Turkey's Foreign Trade and New Markets for Turkey

Background

Turkey’s trade relations go beyond historical process with country’s neighbours and trade partners. Rapid increase of Turkey’s foreign trade begun with signing of the Customs Union agreement with the European Union (EU) in 1995. With this development, the EU is now the largest trade partner of Turkey.

Turkey first applied for an associate membership in the EU (then the European Economic Community) in 1959. The application resulted in an association agreement in 1963, whereby Turkey and the EU agreed to establish a customs union by 1995 at the latest. On March 6, 1996, at the Association Council meeting in Brussels it was agreed that a customs union would be launched between Turkey and the EU starting from January 1, 1996, to be fully phased in by 2001. As a result, Turkey currently imposes no quotas or tariffs on imports of industrial goods from the EU. Major development under the customs union was that Turkey implemented the European Union’s Common Customs Tariff on imports of industrial goods from third countries (Togan & Hoekman, 2005). Turkey’s Customs Union with the EU, signed in 1995, played a critical role as well. As for the EU trade in goods statistics, bilateral trade between Turkey and the EU increased almost sixfold from $28 billion in 1995 to approximately $158 billion in 2014, making Turkey Europe’s sixth largest trade partner and the EU Turkey’s first largest (Kirişçi & Ekim, 2015). Germany is the largest trade partner of Turkey in export in the last years. Before Germany, Russia had the leading position among Turkey’s trade partners in export.