The European Commission has asked the European Council for a mandate to launch talks to update the bloc's 20-year-old customs union with Turkey, the EU's executive said on December 21.

The move to deepen trade ties with Turkey comes after months of heightened tension between Brussels and Ankara over the Turkish government’s post-coup crackdown on opponents. In November, the European Parliament voted overwhelmingly on a resolution calling for freezing of Turkey’s accession talks but Brussels needs Ankara to keep in place a prized agreement that has helped keep thousands of migrants out of the EU.

The EU, and especially German Chancellor Angela Merkel, has been accused of tolerating the human rights violations in Turkey and of supporting the Erdogan regime just to keep the migrant deal alive. “Respect of democracy and fundamental rights will be an essential element” of the modernised customs union, the European Commission said in a statement.

EU-Turkey customs union allows tariff-free trade of industrial goods but does not cover services, public procurement or agriculture. “With the evolution of the economic environment and the significant growth of EU-Turkey trade, the Customs Union that entered into force in 1996 is becoming less and less equipped to deal with the modern day challenges of trade integration,” the EU executive said, adding that the modernisation and extension of the trade deal could unlock further opportunities for EU companies in the agri-food and services sectors and the public procurement market.

Turkey is the EU's fifth largest trade partner in goods. The value of bilateral trade in goods has increased more than fourfold since 1996 and currently amounts to €140bn annually. The EU has a positive balance of €17bn. For Turkey the EU is the most important trading partner, representing 41% of Turkey's global trade. Moreover, two thirds of foreign direct investment (FDI) in Turkey currently originates in the EU.

Bolstering trade ties with the EU will provide an impetus to Turkey's economy that just registered its first annual contraction in seven years.