December 21, 2016
Though talks over Turkey’s prospective membership in the European Union have made little progress, Ankara could have better luck expanding its trade agreement with Brussels.
(CHRIS MCGRATH/Getty Images)
For Turkey and the European Union, economic integration seems to happen more quickly than political integration does. Negotiations over the country’s accession have made little progress since Turkey was declared an official candidate to join the European Union in 1999. By contrast, trade ties between the European Union and Turkey have flourished over the past two decades. The two have been party to a customs union since December 1995, though the agreement’s foundation has been in place since the 1970s, and today, the European Union is Turkey’s main trade partner. Even after months of mounting tension between Brussels and Ankara, their trade relationship seems more or less unfazed. On Wednesday, the EU Commission asked the governments of the Continental bloc for a mandate to start negotiations to update and expand the customs union. The request serves as a reminder that despite their differences, Turkey and the European Union are still willing to cooperate in some areas, and trade is a good place to start.
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In its current form, the customs union between Turkey and the European Union provides a common external tariff for industrial goods. This arrangement not only enables Turkey to export products such as machinery to the European Union, but it also allows European companies to manufacture products in Turkey at low cost and then re-import them for additional processing. But the agreement excludes public procurement, services and most agricultural products — something the EU Commission hopes to address in a new round of negotiations. Ankara, which is looking for ways to pull out of its economic doldrums, is eager to reopen talks over the customs union.
Compared with trade, Turkey’s membership in the European Union is a much trickier subject among the bloc’s members. Many EU states worry that admitting Turkey would spur massive migration from the country to Western Europe, compounding the Continent’s migration woes. Because Turkey is a country of some 75 million people, some bloc members are concerned that its accession would throw off the balance of power in the European Union, which weights each member’s vote according to its population size. Other forces in the bloc would prefer to keep Turkey out because it is a Muslim country. And short of EU membership, many of the promises that the bloc has made to Turkey as part of their migrant deal — for instance, visa liberalization — are politically costly for European leaders.
Even though Turkish President Recep Tayyip Erdogan has complained about the sluggish pace of political integration with the European Union, he has facilitated and prioritized economic integration. After all, the economic benefits of maintaining deep trade ties with Europe exceed the potential gains that visa liberalization would offer Turkish citizens. This explains why the European Union and Turkey can still cooperate on trade in spite of their tense bilateral relations. As Erdogan harps on the stalled accession talks in an effort to prod Brussels into meeting Ankara’s demands, Turkish leaders such as Economy Minister Nihat Zeybekci consistently emphasize the more tangible value of expanding the customs union.
Trade negotiations are a welcome prospect for Ankara. Turkey’s economy is beginning to falter; in the third quarter of this year, the country’s gross domestic product contracted for the first time in seven years, and in the fourth quarter, the lira reached its lowest recorded exchange rate. During a recent legislative session, Zeybekci named revising the customs union with the European Union as a goal for 2017 to revive the flagging economy. He also expressed hope that the country, which ranks seventh among EU import countries and fifth among export markets, could increase its export volume to the European Union from 48.5 percent to 60 percent under an expanded customs union.
Beyond the economic advantages that a revised customs union would afford Turkey and the European Union, Brussels and Ankara have political incentives for pursuing negotiations on the agreement. From the Continental bloc’s perspective, resuming talks on the customs union is a way to keep the lines of communication with Turkey open and encourage its cooperation in controlling the flow of migrants into Europe. Relative to discussions on visa liberalization, moreover, talks on trade — which will likely progress slowly — are a low-cost way to stay engaged with Turkey. They also offer the European Union a means to maintain a degree of influence over the country without admitting it to the bloc. Similarly, the negotiations provide Ankara an opportunity to keep a dialogue going with Brussels without necessarily introducing the kinds of reforms that it has demanded in exchange for visa liberalization, such as changes to Turkey’s terrorism law. (Given the persistent threats that the country faces from terrorist attacks, Turkey is particularly sensitive — and resistant — to that request. Though Turkish lawmakers have recently discussed making cosmetic adjustments to the law, they will stand firm on the statute regardless of what the European Union has to say.)
Progress on the customs union is far from certain, however. EU members such as Austria recently called for an end to Turkey’s accession talks, and Vienna may oppose the negotiations over the customs union as well. France and the Netherlands will hold general elections in the first half of 2017 — followed by Germany in September — and electoral pressure from the countries’ nationalist parties may force their moderate governments to resist negotiations with Turkey. Other governments may feel that a rapprochement with Turkey is still too politically costly so long as Ankara is cracking down on its opposition. Still, even though relations between Turkey and the European Union will probably remain tense, neither side is interested in severing bilateral ties.
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