Trade effects of the Türkiye-EU Customs Union

Abstract

Türkiye’s relationship with the EU goes back to the inception of the Union with the Turkish showing willingness to become part of the Union since then. This has evolved throughout the years starting with the Ankara Agreement in 1963 and eventually reaching its peak in 1995 with the implementation of the Customs Union. With this agreement, Türkiye gained access to the European market and could trade manufacturing and processed agricultural products with reduced tariffs. Moreover, Türkiye had to abolish all custom duties and restrictions while implementing the Common Customs Tariffs on imported goods and services from third countries. This dissertation, which will be in the form of a longitudinal case study, shall analyse the effects that the Customs Union has left on Turkish trade since its implementation. An evaluation on trade developments between 1988 and 2023 will be made to examine how certain developments and events have affected trade between Türkiye and the EU. Additionally, an examination will be made on how Türkiye’s trade shares have been distributed between the EU and the world. From this evaluation, an analysis will be made on whether trade creation or trade diversion have been generated. This will be done with regards to Jacob Viner’s Customs Union Theory.