of Turkish agricultural products
(fruits, vegetables, meat)• Road quotas
Trade barriers/irritants faced by EU operators (e.g.):• full and non-discriminatory implementation of the CU to
the Republic of Cyprus• import and export licenses/restrictions for certain goods • GMP certificates in pharma sector• Intensive use of safeguard measures
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Way forward
• The EU-TR CU is too limited in scope• Since several years, the EU concludes - and will
continue to conclude - deep and comprehensive FTAs with many important trade partners
• There have been attempts to extend the scope of the CU by the EU, but they have been unsuccessful so far
TradeTrade
Way forward (cont'd)
• The EU-TR CU scope could be extended to cover also other areas such as agriculture, services, investment, public procurement, including an operational Dispute Settlement Mechanism to tackle unresolved/future trade irritants and to ensure full implementation
• Paradox: not doing that extension will leave the EU-TR CU behind the FTAs concluded by the EU.
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Way forward (cont'd)
• WB made an assessment report of the CU and should present its final report with main findings and recommendations in Jan./Feb. 2014
• EU will study WB report and will thereafter consider together with Turkey which recommendations and policy options to take forward in the interest of both sides.
TradeTrade
Thank you for your attention