1. EU – Turkey Customs Union
“EU-TR Joint Consultative Committee " Brussels, 7 November 2013

2. Accession negotiations
EU – Turkey
Customs Union
Jan 1,1996
Candidate country
Dec 11,1999
Accession negotiations
Oct 3, 2005

3. Customs Union
Covers all industrial goods but does not address agriculture (except certain PAPs), and coal and most steel products; both are covered by bilateral concessions (FTA type)
Commits TR to align to the acquis communautaire in several essential internal market areas, notably customs legislation, common commercial policy, industrial standards, IPR, competition policy.

4. Benefits of the Customs Union
Turkey has benefited from an “early” legislative alignment process before its accession negotiations started.
Turkey is participating to a large extent in the EU single market for goods.
Turkish producers gained competitive advantage in adopting (most) EU technical standards.

5. Benefits of the Customs Union (cont'd)
Customs Union: driving force for trade liberalisation and integration into global markets
Turkish companies are more and more integrated into the production network of the EU
Increased sophistication of Turkish exports

6. Increased trade and investment relations
Since 1996, trade between the EU and Turkey has increased more than fourfold (from 22.6 bn € in 1995 to bn € in 2012, for EU 15 only)
The EU has been an open and secure market for Turkish exporters
Despite increased trade, diminishing share of Turkey's exports to the EU (in 2012 below 40%).
However, to be emphasized that both the EU and Turkey are benefiting from the CU

7. EU trade with Turkey
Millions of euro
Source: Eurostat

8. EU's Trade With Main Partners (2012)
Turkey is the EU’s 6th trade partner and ranks higher than some developed countries such as Canada (11) and Australia (15)
The Major Imports Partners
The Major Exports Partners
The Major Trade Partners Rk
Partners
Mio euro %
Extra EU27
1,791,727
100.0%
1,686,774
3,478,501 1
China
289,915
16.2%
United States
291,880
17.3%
497,658
14.3% 2
Russia
213,212
11.9%
143,874
8.5%
433,789
12.5% 3
205,778
11.5%
Switzerland
133,341
7.9%
336,474
9.7% 4
104,544
5.8%
123,262
7.3%
237,885
6.8% 5
Norway
100,437
5.6%
Turkey
75,172
4.5%
150,258
4.3% 6
Japan
63,813
3.6%
55,490
3.3%
122,961
3.5% 7
47,789
2.7%
49,821
3.0%
119,303
3.4% 8
South Korea
37,861
2.1%
Brazil
39,595
2.3%
76,685
2.2% 9
India
37,295
38,468
75,764 10
37,090
37,763
75,624
Source: Eurostat

9. EU imports from Turkey (2012)

10. EU exports to Turkey (2012)

11. Turkey's Trade With Main Partners (2012)
The EU is Turkey's major trading partner.
The Major Imports Partners
The Major Export Partners
The Major Trade Partners Rk
Partners
Mio euro %
World (all countries)
167,582
100.0%
109,041
272,622 1
EU27
62,233
37.1%
42,280
38.8%
104,513
37.8% 2
Russia
17,291
5.0%
Iraq
5,989
3.1%
21,601
4.0% 3
China
15,573
4.5%
4,310
2.2%
17,345
3.2% 4
United States
11,529
3.3%
3,315
1.7%
14,845
2.8% 5
Iran
8,924
2.6%
United Arab Emirates
2,673
1.4%
11,510
2.1% 6
India
4,667
2,586
1.3%
6,051
1.1% 7
South Korea
4,533
Saudi Arabia
1,983
1.0%
5,210 8
Switzerland
3,605
Egypt
4,914
0.9% 9
Ukraine
3,457
1,772
4,702 10
Japan
3,062
Israel
1,717
4,688
Source: IMF

12. EU accession negotiations
"Would you say that Turkey's accession negotiations with the EU have improved or deteriorated your perception of its attractiveness for FDI?"
Source: Ernst & Young's 2013 Turkey attractiveness survey on 201 investors

13. EU – Turkey investment relations
The EU represents around 75% of incoming FDI to Turkey (average )
Some 15,350 companies in Turkey with EU capital
, the EU directed 202 projects to Turkey, focusing mainly on sectors with a high technology component. But business services, transport and logistics have also drawn investor attention.

14. EU-Turkey CU is a success story but …
Turkish complaints (e.g.):
FTAs issue – trade policy making
SPS controls on exports of Turkish agricultural products (fruits, vegetables, meat)
Road quotas
Trade barriers/irritants faced by EU operators (e.g.):
full and non-discriminatory implementation of the CU to the Republic of Cyprus
import and export licenses/restrictions for certain goods
GMP certificates in pharma sector
Intensive use of safeguard measures

15. Way forward The EU-TR CU is too limited in scope
Since several years, the EU concludes - and will continue to conclude - deep and comprehensive FTAs with many important trade partners
There have been attempts to extend the scope of the CU by the EU, but they have been unsuccessful so far

16. Way forward (cont'd)
The EU-TR CU scope could be extended to cover also other areas such as agriculture, services, investment, public procurement, including an operational Dispute Settlement Mechanism to tackle unresolved/future trade irritants and to ensure full implementation
Paradox: not doing that extension will leave the EU-TR CU behind the FTAs concluded by the EU.

17. Way forward (cont'd)
WB made an assessment report of the CU and should present its final report with main findings and recommendations in Jan./Feb. 2014
EU will study WB report and will thereafter consider together with Turkey which recommendations and policy options to take forward in the interest of both sides.

18. Thank you for your attention