EU - Turkey Customs Union -
Questions and Answers

1. What are the benefits of the Customs Union?

I) Economic benefits:

* to the European Union

- The Customs Union will open and consolidate the Turkish market for Community producers. All tariff and non tariff barriers will be eliminated. Community exporters will thus earn preferential and unhindered access to this young and non saturated market of 65 million consumers.

- Turkey is already the country with which the Community has the largest trade surplus. After the completion of the Customs Union this trend is expected to gain strength. In other words, Community firms are expected to increase their sales and thus their market share in Turkey which will have a positive impact on employment in the Community.

- With the Customs Union, Turkey will harmonize her economic legislation with that of the Community. As a result, the conditions for doing business in Turkey will become substantially similar to those existing in the Community. Thus Community firms operating in Turkey will enjoy a familiar economic and legal environment. Furthermore, the reference made in the Customs Union decision to the case law of the European Court of Justice will facilitate the process of dispute settlement. In short, EU firms operating in Turkey will enjoy increased legal certainty on a par with Member States.

- Community firms will gain a new competitive edge provided that they take advantage of the investment and production opportunities offered by Turkey. They will also be able to use Turkey as an export base for the Middle East, the Black Sea region, and Central Asia. In addition, improved opportunities of cooperation with Turkish firms will enable them to penetrate and to operate in those markets.

* to Turkey

- The Customs Union will crown Turkey's process of integration with the World economy. It will help rationalize and modernize Turkey's economic structure. Increased competition will improve the efficiency of Turkish firms.

- The opening of the European market will, on the one hand raise Turkey's exports to the EU and on the other, enable Turkish industry to reach economies of scale. In conjuction with a more efficient production structure, this will improve the international competitiveness of Turkish firms.

- The Customs Union is expected to give rise to an increased inflow of foreign direct investment which will modernize production facilities and bring in crucial international know how. That will enable Turkey to take a more active part in the process of globalisation.

- The upgrading of the economic legislation especially in areas of competition rules and protection of intellectual property rights will create a legislative framework favorable to the steady and adequate development of economic activity.

- The resumption of financial cooperation with Turkey will contribute to the success of Turkey's economic restructuring and to the improvement of her infrastructure. It will also bring up the possibility of increased and more effective cooperation between EU and Turkish firms through joint Community programs.

- All of these will, in the medium and long term, translate into increased employment in Turkey which will ease social tensions and improve the country's socio-economic situation. At the same time migratory pressures will be lessened.

- Furthermore, as is the case for the Single Market, improved microeconomic conditions will contribute to the betterment of the macroeconomic situation and help Turkey redress her macroeconomic imbalances.

II) Political benefits

* to the European Union

- The Customs Union will firmly anchor Turkey to the West and to the EU in particular.

- As the unquestionable proof of the relevance and success of the development strategy pursued by Turkey, the Customs Union will increase the appeal of the Turkish model in a region beset by economic difficulties and political instability. It will thus strengthen the position of those who defend such a pluralist and secular model of development. By the same token, it will help those countries to move away from radical and extremist attitudes.

- The Customs Union will send a highly important message to the Islamic world by demonstrating that religious differences are not an absolute barrier to integration.

*to Turkey

- The Customs Union will lead to the consolidation of Western values in Turkey. It will reinforce progressive forces in the country. By encouraging attempts at liberalizing the constitutional and legal system, a successful Customs Union will help Turkey in her efforts to upgrade her democracy.

- It will set firmly Turkey on the course of integration with Western Europe. As such, it will provide a concrete foreign policy objective and dissuade attempts to steer away from this goal. By the same token, it will help to undermine the influence of those who stand against such a policy.

- Increased economic interdependence with Western Europe will, through the strengthening of civil society, contribute to the development of a healthier democracy.

2. What if the Customs Union is not approved by the European Parliament?

I) Economic consequences:

Not only would none of the afore-mentioned positive developments come into being, but furthermore:

- the parties would lose their preferential and unhindered access to each others' markets which would result in higher unemployment for both of them. In Turkey, that would also lead to increased migratory movements.

- Turkey's ongoing process of economic modernization will be jeopardized. The long run social consequences of such a development should not be underestimated.

- The business prospects of EU companies operating in Turkey would be hurt as Turkish consumers would turn, as a reaction, to US or Japanese companies.

II) Political consequences:

- It would be impossible for any government in Turkey to explain to public opinion why Turkey is kept out of the European integration process at a time when so many countries which were outside the Community's sphere of interest until a few years ago are now being prepared for accession.

- That would lead to a drastic reassessment of Turkey's links with the West. Such a development would also greatly strengthen the hand of all those in Turkey who wish to loosen ties with Europe.

- It will constitute a severe blow to EU - Turkey relations that will seriously undermine their future evolution.

- The credibility of the EU with regard to the creation of a Mediterranean cooperation and partnership zone will be damaged.