Among the EU candidate countries of Albania, Iceland, Montenegro, Serbia, Former Yugoslav Republic of Macedonia, and Turkey, Turkey is the candidate country with the largest population and size as well as the one who has spent the longest time on the way to EU accession. It also has a closer economic relationship with the EU, as it has been participating in a Customs Union (CU) with the existing EU members since 1996. Turkey's potential EU candidacy has become a matter of controversy in recent years. The possibility of Turkish accession to the EU has reignited fears in the ‘old' EU. The aim of this chapter is to discuss the recent developments in Turkey-EU relations and to evaluate the recent performance of Turkey on the way to EU accession by focusing on economic and mainly trade implications of a Turkish EU accession.
TopBackground
Turkey’s journey on the way to EU accession has been a rough one, full of ups and downs. As a result of adverse economic conditions experienced, a drastic change occurred in the Turkish economy in 1980; there has been a shift to an outward focused economic strategy and thus, economic liberalisation process of Turkey started, shifting Turkish economy toward export-led growth. Turkish government of that period formulated its policies with the goal of meeting certain European Community (EC) obligations and formally applied for full membership of the Community in 1987. However, the origin of Turkey’s involvement with the EU dates back to 1959 and includes the Ankara agreement of 1963, establishing an Association as well as initiating the creation of a CU between the two parties (European Commission, 2013a).
That new era of outward-orientation in 1980 started with the economic advice and financial help of international institutions such as the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and the European Economic Community (EEC). Before that, an inward-looking policy of industrialisation and import substitution with a restrictive trade regime, sustaining high cost import competing industries, was pursued by the Turkish government.
One of the most significant developments in the foreign trade relations of Turkey was the 1995 Customs Union agreement with the EU. A Customs Union would be created between Turkey and the EU as of 1996, to be fully phased in by 2001. Initially the agreement only covered the industrial products but then, processed agriculture products, i.e. food products have also been included in the final phase. As a result of the Eastern enlargement of the EU, the CU agreement also included the countries of Central and Eastern Europe as well as Malta with the exception of Cyprus. Because of the Cyprus problem, Turkey does not apply the Additional Protocol of the Ankara agreement to the Republic of Cyprus as it does not recognise it. Because of that eight chapters of the Community acquis can not be opened for negotiation (European Commission, 2013a). With Romania’s and Bulgaria’s accession in 2007 followed by the Croatian accession of 2013, those countries also became part of the CU agreement (Anadolu Agency, 2013).
In late 2004, an agreement was reached between Turkey and the EU for entry talks to begin in October 2005. Therefore, accession negotiations started and have been ongoing between Turkey and the EU since then.