IKV Chairman participated on the 12th June 2014 to the seminar on the Customs Union between Turkey and EU which was organized by the SETA Foundation. The seminar was organized following the publication of the report prepared by the World Bank regarding the revision of the scope of the Customs Union.

At the beginning of the seminar, the World Bank Country Director for Turkey Martin Reiser summarized the key points and conclusions withdrawn from the report.

The seminar was chaired by SETA Research Economist Prof. Dr. Erdal Tanas Karagol. SETA Researcher Hatice Karahan presented an overview of Turkey’s foreign trade policy and EU’s role within Turkey’s trade relations. Karahan stated that EU’s economic recovery had a positive impact on Turkey’s exports through the increase of demand. Karahan finally emphasized on the positive impacts that the Customs Union had on Turkey’s foreign trade but stated that the decision to revise the Customs Union could not have been better timed.

World Bank Country Director for Turkey Martin Reiser spoke about the problems that have arisen with the current way of functioning of the Customs Union and presented also some policy recommendations to overcome these challenges. Reiser stated that the Customs Union had a positive impact in Turkey’s economy stressing therefore the importance of maintaining this Union. Martin Reiser also explained how the competition in European Markets led to the modernization and the increase of competitiveness of Turkish industry .

Reiser referred to these key points while discussing about the main outcomes of the report:

- If the scope of the Customs Union is extended, it will have similar positive outcomes in agriculture and services sectors as it has been witnessed with the industrial sector. But to benefit fully from this revision, Turkey has to undergo a major reform in agriculture sector and in areas such as financial, legal and health services.

- The Customs Union was established on a temporary basis since it was expected that Turkey will join the EU in a short period of time. The existing consulting process within the Customs Union is not functioning sufficiently since neither Turkey nor EU is aware of the initiatives taken by the other part in the area of the customs. Turkey has bind itself  to align its trade policy to EU’s preferential trade regimes although it is not represented in the decision making process.

- It is essential to solve this asymmetrical structure and the shortcomings which have revealed over the years. Widening the scope of the Customs Union should only be considered once these problems are resolved.

- It is essential to solve the problems of the FTAs, transport quotas and the visa obligation.

IKV Chairman Omer Cihad Vardan presented the perspective of the Turkish business community in regard to the Customs Union. Vardan drew the attention to the important changes that have occurred in the world trading systems since 1996 when the Customs Union entered into force. Vardan highlighted the problems encountered by Turkey with the free trade agreements signed by the EU with third countries.  He also explained that the visa obligation represented an important barrier for Turkish industrialists and businessman. In this respect, he explained that while the industrial goods can travel freely within the EU, businessmen are still facing the visa obstacle. IKV Chairman Vardan welcomed the report prepared by the World Bank and stressed to the importance to solve these problems related to the Customs Union in a short period of time.

Lastly, Consultant of International Transportation Association Can Baydarol presented the problems encountered within the transportation sector within the current way of functioning of the Customs Union. He insisted on the fact that the quota applied by EU Member States had a negative impact on EU’s economy and companies as well.  Baydarol also mentioned the visa problems encountered by truck drivers.