Brexit negotiations over UK's membership of the EU customs union (CU) have stirred the quiet waters of European Commission's set system of trade agreements, putting the question of deal alteration back on the table.
In Turkey's case, the CU it currently holds with the bloc may get to see a new future, which could boost the country's economy, as well as benefit its European neighbors. That is if the EU decides to revisit the trade agreement with Ankara that was struck more than a decade ago.
Speaking to Professor of Economics at the University of York, Dr. Gulcin Ozkan, Sputnik discussed Turkish-EU trade ties and whether a revision of the customs union between the parties is on the cards.
Sputnik: Turkish customs union was intended as a stepping stone to full EU membership. Do you think that avenue — Turkey's EU accession — is closed or open at the moment?
Dr. Gulcin Ozkan: Unfortunately, this process now appears to have come to a halt and is unlikely to be revived in the near future, unless significant political changes take place in Turkey.
Sputnik: Would you agree that Turkey's customs union with the EU is asymmetrical — in the sense of how advantageous it is for both parties?
Dr. Gulcin Ozkan: It is clearly asymmetric in favor of the EU, but that is not surprising given the purpose of the initial agreement. Having said that Turkey also benefited from it significantly; the value of its bilateral trade with the EU quadrupled since the CU's inception in 1995 (World Bank).
Sputnik: Should the EU-Turkey trade partnership be revisited? How can it be modernized?
Dr. Gulcin Ozkan: There have long been talks about revisiting the EU-Turkey CU. Both the structure of the Turkey's as well as the global economy has changed massively since the mid-1990s. There were calls for extending the CU to cover services and agriculture which were excluded from the initial agreement. Other potential reforms might include existing restrictions to trade between Turkey and the EU such as trade defense instruments and transport permits; harmonization in regulations as well as designing effective dispute settlement mechanisms in trade concessions.
Sputnik: With the elections coming up in Turkey this June, do you think there will be a push for modernization of the customs union between Ankara and Brussels?
Dr. Gulcin Ozkan: The renewal of the CU is not a major policy priority at this point in time. There are currently big questions regarding how important the current government in Turkey views the relations with the EU. Recent rhetoric has been in the opposite direction. However, most parties currently campaigning in Turkey ahead of the polls on the 24th of June — including the ruling party — pledge to 'furthering moves towards the EU membership' as part of their election manifestos.
Sputnik: Is it in EU's interests to revisit the trade relationship with Turkey?
Dr. Gulcin Ozkan: Yes, it would be. The EU also greatly benefited from the trade integration that followed the CU. Reforming this agreement is likely to increase trade further, which will be good for both parties even if it is likely to benefit Turkey proportionally more than the EU.
Sputnik: How can Brexit influence Turkey's trade relations with EU?
Dr. Gulcin Ozkan: Although this will depend upon the shape of Britain's trade arrangements with the EU after separation, Brexit is likely to impact upon Turkey-EU trade relation significantly. Britain is Turkey's second largest export destination making up more than eight percent of all its exports. This has been significantly contributed to by the existing CU between the EU and Turkey. It is clear therefore that a 'hard Brexit' would seriously influence Turkey's trade ties with the EU.
Sputnik: Could Turkey-EU trade partnership be a prototype for Britain?
Dr. Gulcin Ozkan: The EU currently holds custom union (CU) arrangements with Andorra, San Marino and Turkey. Given the size of these three countries, the CU with Turkey would in principle be a clear example for Britain in the post-Brexit world. Yet in practice the comparison is not as straightforward. First, the EU's CU arrangement with Turkey was a step towards further integration — the potential membership of the EU. Brexit is the opposite case of a country's separation from the union. Clearly the dynamics in those two cases will be very different.
Secondly, Turkey's CU with the EU is a rather bespoke arrangement excluding services and (raw) agricultural products. This is obviously not a model for a country like Britain with a major services. Also importantly, Turkey has no say in the design of the rules and regulations that it has to abide by, which has proved difficult at times. This would be much harder for Britain, having been part of that process so long.
The views and opinions expressed by Dr. Gulcin Ozkan are those of the speaker and do not necessarily reflect those of Sputnik.