One can see that the modernisation process of the Customs Union is one of the priorities of Turkey’s EU accession process in 2017. The preparatory works launched by Minister of Economy Nihat Zeybekci and Commissioner for Trade Cecilia Malmström which began in May 2015 are about to be completed. The official negotiations are expected to begin in 2017. IKV Chairman Ayhan Zeytinoğlu indicated that the modernisation of the Customs Union would strengthen Turkey’s production capacity, agricultural effectiveness, trade in services and increase its competitive force within the framework of external markets along with enhancing greater harmonisation with EU norms and standards.

“The modernisation process of the Customs Union will play a key role in helping Turkey escape from the middle income trap”  

IKV Chairman Zeytinoğlu also highlighted the fact the Customs Union which is in force for the last 20 years has benefited significantly the Turkish industrial sector and enhanced its capacity in external markets; it helped multiply by four times Turkey’s trade volume with the EU and enhance its competitive force in that respect. In contrast, Zeytinoğlu added that although the Customs Union has provided many benefits, its current form is not sufficient with the latest developments with respect of international and EU trade and that the benefits it provided have eroded.  Zeytinoğlu followed his words as follows:

 “We are waiting for the modernisation of the Customs Union to provide important benefits to our national income, employment, foreign investments and external trade. According to research which has been conducted by our Ministry of Economy and the European Commission, it did especially show the annual increase in terms of GDP and in exports. In an impact analysis conducted by the European Commission, it was revealed that the modernisation of the Customs Union would lead to an increase of GDP in real value by 1.44% (12.5 billion euros). In a report prepared by our Ministry of Economy, it was indicated that there would be an increase by 1.9% in terms of GDP and an increase by 24.4% in exports to the EU by 2030”.  

“Along with increasing the scope of agriculture, services and public procurements, the modernisation of the Customs Union would provide expected benefits in terms of free trade agreements concluded by the EU”

IKV Chairman Zeytinoğlu also underscored that the forecasts expected by the impact analyses would become valid in case the deepening of the Customs Union and Turkey’s inclusion within the framework of free trade agreements signed by the EU with third countries materialises:

 “In light of the various impact analyses which have been realised, there are different calculations which are made from the different scenarios which emerge. As such, some claim the Customs Union could continue in its current form or change and give way to a more comprehensive FTA. One can say that the most profitable scenario for both parties would be the alternative of deepening the Customs Union. Accordingly, the operational capacity of the Customs Union would be improved, the dispute settlement mechanism strengthened and Turkey would benefit from the FTAs signed by the EU. Moreover, it is expected that areas such as trade in services, public procurement markets along with agricultural products would also be integrated within the framework of the Customs Union. Therefore, the reciprocal enhancement of the opening the markets would help in alleviating the disadvantages faced by Turkey with respect to the FTAs signed between the EU and third countries, increase harmonisation with EU regulations and generally lead to a revitalisation of the Turkish economy”.

Lastly, IKV Chairman Zeytinoğlu referred to the sectoral effects of the modernisation of the Customs Union:

“The modernisation process of the Customs Union would increase competitiveness in the internal market. Although this process may lead to certain difficulties in the beginning, in the medium and long term, it would trigger efficiency and productivity in a variety of agricultural product groups and the services sector along with enhancing the market share of the industry with respect to FTAs signed with third countries. Indeed, it is expected that exports would increase in areas such as motored vehicles, electronic tools, industrial products such as textiles and shoes, food sector, agricultural products along with construction, transport, financial services and recreational services. Outside industry, it would lead to further foreign investments in the agricultural and services sector and thus create new job opportunities. We do hope that such a process would provide impetus to strengthen harmonisation with the EU in the legislative area and also further enhance principles such as transparency, accountability predictability, legal audit and good governance”.