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Summary

  • Turkey and the EU have been in a customs union since 1995. Both sides recognize that this arrangement requires updating to rectify design deficiencies that are undermining its operational effectiveness and to keep pace with the new generation of trade agreements that the EU has signed.
  • Turkey wants a stronger voice in EU trade policy formulation, and to ensure that it is included in future EU free trade agreements. It also wants to simplify procedures for Turkish goods vehicles at the borders with Bulgaria and Greece and when transiting between EU states.
  • The European Commission has proposed expanding the scope of the customs union to include liberalizing services, rights of establishment, public procurement and agriculture.
  • Ukraine’s Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, part of an association agreement that entered into full force in 2017, provides a template for an upgraded EU–Turkey trade relationship in some areas. It suggests that the EU will tie further liberalization to Turkey’s full incorporation of relevant EU rules and regulations (the acquis communautaire) and acceptance of the jurisdiction of the Court of Justice of the European Union on matters of EU law.
  • Turkey’s bilateral political disputes with individual EU member states have so far hindered prospects for updating the customs union. An alternative, more gradual and open-ended strategy is therefore required to move the process forward.
  • Turkey’s experience shows the challenges facing a non-member state in a formal customs arrangement with the EU. Post-Brexit UK should seek a more intimate arrangement with the EU than a Turkey-style customs union.