Improving the customs union

ISTANBUL (CIHAN)- Monday was the 27th anniversary of former President and Prime Minister Turgut Özal’s government’s application for full membership in the European Union.
This was a period where the EU bid, which had been squandered by military coups since 1959, was a critical issue for Turkey, particularly because of Greece’s membership in 1981. The priority of the government that came to power in the 1983 election, after the military coup on Sept. 12, 1980, was to reverse the course of events and to look for the external dynamic Turkey needed to transform itself with relation to a revitalized EU.

The application was rejected in 1989 due to ineligibility with regard to economic criteria. At that time, the EU was preparing itself to welcome the Eastern European states that were parting ways with the collapsing Soviet system, the economies of which were in dire conditions. By doing so, the EU was clearly and openly using a double standard when it came to Turkey’s membership. Despite that, the government did not give up. In 1995, it successfully reached the target of establishing the EU-Turkey Customs Union (CU) as specified in the Ankara Agreement’s Additional Protocol.

The CU is a keystone to the EU membership. Without it, the relationship between Turkey and the EU would have been dead a long time ago. At the beginning, the fact that the business world was benefiting from protectionism raised concerns, but it eventually adapted itself to the new system. The annual trade volume is now in the range of 100-130 billion euros. Even though Turkey is always in deficit in bilateral trade, imported EU goods are mostly used in infrastructure. It should also be noted that 75 percent of foreign direct investment (FDI) in Turkey is made by EU economic actors.

Thanks to the CU, the Turkish economy is transforming and integrating with the global economy. This relationship goes beyond a simple free-trade agreement (FTA) it transforms Turkey’s industrial infrastructure because exporting to the EU market means that you are able to produce goods eligible in that market. Domestic consumers as well as those in third countries are enjoying the high quality of these exported goods. In the end, the CU has had undisputable success as an economic deal it is a unique and comprehensive framework that the EU has established with a third country that does not have full membership.

However, the aantage Turkey has acquired over the last 18 years since the deal was made is now being eroded. Globalization, the EU’s eastward enlargement, the exclusion of services and unprocessed agricultural goods and, most importantly, a lack of progress in the membership bid are the most important reasons to cite. One should recall that the CU was always considered a mere step before full membership. Some of the current problems — including the disaantages associated with FTAs as determined by the EU with the third countries, transportation quotas restricting exports and visa issues facing business executives — are the results of the aforementioned reasons. In an effort to revive the stalled relationship and to offer solutions, the European Commission (EC) asked the World Bank (WB) to evaluate the CU.

The report, which was released last week in Ankara, Brussels and Istanbul, offers a detailed and accurate assessment of the CU and makes constructive recommendations by duly taking into account Turkey’s objections. It would be wise to consider the recommendations in a joint task force of experts from both sides and to transform them into policy. The report can be viewed on the World Bank’s official website: www.worldbank.orgcontentdamWorldbankdocumentecaturkeytr-eu-customs-union-tr.pdf

However, there are political constraints. On May 25, the EU will elect a new Parliament and then a new EC will be formed in the fall. Maybe the report will be considered and discussed after that. In any case, Ankara should insist on it but the general mood in Ankara suggests that with a few exceptions, no one is interested in reviving the relationship with the EU. The EU’s standards are too normative for the government’s policy, which consists of an unlimited and unchecked construction and consumption extravaganza closely linked to political benefits. European Commissioner for Enlargement and European Neighborhood Policy Stefan Fule’s recent remarks that “the developments over the last three months in Turkey raised doubts on its commitment to European values and standards,” summarize the state of affairs. Besides, what is fundamental is not the CU per se, but the membership talks.

Despite all odds, the WB and the EC have done a good job, which needs to be taken into account.

ENGIZ AKTAR (CihanToday’s Zaman)