An Analysis of Potential Economic Benefits of Turkey's Full EU Membership

An Analysis of Potential Economic Benefits of Turkey's Full EU Membership

Hakan Ay (Dokuz Eylül University, Turkey) and Eren Alper Yilmaz (Adnan Menderes University, Turkey)
Copyright: © 2015 |Pages: 10
DOI: 10.4018/978-1-4666-7308-3.ch008
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Abstract

Even though Turkey has become the sixth largest economy in Europe, there are still hesitations and economic problems for the EU due to Turkey's rising population, low rate of GDP, budget deficit, migration, etc. In recent political history—before 2000s—Turkey failed in its economic liberalization policy. However, the country has seen a significant increase in the economy by developing a market economy and privatizations successfully in the last decade. There is no doubt that Europe would profit from the accession of Turkey to the EU in terms of internal market factors, agriculture, manufacturing industry, trade relations, tourism, and so on. For this reason, instead of looking for faults within the Turkish economy, the EU should try to see positive developments in the Turkish economic system and it should follow a policy that could overcome ongoing problems by mutual negotiations with Turkey. Approval of Turkey's membership to the EU would bring serious economic profits to Europe.
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Introduction

The first step in European integration started with the foundation of the European Coal and Steel Community in 1951 by six states. Following this, was the creation of the European Economic Community (EEC) in 1957, and European Atomic Energy Community in 1958. While the other states in Europe were approaching cautiously, Turkey was the second state admitted to the EEC after Greece in 1959. This application brought the next largest modernization movement after the Republic, so Turkey was moving forward decisively at this stage. However, the European Community asserted that Turkey's level of development for full membership was not sufficient enough, so it proposed a partnership agreement. Thereupon, Turkey signed an agreement named the “Ankara Agreement” with the European Economic Community in 1963 which explicitly envisaged full membership. This agreement formed the basis of the partnership between the European Economic Community and Turkey (Ay, 2013: 16).

This agreement, which aimed to accelerate the development of Turkey both economically and in terms of trade relations between the two sides, envisaged three stages: the preparatory period, the transitional period, and the final period (T.C Avrupa Birliği Bakanlığı, 2011). Following the transitional period, it was planned to finish “Customs Unions” and in 1973 an Additional Protocol was entered into force. It consisted of topics such as free movement of goods, capital, services and persons, transport and competition, taxation and approximation of legislation, and harmonization of trade policies. It was considered as an agreement to regulate the period before full membership (Ay, 2013: 74-75).

The EEC, which was perceived mainly as an intergovernmental organization similar to NATO, aimed to develop an economic relationship with Turkey despite being negative at the time of Turkey’s application. The EEC, which changed into the European Union after a while, put many obstacles in terms of politics, social affairs, and “economics”, which forms the main debate of this essay. The EC’s stance at this time was based on low economic growth, budget deficits, high interest rates, low per capita income, low Gross Domestic Product, failure in the application of economic liberalization, and high unemployment rates, all of which were considered important economic barriers that pointed to an unready economic situation. Nevertheless, the completion of the Customs Union in 1995 enhanced Turkey’s economic integration with the EU. Turkey, as a first phase of integration with the European Union, signed the Customs Union in March 1995 and with the decision of Association Council entered into the Customs Union on 1 January 1996. Upon completion of the Customs Union, Turkey came a long way for integration with the EU. At least, the Turkish economy and industry proved that they were able to cope with the process. Then, the acknowledgment of its candidate status in 1999 in the Helsinki Summit initiated a comprehensive reform process in the country. With this summit, a new period started in relations between Turkey and the EU, following which an Accession Partnership was prepared in order to determine policies that could help toward membership.

Turkey’s economic situation was seen in a positive manner, such as being the sixteenth largest economy in the world and sixth largest in Europe at that time. There is no doubt that Turkey will affect the size of the EU's internal market, develop trade relations and provide a large economic gain from tourism in the EU, which also depends on its growing industry, production and export rates. If the Turkish economy is further liberalized successfully and provides stability inside and outside, the EU will certainly gain economically from Turkey`s membership if doors are fully opened to Turkey.

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