EU wants to deepen trade relations with Turkey

By bne IntelliNews December 21, 2016

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.

Related Articles

Turkey to refuse extradition of all suspects to US unless Washington hands over Gulen says Erdogan

Turkey will not extradite any terror suspects to the US if Washington continues to refuse to hand over Fethullah Gulen, President Recep Tayyip Erdogan said on January 11. Ankara blames the ... more

Record decline in Turkish central bank’s gross forex reserves pushes holdings to $89.9bn

The Turkish central bank reported on December 7 that its gross forex reserves last week experienced a record drop, declining to $89.85bn on December 1 from $96.35bn a week earlier. ... more

EU governments reportedly agree to cut Turkey’s pre-accession funds

EU governments have agreed with the European Parliament to withdraw €105mn that would have gone to help finance political ... more